5 Trends in Energy Storage

Nikola Power is optimistic about serious growth in the U.S. energy storage market in 2019. The market continued with impressive year over year growth in 2018 despite significant challenges, including supply bottlenecks and ever-changing federal trade policy.

We see 5 major trends driving the U.S. Energy Storage Markets in 2019 and beyond:  

Energy Storage Will Be an Integral Part of Electric Vehicle Charging Infrastructure

Utilization and adoption rates of electric vehicles (EV) have finally reached critical mass. The delivery of hundreds of thousands of Tesla Model 3’s, along with VW, Hyundai, Volvo, Audi and Mercedes-Benz embracing EV technology, will only accelerate this adoption. There will now be a natural increase in charging stations around our cities and communities. An example of this is the mandate of 100% electric transit vehicles in the State of California by 2040. At scale, increased demand will add additional strain to the grid and could result in substantial demand charges for all stakeholders. As the penetration of next generation EV charging stations expands, solar plus storage plays a pivotal role of shaving peak-demand charges during evening rush hour commutes — providing another opportunity for the increased deployment of energy storage.

Public Policy at the State Level Driving Energy Storage Adoption

While our federal politics have negatively impacted the clean energy industry on a number of clean energy policies, this has led to significant increases in leadership from state governments. In the past year, we have seen a number of states including, California, Massachusetts, and New York, set renewable energy targets, set 100% carbon-free goals, establish energy storage incentives, and implement clean peak standards — creating a friendly environment for greater energy storage adoption. We anticipate a continuation of this trend with newly elected Governors from Colorado, New Mexico, Nevada, Illinois, Connecticut, Maine, Michigan, and Oregon who ran campaigns with an emphasis on 100% clean energy. We are excited about this trend of state leadership and are leading this trend in our home state of Colorado and will work with our industry trade groups ESA and SEIA to lead this effort across multiple states.

Battery Prices Will Drop

It is no secret that the industry encountered many supply chain challenges this past year, but we know that battery manufacturers across the globe are taking the necessary steps to expand production and lower their dependence on cobalt, a rare but key ingredient in high-energy density lithium-ion battery chemistries like lithium nickel, manganese cobalt oxide, and lithium nickel cobalt aluminum oxide. The growth of the electric vehicle industry led to massive demand for these batteries, taking up a majority of global battery manufacturing. We believe that the current price increase will pave the way for cobalt-free batteries like lithium iron phosphate, lithium titanate, and lithium manganese oxide — all of which have lower demand from electric vehicles due to their lower energy density. With an increase in manufacturing and continued improvement of battery technology, we should see prices continue to decrease; ultimately, the declining forward cost curve for stationary storage provides better project economics for energy storage investors.

The Energy Storage Market Continues to Expand

A number of factors, including the aforementioned reduction of battery costs, will enable our industry to grow dramatically in 2019 and beyond. With clarity behind the Federal Energy Regulatory Commission (FERC) Order 841 and grid operators filing their official compliance plans, we have better visibility into how utilities will move forward in the new regulatory environment. The U.S. Energy Storage Monitor states that “energy storage deployments in the U.S. will accelerate dramatically over the coming years, growing from 338 MW in 2018 to 659 MW in 2019, before more than doubling to 1.7 GW in 2020.” Nikola Power is seeing a significant uptick in interest and inclusion of energy storage in RFP’s and customer inquiries. The trend of significant market adoption in all sectors, behind the meter and in front of the meter projects will continue to grow in 2019.  

The Solar Market Will Drive Energy Storage Forward in 2019

We are seeing tremendous excitement and interest from solar customers and industry players to understand how energy storage can complement new solar assets. Key customers like municipalities, universities, schools, and hospitals (MUSH market), residential, commercial, and industrial channels are wanting to adopt energy storage to drive resiliency, reduce energy costs, and avoid high demand charges. As solar deployment continues in these markets around the country, energy storage is increasingly being combined with these projects to provide a flexible clean energy solution. On the utility side of the market, strong momentum exists to aggregate distributed energy resources and defer infrastructure upgrades by including energy storage resources. Most utility solar solicitations in 2019 will include some element of energy storage.

Nikola Power is excited to be a part of these trends; with the leadership team’s pioneering work in solar over the last 11 years, we are well positioned to execute!

Evan Hung