File this one under O for Oops, Never Saw That One Coming. President* Trump campaigned on a promise to save coal jobs in the US, but he missed that thing about the potential for explosive growth in the energy storage market. Now the chickens are coming home to roost, and that spells bad news for fossil fuels.
In the latest development, the energy research firm Wood Mackenzie Power & Renewables (formerly GTM Research) reports a respectable — ok, so super impressive — year over year growth for Q2 energy storage deployments of 200% in the US.
Energy Storage And Renewable Energy
For those of you new to the topic, energy storage is an important factor in the growth of wind and solar power. These intermittent sources are threading into the national power grid with the help of “smart” energy management tools for balancing supply and demand.
Despite Trump’s pro-coal rhetoric, the US Department of Energy has been vigorously promoting wind and solar grid integration. To accelerate the trend, the agency is pursuing energy storage along with smart grid technology. That includes small-scale, distributed storage as well as utility-scale, long duration storage.
That utility-scale angle is somewhere off in the future (currently, pumped hydro is the primary option), but the business sector is already leaning on small-scale batteries to ensure resiliency and reliability at individual sites. So, for that matter, is the Department of Defense.
Small-scale batteries are also streaming into the individual home market. Aside from the convenience of being able to keep the lights on whenever the grid goes down, there’s the necessity factor. More people are working from home and receiving health care at home, and can’t afford an outage of any duration.
200% Growth For Energy Storage
So, how to quantify this trend? Wood Mackenzie partners with the Energy Storage Association to produce a quarterly report called the U.S. Energy Storage Monitor. The latest report is just out and it’s a doozy. Here’s the rundown from Wood Mackenzie:
…156.5 megawatt-hours of energy storage were deployed in the second quarter of 2018, triple what was deployed in the second quarter of 2017. The residential segment led the way, growing tenfold year-over-year.
Not surprisingly, California and Hawaii powered the growth in residential energy storage. Hawaii established a 100% clean power goal back in 2015, and California lawmakers are also on track to establish a 100% goal for renewables.
Wood Mackenzie foresees that Arizona and Massachusetts could vie for a spot in the top three alongside California and Hawaii, which is something of a surprise until you factor in the relationship between wind, solar, and energy storage.
Massachusetts is not located in the southwest, which is the premier solar region in the US. However, the state does have a vigorous renewable energy policy and it is (finally) on track to dive headlong into its offshore wind resources.
Despite a history of conservative policymaking designed to trip up the solar market, Arizona is currently the nation’s number three state for installed solar capacity. That’s a big jump up from its number seven position last year. It looks like the folks at Wood Mackenzie are betting on state residents and businesses to keep demand for solar running high regardless of the political obstacles.
New York State is another up-and-comer. Like Massachusetts, the state’s location in the US northeast location makes it not a prime spot for solar cell efficiency, but policy makers are making up the difference with an ambitious new clean power plan. New York is also making the most of its window for offshore wind development.
The bottom line message here is that even where solar and wind conditions are not optimal, state policy can still force the transition from fossil fuels to renewables.
Coal-Killing Energy Storage
Brett Wood Simon, Senior Analyst on Energy Storage with Wood Mackenziee, got on the phone with CleanTechnica last week to flesh out the interplay between energy storage growth and coal power plant shrinkage.
Some analysts are concerned that the availability of energy storage could enable coal and nuclear power plants to keep running when they otherwise wouldn’t, but Simon doesn’t see that as a significant issue.
“Generation in long-term storage won’t prop up existing coal or nuclear,” he said. “It’s just not economical in the long run, especially for the large [battery arrays]. They are expensive, and you have to ask if it’s worth putting down to keep a power plant running just another three years.”
For those concerned about the impact of Trump’s solar tariff on energy storage, Simon noted that the tariff did reduce the forecast for solar growth. That did impact the energy storage forecast, but “not to a great degree.”
The lithium supply issue and a bottleneck in battery manufacturing is another factor that could limit growth, but Simon doesn’t see any significant, long-term impact:
In the last report and this report, we did notice a light increase in lithium-ion battery rack costs…but we don’t see it as persisting more than six months or so.
What About That Long Duration Thing?
Wood Mackenzie also found strong year-to-year growth in non-residential and utility-scale storage (aka front-of-the-meter) storage.
Simon underscored that point, in the context of the long-term, downward trend in the cost of renewables and energy storage:
The economics are going to influence quite a bit of interest in front-of-the-meter, and we forecast that it will be the largest single segment. We’ve seen large projects with Xcel in Colorado and NV Energy. We expect this market to continue to grow.
The front of the meter story dovetails with the Energy Department’s interest in long duration energy storage, and it’s important to pick apart the numbers here.
The new report found that if you’re using megawatts in capacity as your measuring unit, front-of-the-meter deployment dropped 30%.
That sounds like bad news, but it isn’t. There was actually an increase of 176% in megawatt-hours. Here’s the explainer from the report:
This is due to long-duration (4+ hour) projects coming online for services such as capacity and load-shifting, compared to shorter-duration frequency regulation projects. Notably this quarter all front-of-meter installations were paired with solar production.
All The Good News About Batteries
To cap off the good news, Wood Mackenzie expects annual energy storage deployment to continue increasing at a rapid clip.
The report notes that several major new battery manufacturing facilities are expected to come online and open up that bottleneck.
Diversification and expansion in the lithium supply chain should also help keep things humming along.
As Simon describes it, the residential solar market will continue to propel back-of-the-meter energy storage growth:
So far in 2018 we’ve seen more residential growth than in all of 2017. These systems have been getting cheaper, there’s more awareness, and solar installers are becoming more aware of how to sell them.
Avoiding demand charges and buying a cushion against power outages are the two main selling points cited by Simon. Then there’s this:
There is also an emotional undercurrent. My neighbor has it, now I want that, it seems cool. More people are asking for storage…practically all the solar installers we talk to are being asked about storage. Solar is the path to storage.
As for coal, the White House is trying its best to keep old coal power plants in operation to feed the domestic market for coal. More recently, it has begun eyeballing the potential for increasing coal exports.
That’s going to be a tough row to hoe. State policymakers aren’t generally on board with the idea that propping up 20th century power plants makes sense when 21st century alternatives are available.
Adding insult to injury, the Department of Energy has been enthusiastically pursuing its clean power mission at the expense of coal.
Any hope that the export market can pick up the slack will be short-lived. US coal exports are expected to decline in the coming years.
Last January, Reuters noted a slight uptick in coal jobs overall during Trump’s first year in office. However, the modest increase applied only to a handful of coal-producing states. Many coal communities experienced a world of pain in 2017, and more is in sight.
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