Energy storage market worth $250 billion in 2040: Here are 7 reasons why

July 27, 2016

Renewable energy won its fair share of hype. Now it's time for energy storage to take center stage.

Bloomberg New Energy Finance (BNEF) recently stated the energy storage market would be worth $250 billion or more by 2040. This begs the question, "How did it get so popular?"

Part of the BNEF report hinges on the fact the organization also believes zero-emission energy will account for 60 percent of total installed capacity - a hefty portion considering the world's current reliance on fossil fuels. This can only be made possible if this renewable energy can be stored, which, as of now, isn't the most popular option - but it's getting there. Zero-emission energy must be stored to increase useable output and reliability because it is intermittent. In the meantime, fossil fuels and nuclear is being phased out and natural gas is being used as a bridge to greater reliance on renewables energy and energy storage.

7 reasons the energy storage market is set to take off
The energy storage market is growing for several reasons:

1. As mentioned above, energy storage is a critical component for supplying renewable energy.

As more fossil fuel and nuclear plants close, the need for energy storage will intensify. Fossil fuels have been a preferred energy source because they are their own form of storage. Simply put, you store the fossil fuel then burn it when you need it to supply electricity. Renewable energy generation is different. You can capture it through a solar panel but that energy has to do one of two things afterwards. Either it goes directly into an appliance, or, more commonly, it goes back into the grid. Energy storage provides a third option. With energy storage you can save renewable energy for later, for example, when the wind isn't blowing or the sun isn't shinning. If popularity for renewable energy is expected to keep growing at its expected, high rate, energy storage must become part of the equation.

Around the world, not only fossil fuel plants but also nuclear plants are being phased out. Most recently California closed its last nuclear plant. Nuclear plants have been a stable source of base load power for decades. They stay activated all day and night, never shutting down. Without nuclear, more energy dependence is put on renewables and natural gas. Unfortunately, while natural gas has been touted as a cleaner form of energy, leaks have proven to be not only hazardous but can cause energy shortages.

2. With electricity generation options waning, governments around the world are starting to realize the value of energy storage and are beginning to fund it. As the generational mix moves to a higher concentration of renewable sources, energy storage of all kinds will be needed to put storage back on the grid.  Fossil fuels inherently provided fast ramp ups and downs to match load. Energy storage on the grid will need to provide reliability. According to Science Magazine, an energy bill was passed in April that will provide an increased federal budget for science research, much of which will be focused around energy storage. Tax incentives are also being proposed by the U.S. Senate.

Thermal energy storage is growing in popularity.

3. As we move away from a fossil fuel economy, electric cars will grow in market share requiring energy storage advancements and products. BNEF estimates 35% of all light vehicles sold will be electric in 2040 storing energy rather than fossil fuels.

4. Energy storage makes sense economically. The cost of batteries is coming down and thermal energy storage is already a bargain at a tenth of the cost of batteries. Additionally, night time energy pricing is encouraging consumption off peak which can be used to create and store cooling and then discharge when on peak prices are high.

5. Energy storage is gaining mainstream acceptance. Residential storage solutions are being introduced as consumer are looking to mitigate energy costs. And more commercial properties are incorporating energy storage into their building plans. In fact they are being encouraged to do so. As this recent Forbes article advises, "To combat this hot strain on the grid, commercial buildings can take advantage of thermal energy storage. In fact, they must take advantage of this strategy or we will have some major problems in the coming decades."

6. Consumers want to invest in companies that pollute less. Commercial properties are looking to show their investors how they are reducing their environmental impact. Even Wall Street has come on board, launching financial products that take into consideration environmental factors. Current trends like zero energy buildings means, businesses will need to go beyond energy efficiency and look at the energy source.

7. Utilities are procuring energy storage and see storage as the number one technology to invest in right now. In light of renewable energy growth and government regulations, utilities see energy storage as part of their business model makeover. Energy storage will used to smooth out power flows from intermittent renewable energy resources and level peak energy use from air-conditioning loads.

Why thermal energy storage?
Although it doesn't seem it, air conditioning is where a large portion of the world's greenhouse gas emissions will be mounting up from. During the weekdays, the grid is overloaded with requests for cooling - during the summer.

To compensate for the increased demand, the grid draws supply from highly-pollutant "peaking" power plants. While these emissions aren't directly coming from the building itself, the act of taking the dirty energy contributes to global climate change.

Thermal energy storage can store a building's cooling load at night, instead of relying on "peaking" plants during hours of peak demand. This not only cuts down on the amount of energy being drawn from peaking plants with high carbon emissions, but also reduces the utility bill as the energy is much more affordable at night.

Currently there's 3.83 gigawatts of energy storage installed around the globe, according to the Energy Storage Exchange. The majority of the power is in the form of thermal energy storage, excluding pumped hydro storage which makes up the vast majority of installed capacity however is limited by the necessity of large reservoirs of water. By 2040, the BNEF report expects there to be over 750 GWh of energy storage - a massive increase from what is currently on the market today. To make that happen, all forms of energy storage will be needed.

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