global energy storage market update: australian … · fast growing section storage market with an...

/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED1

ANISSA DEHAMNA

PRINCIPAL RESEARCH ANALYST

NAVIGANT RESEARCH

GLOBAL ENERGY STORAGE MARKET

UPDATE: AUSTRALIAN ENERGY STORAGE

ASSOCIATION

JUNE 2, 2016


TABLE OF CONTENTS

SECTION 1: The Energy Cloud

SECTION 2: Distributed Storage

SECTION 3: Utility-Scale Storage

SECTION 4: Recent Energy Storage Deployments

SECTION 5: Energy Storage System Cost Forecasts


THE ENERGY CLOUD

/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED4 / ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED4

A PLATFORM FOR INTEGRATING TECHNOLOGY SOLUTIONS ACROSS THE GRID

• Large, centrally located generation facilities

• Designed for one-way energy flow

• Utility controlled

• Technologically inflexible

• Simple market structures and transactions

• Highly regulated (rate base) and pass

through

• Distributed energy resources

• Multiple inputs and users, supporting two-way energy flows

• Digitalization of the electric-mechanical infrastructure: smart grid and

behind the meter energy management systems

• Flexible, dynamic, and resilient

• Complex market structures and transactions

• Regulation changing rapidly around renewables, distributed generation

(solar, microgrid, storage), net metering etc.

/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED5 / ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED5 / ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED5

ENERGY STORAGE SOFTWARE AND CONTROLS

• Software and controls (S&C) for energy storage systems are key to enabling the potential of the energy cloud

• S&C responsible for:

- Real-time system control

- Grid communications

- Output forecasting (when tied to generation asset)

- Optimizing dispatch strategy to maximize availability, and lifetime of storage asset

• S&C has a significant impact on overall system return on investment by managing the economics of performing

different applications

• Distributed system aggregation will become an increasingly important aspect of S&C functionality as the energy

cloud develops


DISTRIBUTED STORAGE


DISTRIBUTED ENERGY STORAGE: MAJOR TRENDS

• Distributed energy storage (including residential, commercial and industrial [C&I], and community storage) is a

fast growing section storage market with an expected annual deployment of 26,213.0 MW in 2025

• Lithium Ion (Li-ion) technology is capturing an increased market share due to rapidly falling costs, high efficiency,

and a smaller footprint

• Increasing competition in the space from energy service companies and solar PV providers

- More vendors are offering integrated solutions for storage as part of a complete building energy management system or tied

to solar PV

• Value of resiliency and improved power quality is an important driver for many C&I customers

• Virtual aggregation of distributed systems allowing systems to provide grid services and compete in energy

markets, greatly increasing value proposition


DISTRIBUTED ENERGY STORAGE TRENDS IN AUSTRALIA

• PV Compensation winding down

- New South Wales feed-in-tariff ends at close of 2016

• Government Support for Distributed Solar + Storage

- Australian Renewable Energy Agency (ARENA) providing $14 million funding for solar + storage

around the country

- Australian Capital Territory (ACT) subsidizing 36 MW of residential battery storage (average AUS$

694/kW)

- Greens Party proposes up to 50% subsidy for distributed storage – up to 1.2 million homes and

30,000 businesses over 5 years


ANNUAL C&I ESS POWER CAPACITY DEPLOYMENTS BY REGION, WORLD MARKETS:

2016-2025

Annual C&I ESS Power Capacity Deployments by Region, World Markets:

2016-2025

(Source: Navigant Research)

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

($ M

illio

ns

)

(MW

)

North AmericaWestern EuropeEastern EuropeAsia PacificLatin AmericaMiddle EastAfricaRevenue


UTILITY-SCALE STORAGE


UTILITY ESS STRATEGY COMPARISON

Strategy Pros Cons

Investment Strategy

• Larger procurements—lower

per-kWh cost

• Easier financing—rate-based

• Flexible operations/control

• Technology performance risk

falls to the utilities

Virtual Power Plant Strategy

• Improved reliability

• Potentially improved customer

relationships

• Untested technology platforms

• Lack of utility familiarity

• Regulatory risk

Product Strategy

• New revenue streams possible

• Greater understanding of

technology

• Higher capital expenditures

required from utility

Hybrid

• Flexibility in approach

• Third-party ownerships of

assets included

• New business models tested

• Lack of utility familiarity

• Risk of stranded assets


UTILITY-SCALE STORAGE MAJOR TRENDS

• Regulatory reforms—clarifying rules for storage in energy and ancillary service markets—will be key to growth in

many regions

• Software and control systems are becoming increasingly important to capture multiple revenue streams,

improving project profitability

- Flexible ESSs are increasingly being demanded to serve various applications, depending on real-time grid conditions

• The needs of utilities and grid operators will vary in markets around the world, leading to demand for a range of

technologies

• Innovative business models and project financing will be key to further market growth


UTILITY-DRIVEN ENERGY STORAGE TRENDS IN AUSTRALIA

• Utilities Deploying Distributed Storage

- Ergon Energy piloting solar + storage systems they will own

- AGL Energy selling residential storage directly to customers

• Utilities Exploring Storage For Rural and Off-grid

- Ergon deployed 2 MWh of storage for SWER line support

- Growing opportunities for diesel displacement in community and mining microgrids


ANNUAL INSTALLED STORAGE CAPACITY BY SEGMENT, WORLD MARKETS: 2016-

2024

Annual Installed Storage Capacity by Segment, World Markets: 2016-2024


$-

$5,000

$10,000

$15,000

$20,000

$25,000

-

5,000

10,000

15,000

20,000

25,000

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

($ M

illio

ns

)

