Earlier in May, American electric car maker Tesla Motors Inc. made a splash in the energy sector when it revealed a new type of lithium battery packs for home and enterprise applications. Tesla touted its new line of energy storage systems, known as Power Wall, would fundamentally change the way the world uses energy and get the world’s consumption of power down to zero carbon levels. The Powerwall has two models: one with 7 kWh for day use and the other with 10 kWh for backup. The retail prices for these systems at most would not go over USD 3,500. As for enterprise clients, Tesla offers Powerpack, a bigger version of Powerwall with 100 kWh capacity. “Tesla’s new power storage units for home use are cost-effective for consumers,” said Duff Lu, research manager for EnergyTrend, a division of TrendForce. “We therefore can expect similar products to take off following the drive that the Powerwall has created with its market entry.”
PV systems working in conjunction with energy storage systems are the most popular type of project in the new energy market right now. EnergyTrend projects the market scale for this kind of energy storage systems will climb rapidly from 226 MWh in 2015 to 1,628 MWh in 2018. Furthermore, the market growth for household energy storage systems will surpass that of the industrial and enterprise applications. In the future, energy storage systems will become more available in both household and industrial applications (including uses in the new energy sector).
According to Lu, demands in the energy storage market in general has steadily risen because of the following factors:
1. The current demand for batteries are ever-increasing because of the widespread use of various consumer electronic products.
2. The feed-in tariff (FiT) rates for electricity generated by PV systems are lowered yearly worldwide, but the retail electricity prices remain high.
3. The power generation industry has increased its overall conversion efficiency, and this in turn has also lifted the market demand for energy storage application.
4. Energy storage systems are presently seeing a steady price drop.
Currently, energy storage systems for home use have been promoted and supported by government programs around the world. Japan, Germany, the United States and China have in turn created subsidy schemes for energy storage products. For instance, the latest FiT program announced by Japan’s Ministry of Economy, Trade and Industry gives preference to the under-10kW PV installations that come with an energy storage system. The FiT rate for them is set higher at JPY 35/kWh because they can provide backup power and be configured for peak shaving. However, PV systems that are without energy storage systems have a reduced rate of JPY 33/kWh. Consequently, batteries will become a necessary feature in electricity generation systems for self-consumption because they will prevent surplus power from being wasted. Energy storage systems also offer the advantage of grid-tied electricity generation systems to sell excess capacity. Such cases include Japan’s electricity buyback program, which many countries will likely to emulate.
The United States’ renewable sector is expected to reach 70GW generation capacity by 2020. By that time, California aims to have 33% of its energy from renewable installations. Taking account that 3~5% of the United States’ renewable capacity in 2020 will be used for power backup, the country’s total demand for energy storage systems to complement the installation target will be about 2~3.5 GW. Furthermore, California Public Utilities Commission has recently passed a related law that mandates the state’s top three power companies to add at least 1.325 GW of energy storage by the end of the decade. In sum, California’s policies will drive the developments of large-scale energy storage systems in the near future.
Lu further notes industries in China’s renewable energy sector are seeing accelerated growths, and they all complement developments in energy storage systems. These include grid-tied projects, distributed generation projects, micro-grids and plug-in vehicles. The market for energy storage systems in China is still in its early phase with lead-acid batteries being the mainstream products. The scale of the country’s energy storage installations currently in operation is above 50MW. Wind turbine systems represent the largest proportion in China’s renewable sector, but nearly 10% of power that they generate is lost because these wind turbine systems have not been optimized and are not tied with an energy storage system. Demands are also turning up for distributed generation and micro-grid solutions. They encompass the electrification of rural communities, renewable systems for coastal islands and other rooftop PV system projects. On the whole, China is different from other markets that mainly cater to household or industrial demands. The country’s diverse environments offer opportunities in many applications.
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