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The Consolidation Of U.S. Shale

The Consolidation Of U.S. Shale

The shale consolidation wave is…

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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U.S. Utilities Rush To Procure Energy Storage Capacity

A growing number of U.S. utilities plan to add energy storage to their resource plans this decade, as declining renewable energy costs and investor and public pressure to curb emissions have significantly changed the market over the past few years.  

More and more utilities across the United States plan to add more wind and solar capacity and retire coal-fired power plants to start addressing climate change and to take advantage of falling renewable energy procurement costs. And a growing number of those utilities are combining battery energy storage with their new solar and wind capacity plans.

The utilities’ integrated resource plans (IRPs) for the next few years include significant growth in battery energy storage. Battery storage deployments are even expected to exceed the utilities’ expectations in their IRPs, according to a new analysis by Wood Mackenzie.   

The energy consultancy’s analysis of the plans of 43 utilities showed “exponential growth in expected utility demand for battery energy storage system procurements, as utilities adopt more aggressive clean energy portfolio strategies,” WoodMac says.

Last year was a crucial year in battery energy storage plans as the utilities with plans to add energy storage increased their combined expected storage deployment five times compared to the 2018 plans, WoodMac’s analysis showed, as carried by Greentech Media.

Currently, utilities in the United States expect 6.3 gigawatts (GW) of battery deployment this decade.  

Utilities are starting to move from pilot projects to wider deployment of battery energy storage because they gain experience with the technology, according to Wood Mackenzie’s storage researcher Gregson Curtin.

“Once utilities test energy storage and like it, they keep procuring more and more,” Curtin tells Greentech Media, a unit of Wood Mackenzie. Related: 5 Reasons Why Big Oil Is Here To Stay

One of the key obstacles to mass battery deployment is the lack of operational experience with the technology, according to the analyst.

Another hurdle was the fact that utilities couldn’t accurately assess the value of energy storage batteries in their resource planning, due to lack of both reliable cost data and established industry modeling and planning practices, a report from the Pacific Northwest National Laboratory (PNNL) showed in April last year.

“The technology and policy around new energy technologies are changing so rapidly, utilities have a hard time nailing down concrete values for their planning forecasts,” Jeremy Twitchell, a PNNL energy analyst and one of the report’s authors, said last year. 

But utilities now see improved project economics for battery storage and falling battery prices, which makes them bolder in their energy storage plans, WoodMac’s analysis says.

With lower costs and more experience, utilities could be able to plan beyond pilot projects, some of which have never been scaled up in the past.

Utilities already plan increased energy storage deployments in their IRPs.

PacifiCorp’s plan, for example, projects deployment of almost 3 GW of new solar capacity together with nearly 600 MW of battery storage by 2025, and 6.3 GW of solar plus 2.8 GW of storage by 2038.

NextEra Energy’s chairman and CEO James Robo said in a 2019 earnings call last week that more than half of the company’s new solar backlog added in 2019 included a battery storage component.

“We also increasingly see storage as an important stand-alone business in its own right, as we were viewing a number of opportunities to add storage to our existing solar sites to take advantage of the ITC and enhance the value of our existing projects for customers,” Robo said.

“This highlights the rapid transition to the next phase of renewables development that pairs low-cost wind and solar energy with a low-cost battery storage solution,” the manager added.

This decade, batteries and battery technology are set to play an increasingly important role in bringing more renewable energy and electric vehicles to the market, analysts say. Continuously falling battery costs, and rising capacity and usage of clean energy are set to result in booming global stationary energy storage over the next two decades, which will require total investments of as much as US$662 billion, BloombergNEF (BNEF) said in a report last year. 

The energy storage market is set to be one of the winners amid the energy transition and calls for curbing emissions.

WoodMac said in an April 2019 outlook:

“Over the last five years, the world began to experiment with storage; in the next five, storage will become a key grid asset.” 

By Tsvetana Paraskova for Oilprice.com

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