Grid scale energy storage: the hottest market that doesn't exist.

I have been following the energy storage area for some time, having led a fuel cell start-up, helped commercialize portable technologies, and worked on thermal storage.

Recently I attended a Berkeley-Stanford Cleantech Conference on “Energy Storage: Enhancing the Value of Renewables”. The organizers put together a great event, although I would have liked to see more on competing technologies and real details on policy issues.  I can’t cover all the interesting conversation in this short post. Here is a short summary . . .  

The potential market looks attractive. Eric Wesoff of Green Tech Media presented a market estimate at $600 billion. Ed Cazalet of MegaWatt Storage Farms believes that California will need an additional 4GW of storage to meet demands of the 33% RPS in 2020. Nick Hodson of McKinsey said utilities would use storage if it was cheap enough, citing the example of Switzerland and Austria who have 11% and 17% storage capacity respectively, using pumped hydro.

The key words there are “cheap enough”. Haresh Kamath of EPRI drove that point home, saying the big three issues with existing technologies are cost, cost and cost. Although Ed Cazalet of MegaWatt Storage Farms believes that $/W comparisons on a “name plate” basis can be misleading because the fast response and peaking capacity of batteries meant that their real capacity could be double their name plate.

On the other hand, grid scale energy storage also competes with demand response and energy efficiency, which can be extremely cost effective, further underlining the importance of low cost.

As in much of cleantech, policy trumps technology (as pointed out by Eric). A key issue is the structural lack of ownership of the problems that storage will solve. Moreover, Ed pointed out, if utilities are allowed to include storage in their rate base that may skew the market against independent storage providers. The good news is that storage is now on the policy agenda and some US stimulus funds are on the way.

So where to invest? Marianne Wu of MDV was frustrated by limited research at grid scale, the small number of companies, and the small pool of talent which understands the technology and the market requirements and has experience in cost down and scaling.

Bottom Line: Personally I would advocate a back to basics approach on product-marketing and product management. Understand the customer requirements throughout the life cycle, match the technology to the most attractive market, and build for low cost. Talk to the operations people not the just the R&D department. The thought leaders can often help solidify and define customer requirements in a nascent market. Design for usability, manufacturability and cost from the start.

Foot note: GE just announced they are going to make NaS batteries at a new plant in Niskayuna, NY.