(MW

)

Flywheel Pumped Hydro Power-to-Gas CAES Sodium Metal Halide NaS Battery Advanced Li-ion Advanced Lead-Acid Advanced Flow BatteryRevenue


RECENT ENERGY STORAGE

DEPLOYMENTS


TRACKER-FORECAST COMPARISON

• The 2015 Tracker refers to projects officially deployed to date in 2015 in Navigant Research’s Energy Storage

Tracker report

• Tracker data refers to the cumulative capacity of projects currently in Navigant Research’s Tracker which are

scheduled to be commissioned in a given year (i.e., the 2016 Estimate includes projects deployed year-to-date

and those scheduled for deployment in 2016)

Segment Units2015

Forecast

2015

Tracker

2016

Forecast

2016

Estimate

Distributed (MW) 58.7 26.8 180.9 163.3

Utility-Scale (MW) 40.0 130.7 72.6 192.0

Total (MW) 98.7 157.5 253.5 355.3

Navigant Research Forecast vs. Tracker Comparison, Li-ion

System Power Capacity by Segment and Year: United

States, 2015 and 2016


ENERGY STORAGE DEPLOYMENTS

Deployed Energy Storage Power Capacity by Technology and

Region, Excluding Pumped Storage, World Markets: 1Q 2016


-

100

200

300

400

500

600

700

800

900

1,000

North America Asia Pacific Western Europe Latin America Middle East Africa

(MW

)

Li-ion

Molten Salt

Thermal

CAES

NaS Battery

Flywheel

Flow Battery

Advanced Lead-Acid


PIPELINE ENERGY STORAGE DEPLOYMENTS

Pipeline Energy Storage Power Capacity by Technology and

Region, Excluding Pumped Storage, World Markets: 1Q 2016

-

500

1,000

1,500

2,000

2,500

3,000

3,500

North America Asia Pacific Western Europe Latin America Middle East Africa

(MW

)

CAES

Li-ion

NaS Battery

Flywheel

Flow Battery

Gravitational Energy Storage

Molten Salt

Thermal



TOP TECHNOLOGY VENDORS: 1Q 2016

Technology

Vendor

Deployed MW

(1Q 2016)

NGK Insulators 400.7

Man Turbo 290.0

Abengoa 280.0

Solar Millennium 200.0

BYD 139.4

Dresser-Rand 110.0

Saft 95.4

A123 Systems 86.0

LG Chem 85.6

Kokam 83.9


Top 10 Technology Vendors,

Deployed: 1Q 2016

NGK Insulators22.6%

Man Turbo16.4%

Abengoa15.8%

Solar Millennium11.3%

BYD7.9%

Dresser-Rand6.2%

Saft5.4%

A123 Systems4.9%

LG Chem4.8%

Kokam4.7%


TOP 10 SYSTEM INTEGRATORS: 1Q 2016

System

Integrator

Deployed MW

(1Q 2016)

AES Energy Storage 106.0

ABB 87.5

Korea Electric Power

Co. (KEPCO)84.0

Invenergy 68.1

Younicos 63.1

RES Americas 50.1

Beacon Power, LLC 42.0

S&C Electric Company 41.6

Greensmith 27.5

NEC Energy Solutions 27.4


Top 10 System Integrators,

Deployed: 1Q 2016

AES Energy Storage17.7%

ABB14.7%

Korea Electric Power Co. (KEPCO)

14.1%Invenergy11.4%

Younicos10.6%

RES Americas8.4%

Beacon Power, LLC7.0%

S&C Electric Company

7.0%

Greensmith4.6%

NEC Energy Solutions

4.6%


ENERGY STORAGE SYSTEM COST

FORECASTS


ANNUAL BTM BATTERY STORAGE COST BY TECHNOLOGY, WORLD MARKETS: 2016-

2025

Annual BTM Battery Storage Cost by Technology, World Markets: 2016-

2025


$-

$200

$400

$600

$800

$1,000

$1,200

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

($/k

Wh

)

Advanced Lead-Acid

Advanced Flow Battery

Advanced Li-ion


AVERAGE DISTRIBUTED ESS ENABLING TECHNOLOGIES CAPEX ASSUMPTIONS,

WORLD MARKETS: 2016-2025

Average Distributed ESS Enabling Technologies

CAPEX Assumptions, World Markets: 2016-2025


$-

$50

$100

$150

$200

$250

$300

$350

$400

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

($/k

W)

Power Conversion

Software & Controls

Systems Integration Services


UTILITY-SCALE BATTERY STORAGE CAPITAL COST FORECAST, 4-HOUR, 1-HOUR, 15-

MINUTE CASES: 2016-2025

Utility-Scale Battery Storage Capital Cost Forecast,

4-Hour, 1-Hour, 15-Minute Cases: 2016-2025


$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

4-Hour Duration

1-Hour Duration

15-Minute Duration


BATTERY STORAGE PERCENTAGE BY COMPONENT OF TOTAL INSTALLED COST,

WORLD MARKETS: 2016 AND 2025 COMPARISON

Battery Storage Percentage by Component of Total

Installed Cost, World Markets: 2016 and 2025 Comparison


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2016 2025

(Perc

en

tag

e o

f T

ota

l [$

])

Project Development Fees Site Installation

Systems Integration Software and Controls

Power Electronics Battery Pack


ANISSA DEHAMNAPrincipal Research Analyst

1.646.227.4452

[email protected]

CHARLES SOBusiness Development Director

+82 2 2183 2970

[email protected]

MACKINNON LAWRENCESenior Research Director

1.312.882.0865

[email protected]

navigant.com

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