Storage Solutions: US leads the way while Europe and Asia follow closely

US leads the way while Europe and Asia follow closely

The global grid-scale energy storage market is swiftly expanding with the increasing use of renewable energy sources. To deal with the intermittency associated with such resources, energy storage systems play a crucial role. Rising awareness, falling technology costs and increasing energy prices are the other factors pushing utilities to adopt energy storage solutions.

While pumped hydro energy storage (PHES) systems, which have been in use for years now, continue to be the most dominant among grid-scale storage systems, other technologies like compressed air energy storage (CAES), batteries and flywheels are also gaining maturity. Battery energy storage system (BESS) technology has become particularly popular as it enables greater flexibility for power grids. Lithium-ion batteries are the most commonly used, while other models are based on sodium sulphur batteries and lead acid batteries. Flywheel technology has also been used in several applications. The key energy storage vendors in the market are NGK, Samsung, Younicos, Toshiba, BYD, Saft, Siemens, FIAMM, Nidec ASI and General Electric.

The US has taken the lead in the deployment of energy storage systems. During 2014, according to GTM Research, 62 MW of such systems were installed in the US, 40 per cent higher than the previous year’s installations. This growth will probably continue till 2019, when the cumulative storage capacity in the US is expected to cross 2.5 GW.

Europe is increasingly deploying energy storage systems in its grids. Energy storage projects are now eligible to apply for being part of the European Network of Transmission System Operators for Electricity’s 2016 Ten-Year Network Development Plan. Their sizes should be at least 225 MW, indicating the preference for established PHES systems at the European Union level. Several pilots based on other technologies are being tested across the continent. New projects are coming up in Asia as well, particularly in Japan, while China and India are looking at pilots to test suitable storage technologies.

According to Navigant Research, storage projects aggregating close to 700 MW, excluding PHES, were announced during 2014-15. North America, particularly the US, accounts for over half the new project announcements with more than 436 MW. Within the US, California leads with nearly half of the country’s announced capacity. The US is followed by the Asia-Pacific region and Europe with over 165 MW and 95 MW respectively.

In the long term, the global energy storage market is expected to grow significantly. According to the International Energy Agency’s 2014 Energy Storage Technology Roadmap, around 310 GW of new storage capacity could be required across the US, Europe, China and India by 2050.

Regional analysis

US and Canada

A significant development in the US is the introduction of a draft legislation known as the Energy Storage and Deployment Act of 2015, which will set national energy storage targets for 2021 and 2024 to help in the integration of renewable energy. According to the bill, which was introduced in May 2015, large utilities will have to meet at least 1 per cent of their peak demand from storage by 2021. This will be increased to 2 per cent by the end of 2024. If implemented, this is expected to translate into a storage capacity of 8 GW by 2021 and 18 GW by 2024. The bill, which is still in the early stages of discussions, is likely to present several challenges, including that of coordination among various stakeholders. The list of technologies in the bill includes pumped hydro, compressed air, hydrogen fuel cells, electrochemical batteries, thermal storage, flywheels, capacitors and superconducting magnets.

The draft legislation seeks to follow, on a nationwide basis, the success of the programme in California, which in 2013 set a 1,325 MW energy storage capacity target for 2024 for the state’s three investor-owned utilities. While California has been a leader in deploying residential storage systems, PJM Interconnection is at the top in terms of utility-scale energy storage systems. According to GTM Research, between 2013 and the second quarter of 2015, it installed 100 MW of utility-scale storage. It was followed by California with around 24 MW, while others added another 9 MW. It should be noted that over 20 MW of grid-scale storage had been deployed in other markets like Hawaii, Texas and New York before 2013.

In a notable development, the Federal Energy Regulatory Commission accepted PJM’s proposal to allow energy storage to be part of the capacity market, which is a first-of-its-kind order. This implies that storage capacities that commit to providing energy, reserves or frequency regulation during system emergencies will receive guaranteed payments.

In Canada, Ontario is leading the way in energy storage system deployment. It is testing a range of battery applications in line with its target of procuring 50 MW of storage by 2014. In the first phase, in July 2014, Ontario’s Independent Electricity System Operator (IESO) awarded around 34 MW of energy storage projects to five companies (Canadian Solar Solutions, Inc., Convergent Energy and Power LLC, Dimplex North America Limited, Hecate Energy, and Hydrogenics Corporation). In the second phase, the Ontario Power Authority (OPA) initiated the procurement of the remaining 16 MW in September 2014. After the OPA-IESO merger earlier this year, IESO reinitiated the process in April 2015.


Energy storage will play a critical role in meeting these ambitious renewable energy targets. An EU-funded project, stoRE, which concluded in April 2014, has made notable recommendations regarding the creation of appropriate regulatory and market conditions that provide incentives for energy storage development. The aim is to accommodate the planned renewable capacity into the grid at the EU level as well as in the six target countries studied in detail: Ireland, Denmark, Germany, Austria, Spain and Greece.

In Ireland, the EirGrid Group has introduced the Delivering a Secure Sustainable Electricity System (DS3) programme. Due to commence in 2017, it will boost storage developers by enabling them to provide grid services through a system of competitive bids. In early 2015, Freqcon GmbH, German developer and distributor of renewable energy and storage systems, deployed its microgrid stabiliser at the Tallaght Smart Grid Testbed in a Dublin suburb. In Northern Ireland, AES Energy Storage is developing a 100 MW lithium-ion battery system, which will be the largest BESS in Europe. Irish company Schwungrad Energie, together with the University of Limerick, is developing a flywheel pilot project in Offaly county. For this, technical expertise is being provided by the US-based Beacon Power, which, along with EirGrid, is testing the economics of selling frequency regulation and other services to the grid operator. The project is expected to be completed by 2017.

