From science fiction to the future of energy

Published 27 December 2018

A new study from Deloitte—Supercharged: Challenges and opportunities in global battery storage markets —explores the massive range of opportunities ahead for a concept once considered the stuff of science fiction.

Developed by the Deloitte Center for Energy Solutions, the study analyzes the push for energy storage facilities and the ways in which utilities, policymakers and other stakeholders support their development and ongoing deployment.

According to the study, the pace of product development is accelerating, with battery storage having the advantages of flexibility, quick deployment, multiple applications and potential revenue streams, and declining prices.

"The ultimate value of the energy storage market could get is a subject of conjecture, but the concept is clearly gaining traction worldwide, and looks set to fundamentally change market dynamics," says Kevin Guo, Energy, Resources & Industrials Industry Managing Partner, Deloitte China.

With this in mind, the study covers the key market drivers of battery storage (and some of markets leading the way), including:

• Wholesale electricity markets (Germany and the US already allow batteries to compete, and regulatory reform is underway in Chile and Italy);
• financial incentives (Italy and South Korea);
• the phasing out of feed in tariffs and net metering payments (Australia, Germany and the UK);
• energy consumers' desire for energy self-sufficiency (Australia, Germany Italy and the UK);
• national policy initiatives (India, Italy and Japan).
• cost and performance improvements;
• grid modernization including adoption of smart technologies; and
• the global movement towards renewable energy.

While acknowledging these positive developments, the study also explores some of the major barriers to adoption. These include the perception that costs remain high despite sharp drops in the price of batteries over recent years; a lack of standardization; outdated regulatory policy and market design; and fragmented definitions of energy storage.

"Although stakeholders disagree on how to define energy storage, in the end it will come down to ensuring providers can be remunerated for their full range of services," explains Kevin Guo. "This ability to 'value stack' is already taking shape in California, where battery storage systems are allowed to generate revenue from transmission, distribution and generation."

Regulators appear willing to better define energy storage, open up the market to new participants, and indeed compensate them for multiple value streams, the study suggests, but redesigning energy markets to facilitate this could take several years.

In the meantime, market participants will need to find their own routes to growth. Among various options including microgrid storage facilities that are more resistant than traditional energy infrastructure to severe weather events, "most compelling" current development is the growing use of artificial intelligence, distributed ledger and predictive analytics to drive battery storage-based power aggregation.