Energy storage is a complicated technology to value, at least when compared to solar, wind, geothermal, biomass or any other sort of generation. That’s because a battery’s relatively simple set of capabilities -- to charge, discharge and maybe provide some reactive power or voltage support from its inverters -- are given value by literally hundreds of state laws, utility procurements, grid operator regulations and energy market opportunities that govern how they can be put to use on the grid.
It’s also, at least for now, complicated by the relative lack of data. In part, that’s the nature of the industry’s lack of maturity. Few of the newer lithium-ion or flow battery grid projects have been up and running long enough to prove whether they’ll make their money back before they’re replaced under warranty. We’ve seen novel battery technology startups rise on the strength of better cost-per-watt and round-trip efficiency figures, only to flame out -- figuratively or literally. At the same time, how a battery is charged and recharged can mean as much as its underlying strengths, in terms of how long it lasts, and whether it makes money for its owners over the long term.
In recent years, grid-scale energy storage has started to expand from the one-off pilot project stage to commercial repeatability. There are now standardized storage-in-a-box products, with the network and software to monitor and manage them. Market leader AES Energy Storage, for instance, has built a product stack stretching from pre-integrated battery and inverter partners, to fleet-level control and market integration software.
But project developers are still driven by the vagaries of a few key markets and value streams, such as frequency regulation for mid-Atlantic grid operator PJM, mandate-driven capacity procurements in California, substation deferral and “non-wires alternatives” in New York and island-scale wind and solar integration in Hawaii. As we’ve seen from PJM’s regulation market restructuring, changes in these oversize markets can come quickly enough to make a project that penciled out last year not worth the money today. On the plus side of the ledger, many markets are awaiting future revenue streams, as new regulations and new supply-demand trends intersect with ever-falling lithium-ion battery prices.
Last week, I got together with Daniel Finn-Foley, senior analyst on GTM Research's energy storage team, and Nick Burleigh, GTM data services manager, to talk about how the GTM U.S. Energy Storage Data Hub is pulling together the data to help answer questions about this ever-changing landscape. The most recent addition to our grid edge data offerings, the Energy Storage Data Hub tracks U.S. storage markets, utility procurements, regulatory and legislative rulings, and on-the-ground projects by size, scale and vendor makeup. It’s a lot of fun to play with -- and to test out hypotheses about where the markets are headed.
A deep dive into PJM’s shifting energy storage opportunities
Take PJM’s frequency regulation market, which was hit with a recalculation of its Regulation D service signal last year. PJM is still the country’s biggest market for front-of-meter energy storage, with 831.77 megawatts of projects in the pipeline, operational and decommissioned.
The chart below showcases PJM’s share of the U.S. energy storage market. We’ve run the numbers for projects deployed, operational and in planning for the nine states served by PJM in whole or in part, from 2011 through 2018. In this case, we’ve chosen to represent the data in terms of megawatt-hours, to get a clearer picture of the volume of storage involved.
Source: GTM Research Energy Storage Data Hub
“Right off the bat, that tells you what’s going on,” Finn-Foley said. “You can tell that it boomed, and then calmed down quite a bit,” with future projections falling more in line with the potential opportunity involved.
At the same time, “You can get a full look at where these projects are coming from, who is installing what, what are the primary applications -- and in PJM it’s almost all ancillary services," said Finn-Foley.
That’s made clear by looking at this chart of PJM for the same time period in terms of megawatts -- a measure of power versus energy, which should be much higher than megawatt-hours for systems built for 15-minute duty cycles on the frequency regulation market.
Source: GTM Research Energy Storage Data Hub
A common complaint about energy storage coverage is the distinction between megawatts, a measure of how much energy it can bring to the grid at any one time, and megawatt-hours, which represents the duration of this stored energy resource.
As you’ll notice from the charts above, megawatt-hour data is far harder to come by than straight megawatt data. Many projects fail to specify megawatt-hour data, and a lot of the frequency regulation-related projects going in across PJM territory require sub-hourly discharge and charge cycles, making duration a less important figure.