In Germany, energy storage systems are an integral part of the country’s energy transition programme (Energiewende), under which it aims to increase renewable energy consumption to 80 per cent by 2050. Since the government’s introduction of the PV storage system support programme in 2013, over 12,000 such systems have been installed. It is also experimenting with different kinds of grid-scale storage applications. For instance, German wind turbine manufacturer Enercon and wind developer Energiequelle recently inaugurated a 10 MW energy storage plant at Feldheim in Brandenburg to help stabilise 50 Hertz’s transmission network.

In the UK, development is taking place through energy storage demonstration projects, with the Department for Energy and Climate Change (DECC) supporting energy storage technology research and development (R&D) through various schemes. So far, DECC has supported 24 projects covering different technologies like rechargeable batteries, flow batteries, flywheels, thermodynamic systems, CAES, electricity-to-gas and PHES. In all, around GBP 80 million has been dedicated to energy storage research in the UK since 2012. It is estimated that such innovations could save the UK’s energy system over GBP 4 billion by 2050.

Britain’s energy regulator, Ofgem, through its Low Carbon Network Fund, is supporting the deployment and operational testing of several energy storage systems. This includes Big Battery, Europe’s largest network-connected battery, installed by UK Power Networks at Leighton Buzzard, UK, in 2014. The Smarter Network Storage project involves the installation of a 6 MW, 10 MWh battery hosted by UK Power Networks and supplied by S&C Electric Europe at a cost of GBP 18.7 million. In Italy, which also has a substantial proportion of renewable energy penetration, transmission system operator Terna is implementing battery-based storage projects worth 75 MW. Of this, 35 MW of sodium sulphur batteries are being provided by Japan’s NGK to ease congestion in high voltage transmission systems in the Campania, Benevento and Avellino provinces. The remaining 40 MW will be installed in Sardinia and Sicily in two phases of 16 MW and 24 MW respectively.


Japan has been leading the energy storage market in the Asia-Pacific region with its focus on renewable energy and supportive policies. It is the second country after Germany to provide subsidies to residential storage systems. In early 2014, Japan launched a subsidy programme to support the installation of lithium-ion battery-based stationary storage systems, covering up to two-thirds of the installation cost. JPY 10 billion has been earmarked for this programme.

In 2015, Japan announced plans to extend its energy storage subsidies, with a focus on lithium-ion, nickel cadmium and hydrogen batteries. The government estimates the market for lithium-ion batteries to increase by 14 times by 2020 to JPY 600.6 billion in comparison with 2008. China is another Asia-Pacific country with a significant proportion of storage capacity. It is becoming a hub for the manufacturing of storage systems with several new players setting up manufacturing facilities. According to the China Energy Storage Alliance, which estimated the global energy storage capacity (excluding PHES and CAES) at 845 MW at the end of 2014, China had a significant capacity of 84 MW, or 10 per cent of the world’s share. In India, utility-scale energy storage will be driven by renewable energy integration as well as grid balancing needs. To ensure the safe integration of renewable capacity into the grid, the government invited expressions of interest for energy storage demonstration projects in August 2015. The next round of bidding with detailed project proposals will conclude in October 2016, leading to vendor selection and contracting. The objective is to establish the performance levels of new storage technologies and develop new business models for their deployment.

Australia is also considering energy storage, but largely for residential applications. Distributed systems are already popular in Australia, with one in four households that install new solar arrays also investing in battery energy storage. In July 2015, German developer Juwi announced that it would be building Australia’s largest solar and battery storage project – a 10.6 MW solar and 6 MW battery – at the DeGrussa Copper-Gold Mine in western Australia.

Technology and costs

Lithium-ion battery chemistries have become the most popular choice for demonstration and commercial projects in the past year and a half. In the US, 70 per cent of the storage capacity added in 2014 was based on this technology, while the remaining 30 per cent was spread across flywheels, sodium chemistries, flow batteries and emerging technologies. This trend is expected to continue over the next three to four years.

The high costs associated with storage systems continue to be a deterrent preventing their widespread use. In the US, such systems cost between $1.2 and $2.5 per watt. In Europe, capital costs for proposed PHES are between Euro 470 and Euro 2,170 per kW, while those for expanding and repowering projects are between Euro 500 and Euro 1,500 per kW.

A significant amount of R&D is being carried out in the energy storage space. In mid-2015, in order to attract storage companies to set up R&D projects in Massachusetts, the state administration announced a $10 million energy storage initiative. In a separate development, researchers from Samsung announced that they had developed a new technology to coat silicon battery cathodes with high crystal graphene, implying the doubling of lithium-ion battery capacities. Backed by R&D, there are strong expectations that prices will drop, which will further open up the market. Experts predict a 30 per cent price reduction in the next couple of years in the US and as much as a 50 per cent reduction within two years after that.

The way forward

One of the main challenges involved in the large-scale deployment of energy storage systems is their high cost. Another major issue relates to the lack of clear policy and regulatory frameworks in most countries despite them recognising the need for storage capacity. This will be a major pre-requisite for an industry push, as was the case with renewable energy development. It is because of policy and regulatory support that renewable capacities have grown exponentially, with the assistance of declining technology costs.

Despite the challenges, the future of the energy storage industry is promising. While manufacturers are making an effort to design and deliver products that meet utility and consumer requirements, utilities are exploring various options through demonstration projects. The surge in renewable energy capacities across regions and the associated intermittency guarantee a strong market demand for storage systems. It is just a matter of time before these technologies mature further and utilities start adopting large-scale storage systems to maintain stable and reliable network operations.