Greensmith Energy, the leader in energy storage software and integration, announced 130 megawatts of new energy storage systems in 2016, all powered by the company’s industry-leading software platform, GEMS5. The multi-project year includes the design and delivery of the largest energy storage system in the world deployed in Pomona, California providing 20MW/80MWh capacity.
“There’s no question 2016 was another record-setting year for Greensmith and the energy storage industry as a whole, particularly from a grid-scale perspective,” said John Jung, President & CEO of Greensmith Energy. “As the industry begins to grow and expand, Greensmith has seen rapid transition from test systems and pilots to bankability and ROI over the past eight years. As perhaps the largest provider of energy storage software and turn-key systems to some of the largest power companies in the world, coupled with tier one battery and PCS vendor relationships globally – Greensmith enjoys a holistic view of the entire market.”
With this perspective, Greensmith offers seven predictions for 2017:
1. Energy storage market goes global
Long ago, some research analysts made bold predictions, that energy storage would hit 6 GW of newly installed capacity in 2017. Let’s be extremely cautious here and say we miss the mark considerably and end up with 4 GW instead. That would still represent year-over-year growth of more than 200 percent compared to the projected market size this year. Each segment of the market is headed in the right direction, although in the United States, the vast majority of capacity will be installed in the grid-scale and commercial and industrial markets, rather than the residential market. Storage is also addressing an increasing variety of use cases for a diverse group of market participants. 2017 will be another banner year for energy storage.
2. Grid-scale batteries ship for under $300 per kWh
At this moment, lithium-ion batteries are heading toward 90 percent market share on the strength of cost and performance advantages in many cases, including storage durations of greater than 4 hours. Analysts expect prices, now below $400 per kilowatt-hour (kWh), to drop another 30 percent through 2017. To retain market share, lithium-ion vendors will have to continue driving down prices, because other technologies well suited for grid-scale storage will remain strong challengers in the coming year. Meanwhile, system-level costs will continue to fall in 2017, opening up additional grid-scale ROI-positive markets.
3. More Federal tax credits for storage systems
In the first quarter of 2017, Greensmith will commission a 10 MW energy storage system that is paired with solar PV and will be the first grid-tied energy storage system qualifying for the investment tax credit (ITC). Current rules for storage ITC eligibility are complicated, but the GEMS5 software includes a module specifically designed to ensure ITC compliance during storage sizing and operation. Perhaps most significant, the US Congress can close the book on a closely contested election season and turn attention to legislation, such as the bipartisan Energy Storage Tax Incentive and Deployment Act, which would simplify storage ITC eligibility and boost storage deployment.
4. Control software takes center stage
As the rate of storage deployment accelerates, the industry has had to grapple with fundamental issues related to the safety, control and reliability of energy storage technology. One of the big stories of 2016 has been price reductions for batteries, particularly lithium-ion batteries. As the market matures and developers see performance results from control software and integration of systems that run multiple applications, attention will shift to storage system integration and design. While the battery BMS is a protective layer and PCS controllers are written in refractory firmware, a software-based energy management system optimizes for cost and performance. We will see more deployments where smart software controls are essential for asset monetization, such as ancillary services, solar firming and stacked use cases.
5. Storage providers face continued pressure from industry consolidation
While the project pipeline is growing rapidly, venture capital funding for storage technologies has fallen considerably since the days when investors saw game-changing potential all around them. The onus is now on market participants to execute on growth strategies and scale up. Many will succeed. Some may not. Pay close attention as component suppliers try to increase production capacity and shipments while system integrators attempt to compete in new markets and deploy more storage capacity year-over-year. 2016 saw multiple large corporate deals in the energy storage sector and we expect the trend to continue.
6. Developers ask for fewer pilot projects, more long-term solutions and strategies
More participants in electric power markets are making strategic investments in energy storage technologies, recognizing that storage will be a critical asset in the broader distribution and transmission grid. As they do, they are finding ample data to evaluate technologies at pilot scale. The US Department of Energy’s Global Energy Storage Database shows almost 700 electro-chemical systems that are currently operational, mostly in the US, Western Europe and Asia Pacific. The database shows another 193 operating thermal storage systems and 50 operating electro-mechanical systems. In 2017, we’ll see project development move toward multi-year deployment of bankable, commercial storage systems.
7. Cybersecurity becomes a pressing concern for the grid and the storage industry
According to a cybersecurity analyst, FireEye iSIGHTIntelligence, there have been 1,552 industrial control system vulnerability disclosures since 2000. The vast majority of them have occurred in the last six years. While physical security enhancements like fences and surveillance cameras are absolutely necessary to safeguard the grid, hackers are principally interested in data, not hardware. Hackers will exploit the weakest link in the chain of communications at any point between the network operation center and the end customer. The energy storage industry, as a provider of grid stability and safety, must play a growing role in protecting the grid from intentional disruption.