The past few years have seen unparalleled growth in energy storage capacity. However, the majority of this capacity and growth remains concentrated within the same few countries — Navigant Research found that just over half of the growth in 2017 was split between the top 5 countries. The market is already seeing diversification in geography, however, and vast swathes are still virtually untapped.
Factors causing friction in emerging markets are numerous — unfavourable or undefined regulations, uncertain future revenue, a lack of understanding or willingness to explore utility-scale projects. Perhaps most importantly, while the capital costs have dropped, as it stands energy storage alone is not yet bankable for most applications.
So which factors act as market drivers? Government support (investment, subsidies and other financial backing), low-carbon commitments, ageing grids in need of replacement, lack of traditional power infrastructure, significant renewable resources and/or renewable grid penetration, standards and specification reforms that treat energy storage as a serious prospect. These can combine in interesting ways — in one country, utility-scale applications will be more attractive while in others behind-the-meter projects will make more economic sense.
With this in mind, which new geographical markets are most attractive? These market driver factors can combine in intriguing ways. Latin America and China have seen deregulation in their power markets which open paths for independent developers. Sub-Saharan Africa and the Caribbean see energy storage as a solution for remote communities cut off from traditional power infrastructure. India combines both aggressive official renewables targets with rising electricity demand, significant solar resources and an ageing grid infrastructure. The takeaway is that few if any new markets are worth completely discounting. Let’s further examine two areas of opportunity with quite different characteristics.
A key draw of off-grid installations is that the area of opportunity is near-limitless. From remote villages in Sub-Saharan Africa to military outposts in the South Atlantic, from distant mines in Chile to scientific research bases in Borneo — many parties see the benefit of stable power when grid connections are unstable or non-existent.
The other benefit of using off-grid projects to gain a toehold in emerging markets is that there are many potential sources of funding and loans. Governments funding can be available when it is in their interest to connect remote communities, and corporate investments are also increasing. Energy storage developers can keep an eye out for proposals from state utilities, C&I projects and even militaries.
A barrier to implementing these storage systems, however, is a complete lack of familiarity on the ground with the technology. Supply chain issues for both installation and replacements are rife. Companies aiming to break into this sector should expect to be as self-sufficient as possible.
Utility-scale storage opportunities are most likely to crop up in developing countries where current grid infrastructure is unstable, ageing and/or failing to meet rising electricity demands. Many developing countries are keen to meet renewables targets and “skip over” traditional power generation, taking advantage of new technologies that have been proven in more developed markets.
Latin America and South Asia are ones to watch for these applications. As mentioned above, major markets such as Chile, Argentina, Mexico and Brazil either have deregulated, or are in the process of deregulating, their power markets. Roraima in Northern Brazil has announced that it will contract 70 MW of energy storage to counteract potential power supply issues linked to their neighbour, Venezuela.
Developers looking to expand in these markets will face the same issues with lack of familiarity and expertise, especially considering Latin America when compared to India. The larger scale of these projects also make finding stable funding challenging — investors are yet to consider energy storage a proven technology.
Energy Storage World Forum: Growing the Battery Storage Market (White paper, PDF)
Forbes: Energy storage markets are growing, but not everywhere
Energy Storage News: Understanding the energy storage world leaders, anticipating the next big markets
GreenTechMedia: Europe’s energy storage market is in transition
International Finance Corporation: Energy Storage Trends and Opportunities in Emerging Markets
Renewable Energy World: Tracking the rise of the off-grid energy storage market
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