Over the last year, many countries have adopted measures, including tax incentives, tax credits, integrated resource planning, and storage targets, to fuel storage development and modernize their grids.
FREMONT, CA: The year 2019 was a record-breaking year for energy storage. In particular, a total of 364.2 MWh of storage was deployed in the U.S. market in the last quarter of the year. The technology is expected to result in a net operating cost savings of 755 million dollars in the coming days. Precisely, storage is no longer in its approaching state; it has arrived and is here to stay. Storage is not only a cost-effective way to build a cleaner, more renewable grid; it has become a vital component of the creation of a disruptive grid.
Below are four trends that are driving explosive growth in storage:
1. Extended Financing Desire for Merchant Revenue Streams
As investors' perception of storage and the need for storage has increased, so has their willingness to invest without long-term contracted revenue. The transition in the energy market to renewables means that one is increasingly dependent on intermittent wind and solar resources. This feature means that storage will play a vital role in smoothing out volatile energy markets and become increasingly crucial to the grid. Sophisticated investors are increasingly comfortable that this climate would allow them to store their capital well, even without the relative assurance of a long-term revenue contract.
2. Pricing for Batteries Remains to Fall
As the supply of storage increases, demand increases, and technology advances, batteries' price has gradually decreased in recent years. One 2019 study found that the Levelized cost of storage had been reduced by almost 15 percent in 2018. As the industry continues to find efficiencies in production and supply chains, businesses should expect this trend to continue.
3. Warranty and Augmentation Packages Get Cheaper and More Standardized
Warranty and augmentation packages offer trust and peace of mind to storage investors. Over the past few years, the intelligence has evolved over the battery life and the risk of its failure, which has made a considerable difference in the cost of service contracts. This aspect significantly reduces operating cost uncertainties.
4. New State Decrees for Energy Storage
States understand the myriad benefits of rising storage capacity and the vital role of storage in supporting the growing field of renewable energy. Over the last year, many countries have adopted measures, including tax incentives, tax credits, integrated resource planning, and storage targets, to fuel storage development and modernize their grids. Many states have set ambitious storage capacity goals, and several other states have set targets. These states' governance and vision will play a critical part in developing storage and renewable energy.