Lux Research published a report and the rapidly expanding market for batteries, particularly Li-Ion technology, in mobile applications. But there's big potential for the grid-tied energy storage market as well.
Lux analyst Steve Minnihan said the market potential for grid-tied energy storage and the renewable energy technologies they support has never looked more promising.
“For the last three or four years battery technology has been largely overhyped and battery companies overvalued,” Minnihan said. “We saw a large crash in the market over the last year.”
Nearly all of the best-known battery start-ups in the country and even abroad have gone bankrupt or been acquired by other companies. In the stationary battery market, Minnihan said the two companies with the most potential to become leaders in the market are LG Chem and Panasonic – both major corporations a long way from the independent start-ups that dominated the battery and energy storage landscape just two years ago.
Several factors have converged to signal that the stationary battery storage market has major potential for real growth now.
“We’re on a trajectory where regulations aren’t just hypothetical anymore,” Minnihan said.
California has a mandate in place requiring utility companies to procure a certain amount of energy storage, for a total of 1.3 gigawatts in the state, by 2020.
“That’s tremendous,” Minnihan said.
That would double the total amount of grid energy storage in the country today, he said.
“And right now, there’s no asset class for the battery in the utility structure,” Minnihan said. “This is the first tie we’re seeing something where a utility has to acquire batteries as an asset. It’s creating a new home for the battery.”
On top of California’s legislation, the STORAGE 2013 Act is working its way through congressional committees now and could make it to the house or senate floor this fall.
“It’s a very large investment tax credit for big battery utility applications,” Minnihan said.
It would also provide a 30 percent tax credit to homeowners and small businesses that invest in grid-tied energy storage.
“If this thing passes in its current form, it would be the first investment tax credit for energy storage in the country and it would be huge. They have $1.5 billion allocated for this fund.”
He said Germany's incentive for energy storage investment is also going to push the market. Incentives like a major investment tax credit could kickstart the battery industry the same way the 30 percent tax credit for solar energy systems and other renewables drove the solar industry to its current pace of rapid growth.