Review of the global energy storage market in the first half of 2015 (Part 1)

It is reported that the outline of the 13th Five-Year Plan for the national energy storage industry is being compiled by the China Chemical and Physical Power Sources Industry Association on behalf of the National Energy Administration. The development of my country's energy storage industry will soon usher in new development opportunities. 2015 is already halfway through, how is the development of the energy storage market in the first half of this year? Today, we recommend the Energy Storage Industry Technology Alliance (CNESA)'s review of the global energy storage project overview and market hotspots in the first half of 2015 (Part 1), in order to help readers sort out the hot spots of the energy storage industry and grasp the future development trends.

1. Overview of Global Energy Storage Projects

In the first half of 2015, the global energy storage market continued to grow, and the application demand further increased. According to the CNESA database, by the end of June 2015, there were 45 new energy storage projects in the world, with an installed capacity of 507.5MW, including 14 operational projects with an installed capacity of 63.7MW, 4 projects under construction with an installed capacity of 47.5MW, and 27 planned projects with an installed capacity of 396.3MW.

In terms of application distribution, the hot spots in the first half of the year were distributed generation and microgrids, with the number of projects accounting for 42% of the total number of planned and under-construction projects, followed by renewable energy grid connection, ancillary services and power transmission and distribution.

Figure: Application distribution of projects planned or under construction in the first half of 2015 (number)

Source: CNESA Energy Storage Project Database

In terms of technology distribution, the hot technology in the first half of the year is still lithium-ion batteries, accounting for 77% of the total number of projects planned or under construction. Suppliers are mainly from South Korea and Japan, such as Toshiba, LG, Sony, Panasonic, etc. Non-Japanese and Korean suppliers, such as BYD and Saft, also have some projects under construction or planning in the first half of the year.

Figure: Technology distribution of projects planned or under construction in the first half of 2015 (number)

Source: CNESA Energy Storage Project Database

From the perspective of regional distribution, the United States is the country with the most projects planned or under construction in the first half of the year, and is the global leader in energy storage technology and applications, followed by Europe, Japan and other countries. China has few projects planned or under construction in the first half of 2015.

Figure: Country distribution of projects (number) planned or under construction in the first half of 2015

Source: CNESA Energy Storage Project Database

From the projects planned in the first half of the year, it can be seen that energy storage projects in some regions/fields are showing a trend of large-scale application. For example, in March, Alevo plans to contribute 200MW of energy storage projects to the US frequency regulation market; in May, Beacon Power proposed to build Europe's first flywheel energy storage project with a scale of 20MW; in June, Toshiba announced plans to provide 40MW lithium-ion battery systems to Tohoku Electric Power Company in Honshu, Japan; in the same month, NEC proposed to provide 60MW lithium battery systems to Amerigin for frequency regulation. The release of multiple large-scale energy storage projects indicates that in certain specific areas of certain power markets (such as the US frequency regulation market), the advantages of energy storage have been verified, and some owners/users have begun to launch large-scale projects.

2. Global Energy Storage Market Hotspots

Due to differences in market and policy environments, the market activity and application focus of each country in the first half of the year were different. The following is an update of each country's energy storage market based on the application hotspots in the first half of the year.

1. United States

There are two application hotspots in the United States in the first half of the year, one is distributed generation and microgrids, and the other is ancillary services. According to the quarterly update data released by SGIP (the projects supported by SGIP are generally small in scale, so they are not included in the CNESA project database), the promotion of distributed energy storage projects has accelerated significantly from January to April 2015. As of April 20, 2015, the number of projects that have been fully put into operation or have begun to enter the performance assessment stage has risen to 103, including 13 projects in the photovoltaic storage mode, and the new 8 photovoltaic storage projects are all from Tesla. The two user-side energy storage systems (home Powerwall and commercial Powerpack) released by Tesla on April 30 also greatly promoted the application speed of the residential energy storage market and stimulated the attention of other suppliers to the residential market, such as LG Chem, Daimler, BYD, etc., which have also released residential energy storage products after Tesla.

