"I think we're at the beginning of a new cost decline curve. Almost no one today would have predicted photovoltaic prices would have dropped as fast as they have, and storage is right at the cliff heading down that price curve," Straubel said.
The decreasing cost of lithium-ion batteries will allow mass adoption in the power grid, which will then offer utility customers a "firm" and "buffered" source of renewable energy "that's cheaper than fossil fuel energy.
"That same battery cost decrease will drive batteries into the grid."
Straubel said he believes the "tipping point" will happen within the next 10 years.
For some large utilities, battery storage projects are well underway. SunEdison and Advanced Microgrid Solutions, for example, announced this week they will partner to deploy 50 megawatts of energy storage for Southern California Edison.
Southern California Edison will purchase capacity from the storage systems under a 10-year capacity contract, and expects to use the electricity stored in these fleets of hybrid-electric buildings in part to offset the power once produced by the decommissioned San Onofre nuclear power plant and other soon-to-be retired gas-fired plants. The power storage program is part of Southern California Edison's plan to modernize the grid by adding 2.2 gigawatts of newer, cleaner resources including energy storage and renewables by 2022.
PV systems working in conjunction with energy storage systems are the most popular type of project in the new energy market right now, according to EnergyTrend, a division of market research firm TrendForce.
EnergyTrend projects that the market scale for Tesla-style energy storage systems will climb rapidly from 226 megawatt hours (MWh) this year to 1,628 MWh in 2018.
"Furthermore, the market growth for household energy storage systems will surpass that of the industrial and enterprise applications," said Duff Lu, research manager of EnergyTrend. "In the future, energy storage systems will become more available in both household and industrial applications (including uses in the new energy sector)."
According to Lu, demands in the energy storage market in general have steadily risen because of the following factors:
- The current demand for batteries is growing because of the widespread use of consumer electronics.
- The feed-in tariff (FiT) rates for electricity generated by PV systems are lowered yearly worldwide, while retail electricity prices remain high.
- The power generation industry has increased its overall conversion efficiency, which has lifted the market demand for energy storage.
- Energy storage systems are seeing a steady price drop.
Currently, energy storage systems for home use have been promoted and supported by government programs around the world. Japan, Germany, the United States and China have created subsidy schemes for energy storage products.
Lu further noted that industries in China's renewable energy sector are seeing accelerated growth, and they all complement developments in energy storage systems. These include grid-tied projects, distributed generation projects, micro-grids and plug-in vehicles.
The market for energy storage systems in China is still in its early phase, with lead-acid batteries being the mainstream products. The scale of the country's energy storage installations currently in operation is above 50MW.
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