Seventy-one utilities report having at least one energy storage installation deployed in their service territory at the end of 2016, according to a new survey by the Smart Electric Power Alliance (SEPA). Within that group, 31 utilities said they deployed their first energy storage project last year.
“Absolutely this is becoming more of a universal trend,” said Nick Esch, senior research associate at SEPA. “In California, there’s an incentive program driving the market; however, we’re now seeing utilities across the country starting to test out energy storage and the capabilities it can offer for enhanced grid operations.”
According to 155 utility survey respondents, 207 megawatts/257 megawatt-hours of energy storage were added to the grid last year, across 829 systems. Residential deployments accounted for 4.5 megawatts/7.5 megawatt-hours; non-residential deployments accounted for 54 megawatts/68 megawatt-hours; and utility-owned deployments totaled 151 megawatts/181.6 megawatt-hours.
These findings compare to the 221 megawatts/336 megawatt-hours of energy storage GTM Research tracked in 2016. The discrepancy stems from differing research methods.
The SEPA survey — the organization’s first to track energy storage deployments — was conducted through an online platform earlier this year. The report does not represent the entire U.S. storage market, but does reveal valuable insights.
Utilities provided cumulative and 2016 data on energy storage installations interconnected in their service territories prior to December 31, 2016. Energy storage installations included in the results include batteries, flow batteries, kinetic energy storage (such as flywheels), supercapacitors, and compressed air energy storage. The survey did not include pumped hydropower, thermal energy storage, or electric vehicles.
The rapid decline in lithium-ion battery costs (more than 60 percent reduction since 2012) is a major driver of these deployments. More and more utilities are also seeing the value energy storage can provide to the grid and their bottom line at the same time.
“Energy storage is a flexible resource allowing for multiple grid services to be delivered by a single asset and quickly, making it an ideal resource to procure and defer or avoid both distribution and transmission upgrades,” the report states. “Procuring these resources applies to both aggregated distributed energy storage as well as large scale deployments.”
Utility respondents expressed a strong interest in pursuing the procurement of energy storage to defer or avoid capital expenditures in the transmission or distribution grid. Of the 97 respondents who answered this question, more than 80 percent said they are currently implementing or planning/researching/considering an investment deferral project. Of the 44 utilities with no energy storage deployed to date, 31 said they are looking to deploy energy storage to defer or avoid T&D upgrades.
California utilities are well ahead of all others when it comes to energy storage deployment numbers, which comes as no surprise. In 2016, California utilities deployed 120.5 megawatts/176.6 megawatt-hours of energy storage, according to the SEPA survey.
Behind-the-meter storage benefited from the state’s Self-Generation Incentive Program, which has a $166 million annual budget for energy storage and other technologies through 2020. California also passed legislation in 2010 requiring the state’s three investor-owned utilities to procure 1.3 gigawatts of energy storage capacity by 2020. A separate bill was passed in 2016 requiring each utility to file applications for the deployment of an additional 166 megawatts of behind-the-meter of distribution-level storage, for a total of 500 megawatts.
Southern California utilities also rushed to deploy energy storage last year in response to the Aliso Canyon gas leak. Three Southern California Edison (SCE) projects totaling 40 megawatts/80 megawatt-hours were deployed in 2016 as a result of the leak, accounting for 18 percent of the total U.S. energy storage capacity in 2016.
According to the survey, Indiana deployed the second greatest amount of energy storage capacity last year, totaling 22 megawatts/20.8 megawatt-hours. Ohio ranked third with 16.1 megawatts/6.2 megawatt-hours.
Energy storage is arguably the hottest trend in the energy business these days. So while last year’s numbers show strong market growth and geographic expansion, 2016 is really just a starting point.
“One of the most common things that I heard when calling up utilities is, ‘The numbers aren’t very high this year, but wait until next year,'” said Esch — with next year being 2017.