The energy storage market appears primed for a growth spurt.

Energy storage deployments, primarily lithium-ion batteries, are expected to nearly triple this year to 1,233 MWh from 431 MWh in 2017, according to a recent report by consulting firm GTM Research and the Energy Storage Association.

Cost declines and changing policies are driving the growth. At the national level, the Federal Energy Regulatory Commission in February issued an order directing wholesale power markets to develop rules to allow energy storage devices to participate more freely in those markets. Ravi Manghani, director of energy storage at GTM Research, has said the order would “open the floodgates” for energy storage. In a study released after the FERC order, The Brattle Group said the order could pave the way for energy storage to grow to 50,000 MW over the next decade.

Currently, there are about 700 MW of utility scale batteries on the U.S. grid, according to the Energy Information Administration. While still just 0.06% of the overall generation market, most of the storage deployments have occurred over the past seven years, EIA says.

“In many ways, the energy storage market is where the solar market was a few years ago,” says Ralph Romero, senior managing director at Black & Veatch Management Consulting. “Equipment prices are dropping while the technologies are making grid-connected investments more attractive and cost competitive.”

GTM forecasts battery rack price declines of 10% annually over the next five years will continue to drive growth. The GTM-ESA report predicts energy storage installments will grow by a factor of 15 between 2017 and 2023 and also will grow in value to $1 billion in 2019 from $302 million in 2017, reaching $3.8 billion by 2023.

Physically, energy storage can be placed almost anywhere on the grid to balance voltage frequency or absorb excess energy. But energy storage does not fit neatly into the regulations that govern the grid, which were designed around the binary concepts of load and supply.

Energy storage can shift between those functions. The FERC directs wholesale power market operators to adapt their rules to accommodate energy storage.

Several states have taken the lead in making a place for energy storage.

Oregon, Massachusetts and New York already have energy storage targets. At least half a dozen other states are working on policies to encourage energy storage, including Arizona. That state recently issued a moratorium on new gas-fired generation and instead is encouraging the use of energy storage to meet peak needs.

California has passed several laws encouraging storage, including one that sets a 1,325-MW procurement target for the state’s utilities. One of the state’s most notable actions was its response to the 2015 Aliso Canyon methane leaks.

When the leaks forced the closure of the gas storage facility, it put about 10,000 MW of gas-fired generation at risk. In response, state officials issued an emergency order seeking energy storage resources to fill the gap.

Among the projects chosen was the 30-MW, 120-MWh Escondido project developed by AES Energy Storage. The system occupies about an acre and comprises two dozen 64-ft by 10-ft containers close to a grid connection. When it was brought online, Escondido was the largest in the world. Another project that came out of the Aliso Canyon order was a 20-MW, 80-MWh storage facility developed by Greensmith Energy for Southern California Edison. Like the AES project, it was built in six months. The job required up to 200 electricians working on a 24-hour basis. The job was relatively simple in construction terms: building foundations and placing and securing containers.

Not all storage facilities are as simple to put up. A larger facility could require construction of a building the size of a data center. Compared with a gas turbine plant, a storage facility is about 100 times less complicated. Compared with a solar farm, it is about 10 times less complicated, estimated Frank Jakob, technical manager for energy storage at Black & Veatch.

The relative simplicity and speed of building a battery storage system is one of the chief attractions of the technology.

Last summer, utility Arizona Public Service chose to install a 2-MW, 8-MWh battery system in Punkin Center because the cost was about half of what it would have been to build a new distribution line to serve the remote town.

 “We see the combination of regulatory drivers and favorable economics creating a compelling value proposition for combined solar and storage projects with further compression of traditional fossil-driven generation,” says Romero at B&V.

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