2017 was an exciting year for the development of the energy storage markets and projects. Looking back, the China Energy Storage Alliance (CNESA) has compiled a list of the 10 biggest events in the international energy storage industry for 2017.
1. United Kingdom: Capacity Market Regulation Reforms Deal a Blow to Short-duration Storage Systems
In July 2017, British electricity market players put pressure on the Department for Business, Energy and Industrial Strategy (BEIS), stating that battery storage could pose possible risk to the safety of electricity supply systems due to the fast speed in which such batteries discharge. In response, BEIS evaluated the possibility of such a risk and considered a reduction in the de-rating factor of short duration energy storage systems. In December of 2017, BEIS confirmed that T-4 and T-1 capacity auctions would receive sweeping reductions in de-rating factors for 30 minute duration batteries. This regulatory change is expected to severely reduce the benefit of short-duration energy storage projects and delivers a sharp blow to the future development of the capacity market for short-duration energy storage.
2. Australia: Announcement of 5-Minute Settlement Period Helps Compensate Fast-Response Systems
Australia’s electricity system operates at a five-minute power dispatch interval, yet prices are calculated at intervals of 30 minutes. Such a system is unable to distinguish between rapid and slow responses, meaning that systems that respond after 25 minutes would receive the same remuneration as those that respond immediately. The new five-minute dispatch interval changes the way in which power generation companies are paid for the electricity they provide, and supports those technologies, such as energy storage technologies, that provide fast response to electricity needs.
3. United States: Energy Storage Provides Power to the Grid After Southern California Gas Leak
The Aliso Canyon gas leak was the worst natural gas leak in the history of the United States, causing a severe electricity supply crisis in Los Angeles and San Diego. In 6 months, over 100MW of storage capacity was installed in southern California in response to the crisis. The incident served not only to highlight energy storage as a viable solution for grid emergencies, but also helped to decrease the dependence of the area’s power plants on natural gas.
4. Europe: More Energy Storage Subsidies/Incentive Plans Appear, Promoting Behind-the-meter Solar Storage
Following California’s SGIP policy and Germany’s solar storage subsidy policy, other countries and regions in Europe have released subsidies or incentive plans for distributed energy storage. Such measures promote large-scale applications of behind-the-meter storage. Austria’s parliament voted to provide long-term funding for countrywide PV projects from 2018-2019. Lombardy, Italy’s most economically developed region, now provides subsidies to customers who purchase and install energy storage systems. The Czech Republic’s Ministry of Industry and Trade has agreed to appropriate funds to support solar energy storage. These and other subsidy policies will help to stimulate the commercial development of behind-the-meter storage in Europe.
5. India: India’s Energy Storage Market Suffers Many Setbacks, But There is Potential for the Future
2017 was not a great year for India’s energy storage market. Although India holds a positive attitude towards energy storage development, many planned energy storage projects have been shelved or postponed due to a lack of sufficient funding or specifications. Such projects include the Pavagada and Kadapa solar storage project, which canceled bids after a sudden drop in PV prices, as well NTPC Ltd’s solar storage project on Andaman and Nicobar islands, which has seen continuous shelving of bids. The situation only began to improve during the latter half of 2017. In the future, as population rises, urbanization continues, and extreme weather conditions lead to more frequent electricity supply issues, India will face tough challenges in generating capacity and T&D infrastructure. Groups including the Indian government, distribution network operators, and public utilities, among others, are actively working to develop energy storage plans, industries, and business layouts. Looking forward, energy storage shows much potential for growth in India.
6. Global Policy Promotion: More Energy Storage Procurement Plans Released, Encouraging Rapid Deployment of New Projects
Following the opening of procurement planning after California’s AB 2514 bill, the U.S. states of New Jersey, Massachusetts, and Oregon, as well as Australia’s Victoria, Queensland, and South Australia, among others, have all enacted their own energy storage procurement goals for the support of establishing public utility-side storage projects. New York state is also in the process of enacting their own procurement goals. The creation and announcement of these public utility procurement plans is an important step in the promotion of large-scale grid-side energy storage.
7. Global Market Transactions: Mergers/Project Ownership Changes Fuse Technology and Capital
Large energy enterprises continued acquisitions of energy storage companies in 2017, including the acquisition of Demand Energy by European public utility company Enel, the acquisition of sodium-ion battery producer Aquion by China Titans, the acquisition of demand response company Restore by Centrica, and many other purchases. At the same time, many promising energy storage projects saw a change of hands, such as the purchase of RES and Belectric’s UK frequency regulation project by Foresight, and Enel’s purchase of another UK frequency regulation project through a contract signing with Element Power. Acquisitions of energy storage companies and projects by large energy groups reflects their recognition of energy storage’s potential and helps to encourage a merging of technology and investment in the market.
8. Popular Global Models: Virtual Power Plants Grow, Distributed Energy Storage’s Value Continues to Develop
Virtual power plant models have generally been easy to plan yet hard to construct. 2017 saw the implementation of a series of virtual power plants across the globe. Sonnen released a virtual power plant project involving 2900 Arizona homes. Sunverge implemented two separate virtual power plant programs, one in Australian public utility AGL’s service area, the other in Japan’s Tepco service area. Ireland’s International Energy Research Center announced plans for a community-level virtual power plant project. The popularity of these and other virtual power plant projects across the globe highlights the value of distributed energy resources to the grid.
9. Global Project Scale: The Value of Large-scale Projects to the Grid Becomes Clear
As the price of energy storage technology continues to fall, in 2017 planned or constructed energy storage projects have become less limited by initial capital, and project scales have become larger. These projects include developer Deepwater Wind’s large-scale wind energy storage project in coastal Massachusetts, the KEPCO and LG CNS plan for a large-scale solar plant in Guam, and Australia’s large scale combined renewable resource and energy storage projects. These projects are all within the tens of MWh or above, some even reaching 400MWh. The expansion of energy storage projects to a larger scale helps to verify how large-scale storage projects can add value to power systems.
10. Global Model Projects: Tesla Delivers World’s Largest Battery Storage System in Less Than 100 Days
On Dec 1, 2017, Tesla officially activated the world’s largest Li-ion battery system in South Australia. The project operates at 100MW/129MWh and utilizes a Samsung SDI Li-ion battery system. The project is connected to French renewable energy provider Neoen’s Hornsdale wind farm, providing stable clean power for South Australia. The project received much attention for its completion in under 100 days, and served to demonstrate how energy storage can alleviate power system emergencies in a short period of time.
The development of the international energy storage market has served to help China map its own technology developments, search for new business models, and reform related policies and mechanisms. Detailed information on how the international markets have developed will be included in the China Energy Storage Alliance’s 2018 White Paper, to be released at the 7th Annual International Conference and Expo scheduled for April 2-4, 2018