Reality Check: Maybe Energy Storage Isn’t Ready for Prime Time

Dallas, Texas — Highlighting the growth of the energy storage market at the 2015 Energy Storage Association (ESA) Conference in Dallas, Texas, Oncor’s  VP of Transmission Operations Wes Speed compared the industry to the Texas rain: “A few weeks ago we would look at the skies hoping it would rain. We would occasionally hear rain in the distance, but it would never come. This is like storage. It’s all on the horizon, and if you look at the news now, you can see it’s about to flood.”

Indeed, the U.S. energy storage market is expected to grow by 250 percent in 2015 alone, according to GTM Research, with nearly 900 MW of deployments by 2019. For comparison, in 2014 there were less than 100 MW of storage deployed in the U.S.

Despite this growth and excitement in the industry, keynote speaker Jigar Shah brought attendees back down from cloud nine with some hard-hitting truths. “The only reason we have storage right now is not because of grid stability, but because there are personalities like Elon Musk saying: ‘This is awesome.’”

And while it’s great that Musk has brought energy storage into the spotlight, the industry still has some pretty big questions to answer before it can declare victory and solve the world’s energy problems.

First, solar and storage might not actually be BFFs. While it seems natural to pair energy storage and renewable energy technologies, Shah said that the storage industry shouldn’t bank on it.

“If the storage industry is just dependent on backing up solar, then it’s hopeless — you should just quit your job today,” said Shah. “The battery industry shouldn’t tail the residential solar industry.”

Rather than focus solely on integrated storage plus renewables, companies should focus on other bankable benefits of storage, such as utility-scale applications like demand charge reduction and voltage control, suggested Shah. This is exactly the area in which storage companies are starting to see a lot of growth.

The storage industry also needs to take a long hard look at policy. As states begin to notice the value of energy storage and consider adding it to their incentive schemes, how will they determine value?

“I was told this is not a just battery conference, there is thermal, compressed air, pumped hydro — there’s all sorts of people here. Okay, so if there is a storage carve out, who gets it? Are all of these classifications covered within energy storage carve outs? I don’t know who figures that out,” said Shah. “And those are the questions that banks are going to want the answers to before they give you a million dollars.”

Shah also questioned regulatory changes: “I understand how net metering works, but don’t utilities have the right to change rates every year, and don’t things change in value every year?” He brought up possible warranty risks: “I’ve got warranties on everything from inverters to storage, but who’s warranty wins? If something goes wrong, is there one point of accountability?” He also touched on battery life issues: “The notion that lithium batteries have a 25-year life is pretty crazy.”

While Shah didn’t have answers for many of his questions, he urged the crowd to start thinking about them — and fast. If the storage industry wants to score financing and grow, these issues need to be addressed.

Closing out the keynote, ESA Executive Director Matt Roberts noted his appreciation of Shah’s candid remarks. “This was a reality check. There is a great future ahead for energy storage, but plenty of roadblocks along the way that we all need to be aware of.”

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Former editor of I hold a MA in Professional Writing and BA in English from the University of Massachusetts and a certificate in Professional Communications: Writing from Emerson College.

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