Even so, the Energy Storage Data Hub is well equipped to provide users the pertinent megawatt vs. megawatt-hour data where it does exist -- a feature that’s been part of GTM Research’s energy storage methodology for years now.
This page also offers circle graphs representing the share of each year’s tally in terms of project developer, battery vendor, type of technology involved and other market-relevant information culled from various data sets, said Finn-Foley. On the policy front, the data hub offers a list of all 32 regulatory and legislative issues with an impact on energy storage -- including the latest updates from PJM’s Regulation Market Task Force -- that GTM Research is tracking.
And to make sense of these trendlines and policy developments in dollar terms, GTM collects and updates price data from across the country, via its Wholesale Market Price Tracker. Along with key prices, the page offers click-through access to a host of data sets -- “we can see what the submarkets are for ancillary services, the eligibility requirements, the participation requirements," Finn-Foley said.
California’s energy storage landscape at a glance
As PJM’s energy storage market has eased, California’s is entering overdrive, said Nick Burleigh. “We’re seeing a lot of announced capacity in California,” with 8,148 megawatts in operations or in pipeline, although that’s inflated somewhat by the large number of projects seeking a piece of the state’s multifaceted front-of-meter storage opportunity. To tease out the difference between real and proposed projects, he ran two charts, one of all projects, including decommissioned, under construction, operational and announced:
Source: GTM Research Energy Storage Data Hub
And this one, representing only operational projects:
Source: GTM Research Energy Storage Data Hub
California’s utilities are playing a big role in this growth, including long-term capacity procurements in response to the San Onofre nuclear power plant shutdown, substation deferral projects in Central and Northern California, and rapid-response installations to help meet this summer's shortfall in Aliso Canyon’s natural gas supplies. California’s main page covers them all, as well as the pilot projects, like Southern California Edison's preferred resources pilot, that are driving the latest megawatt figures.
Clicking through to an individual procurement brings up a set of resources including megawatt targets, minimum sizes, technology requirements and all the other information available to prospective bidders, along with ongoing updates on project awards and other developments, Burleigh said. A few tidbits of information from this analysis shows that Samsung is currently leading in lithium-ion battery projects in the state, while Primus Power has the lead in flow batteries.
Source: GTM Research Energy Storage Data Hub
Meanwhile, California’s frequency-regulation market opportunities haven't been nearly as lucrative or attractive as PJM’s, but they could still make up a layer of revenue for projects, along with capacity contract payments or capital expense deferral.
Laying market data from PJM and California grid operator CAISO side by side offers users a comparison point between the two, as well as a way to track how regulatory changes could affect matters. “PJM is really less valuable today, because of the policy changes they’ve made," said Burleigh.
Finding the nationwide opportunities, staking out the competition
Next, Finn-Foley turned to the nationwide storage tracking map, searchable by state and grid operator region. From this page, users can calculate megawatts and megawatt-hours in operations or in the pipeline, as well as vendor and technology market share, across a hand-picked basket of jurisdictions.
A quick search can yield data such as which developers hold what portion of the market in different states, both in terms of announcements and projects that are actually up and running, he said. “This is nationwide over all years, and overall status also," said Finn-Foley. "If you want to look at operational [projects], this data will change, and only show you operational share.”
GTM Research has integrated project-by-project data sets that can help users connect the dots on which developers are using which battery technologies and vendors, and provides links to in-depth project-level data.
The research team has also built its forecast data into the map, which reveals a growing number of states beyond California and grid operators beyond PJM that are seeing energy storage activity.
Source: GTM Research Energy Storage Data Hub
“One of the things you'll notice here is the geographic diversity of projects,” said Finn-Foley. Notably, Texas is set to emerge as an important arena for development, with its own unique competitive energy market structures. And Illinois has some significant efforts underway in the form of microgrids.
“You can actually look at the map and see exactly where those projects are -- and if you look into the future, you’ll see it’s more geographically diverse," he said.
