Grid-Connected Energy-Storage Projects in Pipeline to Hit 2GW, Led by US, China and South Korea

LI-ion battery on the road to energy storage heaven

By Marianne Boust, Principal Analyst, IHS Technology

Bottom Line
• Energy storage pipeline advances are led by the United States, China and South Korea - the IHS Energy Storage Company and Project Database - Q2 2016 tracks 2 gigawatts (GW) of grid-connected energy storage projects -- a 20 percent increase, since the end of 2015.
• Lithium ion's (Li-ion's) share of the energy storage market has grown steadily from 20 percent deployed in 2010 to 90 percent forecast for 2016.
• Roughly 300 megawatts (MW) -- or 500 megawatt-hours (MWh) -- of utility-side meter energy storage projects came online during the first half of 2016, for example the 50 MW (300 MWh) Buzen project in Japan, which was developed by Kyushu Electric and supplied by NAS batteries.
• Driven by a surge in behind-the-meter installations in the United States, Australia, the United Kingdom, and Germany, IHS has revised our outlook for 2016 upwards to 1.8 GW, from 1.5 GW in our previous forecast.

IHS Insights

Owing to massive cost reductions, Li-ion technology is now leading lead-acid batteries in the power storage category; it is even challenging sodium sulphur and flow for long-duration storage. IHS estimates that 90 percent of the utility-side of meter energy storage projects tracked are based on Li-ion battery technology. Underpinning the rapid cost reduction is the build-up of the supply chain for batteries in the auto and power sectors. Competition between China's BYD, GCL, South Korea's Samsung SDI, LG Chem and Japan's Panasonic is intensifying. In the residential space GCL has launched a battery system at $450/kWh (excluding inverter) in Australia, nearly matching Tesla's announced price of $3,000 for a 7kWh system.
Li-ion is also gaining traction in the grid-scale market for longer duration, which has been historically dominated by sodium sulfur and flow batteries. IHS has observed grid-scale batteries prices for delivery in 2016 around $400/kWh to $500/kWh, including warranty and management system, with a further 30 percent reduction in the next 18 months. Nonetheless, flow battery manufacturers are scaling up their ambitions and betting on superior lifetime of flow battery technology, as evidenced by the announcement of the 200 MW/800 MWh Dalian demonstration project in China, led by Rongke Power and UniEnergy Technologies.
Although lead-acid technology continues to be used in emerging markets where lack of financing is the biggest barrier, we're seeing lead-acid market share shrinking in developed countries, owing to the superior performance of Li-ion in terms of response time and longer life.
While equipment costs keep falling, policies favorable to energy storage are being implemented in a larger number of countries, driving up new demand in the power sector. In the United States, after the press announcement from the US administration to commit to 1.3 GW of energy storage deployment, Senator Martin Heinrich (D-NM) is set to introduce a draft bill that would grant a 30 percent tax credit to residential and commercial owners of energy storage. Policies are also announced in South Korea, which is considering mandating energy storage in public buildings, as well as allowing energy storage to participate in the South Korea wholesale power market.

Information in this Research Note comes from the IHS Energy Storage Company and Project Database - Q2 2016, part of the IHS Energy Storage intelligence service, which addresses the opportunities and market dynamics for energy storage systems, such as batteries and fly wheels.

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