Dive Brief:
- The California Independent System Operator is the strongest market in the U.S. when it comes to using energy storage for renewable integration, grid optimization and electrification and decentralization, and has a 43.7 GW pipeline of energy storage projects, a recent report from Deloitte found.
- Other markets and parts of the country — like the Electric Reliability Council of Texas, the New York Independent System Operator and the Southwest — also show a lot of potential for the growth of storage based on various indicators, the report’s authors concluded.
- The main takeaway of the report is “energy storage is really critical for our transformative shift in the electric power sector, because it really can provide very broad solutions including grid reliability, renewable energy integration and electrification,” Marlene Motyka, Deloitte’s US Renewable Energy leader and co-author of the report, said.
Dive Insight:
The passage of the Inflation Reduction Act last year has given a boost to the energy storage sector, and the U.S. Energy Information Administration’s 2023 annual energy outlook raised its energy storage capacity forecast for 2050 by 900%, now estimating 278 GW of storage, the report noted. As of July, there were 111 GW of energy storage projects in the development pipeline across the U.S.
The report’s authors looked at different regions of the country and analyzed their performance on using energy storage across three dimensions – renewables integration, grid optimization, and electrification and decentralization support. They found that CAISO led on these fronts, with the strongest pipeline of storage projects of any region.
At the same time, ERCOT is showing a lot of potential for energy storage, according to the report. The market – which faces potential reliability issues due to high congestion costs – currently has 92 GW of wind and solar, plus 32 GW of storage in the pipeline.
The fact that there is so much wind and solar coming online in ERCOT is leading to a heightened interest in storage, according to Motyka, and developers are colocating battery storage with existing renewable energy projects.
“Also, looking at where new projects are being designed and developed, they’re looking at opportunities to make them hybrid and include storage with those installations,” she added.
New York is another region that is ripe for the growth of energy storage. In 2022, the state – which is aiming to achieve 70% renewable electricity by the end of the decade – doubled its 2030 energy storage target to 6 GW.
While 6 GW isn’t huge when compared to development in CAISO and ERCOT, the fact that the state has lofty renewable energy goals and is also thinking about grid resiliency are promising signs for storage, according to Motyka.
The report also identified the Southwest as another promising region. These states have a current renewable penetration of around 17%, which is expected to increase in the next few years as projects in the pipeline start to come online.
“They’re going to be growing their renewable energy footprint and looking to include energy storage with those projects,” she said.
The U.S. is currently in what the report calls “the era of battery dominance” – where battery-based storage systems are prevalent – which the report estimates will continue through 2035. After this, the authors anticipate an “era of breakthrough innovation,” where new energy storage technologies will provide more capacity, seasonal balancing, and other characteristics to help move the country to net-zero emissions.
This new era will be driven by the need for longer duration energy storage, as well as challenges tied to obtaining the natural resources needed for lithium-ion batteries, according to Motyka.
The challenge will be getting these new technologies to a point where they are cost competitive in the market.
“Some utilities are going to have to invest when it may not be the lowest cost solution — but when you look at it over the life of the technology, it really is a benefit, because it can provide a long duration,” she added.
