OPINION: From pilot to product, large-scale storage enters next phase

Energy storage has reached a fully commercialised stage at the grid-scale utility level, with hundreds of megawatts of installations each year and exponential growth forecasts.

Similarly, the market for residential storage is poised to take off with the introduction of systems from major brands such as Tesla, Mercedes-Benz, SolarCity and Panasonic.

But where does that leave the commercial and industrial (C&I) market? According to several research firms, it’s the next hot bed for storage growth.

The US market for C&I energy storage deployment is expected to grow from 6MW in 2014 to 200MW by 2019, says GTM Research.

The global C&I storage market is expected to increase from 500MW this year to 9.1W by 2025. This translates to a tenfold annual revenue increase — from less than $1bn in 2016 to $10.8bn by 2025. Overall, the industry is developing rapidly, as costs come down and new markets open.

This maturation presents an opportunity to suppliers — and a challenge. Specifically, how will the industry transition from the realm of demonstration and niche projects to repeatable, predictable offerings that deliver well-understood, clearly defined performance levels with every implementation? In effect, how can storage solutions become "productised"?

The need for productisation goes beyond individual equipment components, such as battery technology (which will, in any event, migrate towards a more commodity-based supply, as occurred in the automotive industry).

Productisation must encompass the entirety of a storage solution and the service it provides to the user; ie, performing certain energy management functions on the system over an extended period.

For users, there are clear advantages to purchasing such a standardised solution — repeatable processes mean consistency; greater scaleability helps drive costs down; known performance standards support forward planning. For suppliers, the benefits are equally apparent.

Customisation can be costly. Moving to a well-defined, productised offering enables suppliers to reduce costs and to truly capture what is most differentiating about their offerings and encapsulate such differentiation within each system, in every installation.

To achieve this, each step in the value chain — from component selection to solution configuration to installation to operating protocols — needs to be based on consistent, repeatable processes.

This will enable the provision of storage to shift from one-off developments, which have been the prevailing model, to a portfolio of harmonised, integrated assets.

Different classes of customers will have different priorities, however.

To attract large utility customers, the transactional side of storage system development needs to be standardised and conform to contractual models that utility procurement teams are familiar with.

On the C&I side, the possibility for customers to try out storage without making significant investments will help to overcome resistance.

One example of productisation is the way storage is being integrated with other system elements and elegantly packaged.

The declining costs and improving energy density of battery racks have led suppliers to develop designs that optimise battery performance, leading to new storage opportunities.

One recent example is compact containerised systems that incorporate batteries, inverters and control software that can essentially act as a two-hour “grid-in-a-box”, performing a variety of functions.

This type of standardised package can also leverage innovative thermal management approaches to get the most from the integrated system. More of these innovations can be expected.

As energy storage technologies have matured and proved their value, electricity utilities have also made considerable progress in reviewing the options and applying their strengths and benefits.

The result is the deployment of hundreds of megawatts of storage in the field. The next phase of commercialisation will inevitably involve system productisation to ensure consistency and lower costs, and to enable suppliers to responsibly meet customer needs.

This shift has already been playing out on the field: in July 2015, Southern California Edison (SCE) issued a request for proposals calling for standardised, pre-engineered, megawatt-scale storage systems that can be built, shipped, installed and operational within seven months of being contracted.

Industry observers commented that it was the first time a major utility had solicited bids for what would, in effect, be off-the-shelf productised solutions.

More recently, the same utility issued a request for offers for significant amounts of energy storage.

SCE’s solicitation was in response to expected power outages this year due to the disastrous leak at the Aliso Canyon natural-gas storage facility near Los Angeles. While the total amount was not specified, SCE called for systems that could deliver four hours of storage in increments of 5, 10, 15 and 20MW.

Most notably, projects must be operational by the end of 2016. Such a deadline may lead to records for rapid deployment — and are made possible only by the continued move towards energy storage productisation.

Productised solutions combine key system elements and capabilities into an integrated package that saves money, conserves space, provides reliability and leverages component inter-operability for improved performance.

It’s another indication that energy storage is in the commercial mainstream.

Stephen Prince is chief executive of storage developer Younicos

This piece was published as part of the Thought Leaders series. Recharge’s Thought Leaders Club brings together leading thinkers and participants from the renewable-energy sector to examine the key challenges facing our industry