The headline itself is mind-boggling: US energy storage deployments have gone up 944% since last year. Let that sink in a little bit. We knew that the growth of energy storage on a residential, commercial, and utility-scale level was growing in a big way, but now we know exactly how big. The growth of the energy storage industry has been so drastic, so fast, it’s hard to make sense of what these huge numbers actually mean, and where they might be taking the future of energy. That’s why it’s time to start reading beyond the headlines--the implications of this kind of market boom are even more exciting. (And one extra spoiler alert: California is killing it.)
Where are these numbers coming from?
We’re always tracking with GTM Research, an institution that churns out accurate, important data on a regular basis. Their US Energy Storage Monitor focuses on what’s going on in the Energy Storage sector, as far as growth or decline… or in this case, crazy, unprecedented numbers. The market analysis firm releases reports quarterly, so we’ve seen Q1 reports from them for years. This one definitely caught our, and everyone’s, attention.
Q1 numbers in the energy storage market have shown slow, steady growth over the past few years, but Q1 of 2017 showed 233.7MWh of energy storage installations, which was a huge leap from Q1 of 2016, which reported just 22.4MWh. The first quarter of 2017 also edged out the last quarter of 2016, which came in with about 230MWh of new installations.
One of the reasons why the first quarters of these years are compared to each other is because in 2017, the first quarter may prove to be the strongest. This wasn’t true in previous years, which have seen a trend of a smaller first quarter following fourth quarters with higher numbers.
So why was Q1 of 2017 so stellar? At least some of the credit goes to California.
California’s SGIP and Aliso Canyon Projects Lead the Way
California earned the top spot in the Energy Storage All-Star Line-Up because of two major incentives: SGIP funding, and the Aliso Canyon project. Here’s a quick rundown on each of those.
California’s Self-Generation Incentive Program: SGIP has, for years, been California’s way to motivate people to use alternative energy sources to generate and store their own electricity. It stands as the longest running and most successful programs of its kind in the country. In short, the program pays Californians for using certain renewable energy systems, like turbines, and also pays households with energy storage systems, like home batteries. We’re not talking about a few extra pennies, either. The SGIP pays energy storage users over a dollar per watt. This means that home battery owners in California not only enjoy backup power and blackout protection along with lower (or even non-existent) electricity bills… they also get paid. Businesses also reap the benefits of SGIP, too, though this year, the program made a point to focus on residential energy storage, and not let corporations soak up all the funding.
The Aliso Canyon Project A year ago in the summer of 2016, Southern California’s energy world took a downward spiral after a four-month natural gas leak in an Aliso Canyon plant. The leak threatened a huge region of SoCal with rolling blackouts because of power shortages. It was a big deal. To avoid the chaos of cutting power in the Los Angeles Basin, the Utilities Commission turned to energy storage to save the day. To avoid power disruptions, energy storage was rapidly deployed around the state to store renewable energy sources so that back-up power could be available wherever and whenever it was needed. In just a few months, California built an impressive, energy-storage based distributed grid that could supplement power, and avert the crisis of rolling blackouts. The Aliso Canyon project set records for both the fastest grid-scale storage deployment, and the world’s largest lithium-ion battery facility. It. Was. Epic.
After soaking up this info, it’s probably easy to see why California is leading the way in the energy storage deployment department. These projects are also why experts are predicting that energy storage growth will likely not maintain the same rate of acceleration. But Hawaii, Massachusetts, New York, Texas and Arizona have also been pulling their own weight, and putting up big numbers as well, showing us that not all energy storage installations are showing up in California.
All Eyes are on Residential Energy Storage
Residential Energy Storage, usually found in the form of home batteries, is GTM Research’s area to watch in the coming years. Often called ‘behind-the-meter’(because the generation and storage of energy happens in the home, not on a utility-level), GTM says that residential energy storage is going to grow in importance. A lot. In fact, the research predicts that it will constitute as much as 53% of the total energy storage market by 2022. At that point, the total market will likely be worth $3.2 billion (AKA, it will be getting a ton of attention.)
Residential storage, in light of huge utility-scale projects like the Aliso Canyon project, only represented about 4% of the gross revenues of the energy storage market during 2016, but GTM’s top energy storage analyst, Ravi Manghani, expect a 650% increase of these figures, even in the current year. Even though non-residential sales will make a lot more money (just because businesses and utilities are, well, bigger than households), the importance of residential energy storage will only continue to grow. Money draws a lot of attention to a movement, sure, but the growth of residential energy storage is going to completely revolutionize the way we live, generate, and use energy… for the better.
Home battery customers have seen the 6-fold increase in power outages and read about the growing vulnerabilities of the power grid, and decided to do something about it. Home batteries offer energy security in the face of a vulnerable power grid. If the grid cuts out for a few hours (in the case of bad weather, or rolling blackouts like those proposed in California), home battery owners don’t have to worry. Their home can still be powered by the energy stored by their home battery. For those who depend on electricity to power life-essential medical machinery, or for households that use electricity to heat or cool their homes during extreme weather, this sort of energy security can be a big deal.
The weakness of the grid is the reason states like California are offering government funding in the first place. Energy storage changes the entire conversation about grid vulnerability. We don’t have to talk about prolonged power outages as a impending probability, but a situation that can be avoided altogether. Home batteries put the power back into the hands of the consumer, and back into the appliances and systems needed to sustain a high quality of life.
Households equipped with solar panels and energy storage in the form of home batteries will be protected from any utility company mishap, whether it be on a large or small scale. Home batteries allow households to power their own essential appliances like refrigerators, water pumps, and heating/cooling devices with stored electricity collected from their rooftop solar panels. The grid may be vulnerable, but the sun? Not so much.
Residential energy storage is going to give homeowners more freedom, and more security when it comes to energy. Home batteries are about to usher households into a new, modern era of energy that doesn’t rely on an unreliable energy grid, but instead turns upward, to the clean, free energy of the sun. Energy Storage growth, for the win.