A flurry of activity in the energy storage field – both high profile and relatively low key – could have major implications for renewable energy by giving constancy to the otherwise intermittent nature of sources like wind and solar, and making renewables more attractive to policy makers seeking to diversify our energy options.
The “friendly acquisition” of SolarCity – a major rooftop panel installer – proposed by Tesla – an electric vehicle manufacturer and builder of high-capability, long-term batteries – is the most recent development. And while the implications of the merger have yet to emerge, Tesla founder Elon Musk says that in five years, the solar-plus-battery dynamic will prove to be a boon to homeowners with panels installed who are seeing a potential future of fading net metering compensation.
Similar in scope is the $1.1-billion acquisition this past spring of Saft – a prominent battery manufacturer – by the French oil company, Total. The purchase follows the European oil and gas giant’s announcement last fall that it plans to spend at least $500 million annually in renewable energy such as solar and biofuel. Total spent $1.4 billion in 2011 to acquire a majority stake in SunPower Inc., a major U.S. solar panel manufacturer.
The French company’s move into the battery market, which will have the added advantage of boosting storage research, shows that even legacy energy powers understand the changing energy horizon and recognize the growing value of storage in an approaching era where clean renewable energy will replace fossil fuels in powering our homes and automobiles.
The growth of the storage market in the United States is accelerating rapidly. The Energy Storage Association says system installations grew more than 250 percent in 2015 and are continuing to trend upward this year. Costs for lithium-ion batteries have declined more than 70 percent in the last 18 months alone. Globally, installed energy storage capacity is projected to double in 2016 and grow more than tenfold by 2025. And the management consulting firm McKinsey and Company says the market will grow a hundredfold – to $90 billion – by 2025.
That growth is being driven by research like that underway in labs across the country where experts are seeking ways to enhance storage technology and drive down costs. The DOE is funding 75 projects, developing electricity storage, marshalling research teams at Harvard, MIT and Stanford, as well as at the Lawrence Livermore and Oak Ridge National Laboratories.
According to the federal Advanced Research Projects Agency-Energy (ARPA-E), the technologies under study range from hydrogen bromide, zinc-air batteries, molten glass storage and new flywheel designs. DOE officials say the work can result in a drop in storage costs of up to 90 percent, reaching an industry goal of $100 per kilowatt hour within five years.
Earlier this year, the Brattle Group released a report commissioned by the National Rural Electric Cooperatives Association and the Natural Resources Defense Council that spoke to the viability of residential water heaters serving, essentially, as pre-installed thermal batteries that, otherwise, are sitting idle in homes across the United States. The report says that by heating the water in the tank to store thermal energy, water heaters can be controlled in real-time to shift electricity consumption from higher-priced hours when less efficient generating units are operating on the margin to lower-priced hours when less costly generation is operating.
Energy storage is expected to play an increasingly important role in reaching the nation’s climate and clean energy goals in the years ahead, and the growth of the technology is good reason for lawmakers to incentivize that development through policy mechanisms like a comprehensive investment tax credit (ITC).
Under IRS rules, some storage applications can qualify for a credit under existing ITC standards, but eligibility is decided on a case-by-case basis and the rules are ambiguous. Legislation has recently been introduced in both the House (H.R. 5350) and Senate (S. 3159) that would implement a clearly defined 30-percent ITC for energy storage similar to the tax credit for solar power that was extended through 2022 in a measure passed last December.
Stakeholders should call on their lawmakers to support the legislation and other federally supported research efforts that can boost the expanded development of inexpensive energy storage, which, in turn, will play a major role in implementing the renewable energy technology that can help us meet the 25x’25 Vision.