Energy / Research & Reports

Energy storage shaping up as tipping point for utilities

Annual Energy Storage Power Capacity Additions by Segment, All Technologies, North America: 2016-2025


Source: Navigant Research

WASHINGTON, DC — “Storage has long been relegated a trend to watch in the next 10 years – but not a trend of today. Until recently, it was considered too immature (in terms of technology) and too expensive (in terms of capital investment) to be a serious contender in the utility space. Over the past two years, however, a slew of megawatt-scale storage plants started coming online to compete in PJM’s fast-response frequency regulation market. This market development has had two positive consequences for storage: It has helped lower lithium-ion battery pricing, and it has piqued the interest of developers. As a result, storage is now.

The combination of energy storage and demand response (DR) was named one of the most useful tools available today for utility operations in the next 10 years in a survey of utility leaders published in a recent edition of Public Utilities Fortnightly. It was also named one of the most disruptive trends. Although disruption for disruption’s sake is not the goal, it can prod stakeholders into action, encourage creative business models, and inspire reform. Market disruption means winners and losers – and in this case, utilities are positioned to be winners, along with storage suppliers and their large behind-the-meter customers. Losers could be peaking power plants and their developers.

The electric utility industry has several tipping points on the horizon, and storage has a few tipping points of its own, including reaching parity with natural gas peakers and thermal assets, as well as storage-enabled virtual power plants (VPPs). Natural gas peakers have their costs: They require fuel, take longer to build than similar sized storage plants, require water for cooling, and are used only during demand peaks—a fraction of the time. When storage reaches parity with natural gas peakers, true competition will ensue.”

— Anissa Dehamna, Advanced Energy Economy

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