In the first half of 2015, the ancillary services market in the United States remained active. Among the 11 energy storage projects under construction and planning, nearly half of them are used to provide frequency regulation ancillary services. The frequency regulation ancillary services market in the United States is a market with a clear profit mechanism. In the past five years, more than 100MW of frequency regulation energy storage systems have been installed in the PJM market. PJM's successful experience in using batteries for frequency regulation has led other grid operators to propose that they will also adopt battery frequency regulation in the next few years. South Korean grid operators have also announced plans to install hundreds of MW of batteries for frequency regulation services. Germany, Italy, Japan and other countries are also considering adopting battery frequency regulation. However, it is worth noting that the frequency regulation market is a relatively special market with limited market capacity. As the number of battery frequency regulation projects continues to increase, market opportunities will become fewer and fewer.

2. Australia

Judging from the projects currently in operation and planned in Australia, Australia's energy storage market is still in a very early stage and has not yet formed a business model. The projects are small in scale and are mostly used in special scenarios or for experimental purposes. However, after multiple verifications, the energy storage markets most likely to be launched in Australia in the future are: 1. The off-grid (remote areas where the power grid is difficult to cover) market, and 2. The household market used for bill management.

In Australia, it is economical to replace diesel power generation with photovoltaic systems. Some Australian institutions have also realized the application advantages and economic prospects of photovoltaic storage systems in remote areas where the power grid is difficult to cover. Australian Energy Minister Mike Nahan recognized the economic feasibility of "photovoltaic + energy storage" and asked utility companies in rural and remote areas of Australia to accelerate the application of this solution. Mpower, a company specializing in remote area projects, and the Australian Renewable Energy Agency (ARENA), which provides funding for photovoltaic storage projects in remote areas, have also begun to promote some projects. In addition, ARENA has launched an energy plan for remote areas with a total investment of 400 million Australian dollars. The plan has received 70 similar project applications from mining developers. It is expected that the application of photovoltaic storage projects in remote areas will mainly occur in areas with weak power grids and developed mining industries such as Western and Northern Australia and Queensland.

The household market is another hot area for energy storage applications in Australia. An important driving factor for the application of energy storage in this field is that the first round of photovoltaic FIT subsidies expired on December 31, 2016. The new FIT standard is much lower than the previous standard. In certain markets, the FIT reward standard is sometimes only 10% of the peak power cost. In the National Electricity Market (NEM—ISO that governs Western Australia and Northern Australia), 12.7% of households have installed photovoltaics. For these households, storing solar power for self-consumption will become more economically advantageous (in Queensland and South Australia, this proportion is even higher, reaching 20%).

In order to promote the application of household energy storage more quickly, Adelaide has launched Australia's first subsidy mechanism for energy storage (photovoltaic + energy storage), providing a subsidy of up to AUD 5,000 for commercial, residential, school and community users in Adelaide to install photovoltaic + energy storage systems. The introduction of the subsidy plan is conducive to the installation of energy storage and the popularization of electric vehicles, especially for South Australia, where 27% of residents have installed photovoltaic equipment.

While realizing the broad market prospects of energy storage, Australia is also actively introducing more, better and more economical energy storage products. For example, Solar Juice, an Australian solar power wholesaler and distributor, is launching a Samsung 3.6kWh battery energy storage system priced at A$8,000 (including inverters and smart meters). In addition, Ambri, a company focusing on the research and development of liquid metal batteries, announced in January 2015 that its co-founder Professor Donald Sathoway would pilot a production plant in Australia. Panasonic, Tesla's partner in the battery field, has signed an agreement with Red Energy, a subsidiary of Australian power generator and retailer Snowy Hydro, Ergon Energy owned by the Queensland government, and ActewAGL in June this year to cooperate in the project of rooftop solar energy storage system. LG Chem proposed to apply the latest energy storage technology to the Australian market in August 2015. LG Chem expects that in the next two years, Australia's energy storage industry will grow 15 times, requiring the installation of more than 30,000 energy storage systems. LG hopes to gain 30% of the market share in Australia.