Energy storage represents what could be considered one of the fastest areas of growth associated with the smart grid between now and 2020. Currently, there is a large market for electrical storage in uninterruptible power supply (UPS) for critical infrastructure, but the coming years will see a significant increase in the need for storage solutions to support the evolving intelligent grid, both to improve power quality and to allow integration of high levels of intermittent generating sources, such as wind and solar energy.
The importance of the electrical grid is difficult to overstate. Inexpensive, reliable electricity is a key metric of all advanced societies. The amount of overall energy consumption in the form of electricity has increased from 10% in 1940 to over 40% today, and it is projected to be the fastest-growing energy source for the foreseeable future.
There are several factors driving the need to upgrade the electrical grid infrastructure. For electrical generators, there is an increasingly large incentive to find ways to more efficiently use the generating resources that are already in place, both for better use of capital and to avoid regulatory impediments to increasing generating capacity. Also, because there is currently little storage on the grid, there must be enough capacity to meet maximum demand, which results in an overall usage of generating capacity of only about 60%.
The major driver for large-scale grid storage is the planned addition of significant amounts of intermittent generating sources, such as wind and solar energy, to the grid. (The increase in renewable energy sources to the grid is being driven by mandates in over 30 states that require that between 8% and 40% of electrical generating capacity come from renewable sources by 2030.)
NanoMarkets expects the overall market for chemical batteries and supercapacitors for grid storage to be around $11.2 billion a year by 2020, with $9.5 billion coming from chemical batteries and $1.7 billion coming from supercapacitors.
The large-scale grid storage market is in its infancy, and, therefore, there is little precedent for predictions of its growth. That being said, NanoMarkets believes that the mass adoption of grid storage will come in three waves.
The first wave will be grid storage for remote applications, island grids and microgrids. These applications are now economically viable. The best example is remote cellphone towers. Remote grid storage cuts the estimated energy costs for such remote towers by half versus traditional diesel power. The addition of chemical battery grid storage shows similar savings for island grids. Along with microgrids in developing regions, remote grid storage and island grids represent the first wave of significant demand for stationary grid storage.
The second wave of grid storage adoption will be in retail applications (on the customer side of the meter) for power quality and peak shaving. This second wave will have significant overlap with the first wave, and early adopters are already beginning to use the technology. Pharmaceutical, semiconductor and chemical manufacturers are leading the adoption of grid storage for improved power quality today and expanding its use to peak-shaving applications as prices drop. Another second-wave application in the wholesale area is the addition of grid storage to achieve grid stability for wind and solar farms.
The final wave of grid storage will be dominated by both wholesale and retail peak shifting applications. Peak shifting is the most cost-sensitive grid storage application, because the storage solution has to provide large amounts of electricity at a cheaper price than it can be bought from the grid.
Finally, NanoMarkets expects supercapacitors to become an integral part of grid storage, particularly later in the reporting period, as their costs continue to go down and storage capacities continue to increase. In the smart grid area, their growth will be dominated for the next five years by regenerative braking systems on grid-attached light rail systems. Supercapacitors will then expand aggressively into the frequency regulation arena, first for microgrids, and later on for large established grids.
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