Last week, I had the chance to catch a panel discussion on energy storage systems – specifically stationary storage – at the virtual renewable energy conference event offered by LEK Consulting and Piper Sandler. Our General Manager, Adam Knudsen, was on the panel along with participants from Fluence Energy and Powin and focused on “Unlocking the Grid: Storage Development in a Post-IRA Era.” The discussion offered opinions from different vantage points in the market – but the panel largely agreed on key points, including:
Key factors impacting the growth in stationary storage demand:
- The addition of a stationary storage ITC in the IRA;
- The dip in lithium prices in early 2023 drove additional demand, above the IRA’s impact;
- Still some caution as final interpretation of new rules is clarified;
- Capital availability: capital generated to support battery storage initiatives over the last 24-36 months has been substantial. The IRA has certainly helped, but even without it, the economics of these projects make sense and justify the investment.
Main bottlenecks to growth in the energy storage systems market include:
- Interconnection queues – different issues in different areas, but all seem to be moving slower than desired;
- Transmission buildout – as generation centers shift and move, the transmission network needs to adapt to support the changes and accommodate needed capacity;
- Supply of transformers and power electronics – has been constrained due to ongoing supply chain challenges, but limitations ebb and flow, so nimble companies like Dynapower are able to work around them and deliver.
Some general observations the panelists shared:
- Dynapower has a large industrial client base, including copper foil manufacturers, who play a part in supplying battery components. What’s encouraging is that Dynapower has seen an uptick in clean energy business to this base – this growth and expansion should support easing supply chain constraints for copper foil and thus for batteries and adjacent products.
- Stationary storage is likely going to be challenged for battery supply by a strong growth in the e-mobility market.
- Now that standalone storage qualifies for an ITC, there’s growth and relocation of storage to be closer to critical load centers that didn’t support a full solar storage buildout. This topology will help with grid congestion mitigation – and will likely accelerate deployment of stationary storage growth outside of the renewable base.
- Technologically, lithium ion will continue to dominate the market with a shift to sodium ion coming towards the end of the decade. Significant investments are being made, primarily on the auto side but increasingly on the stationary storage side as well, to improve the lithium value chain. Either way, supporting equipment must be designed to work with multiple chemistries and underlying technologies to be future-proofed.
This panel of industry heavyweights provided thoughtful and thought-provoking insight. As this very exciting market in both behind the meter energy storage and front of the meter energy storage continues in its high growth trajectory, it will be interesting to see how all these factors play out. Big thanks for Piper Sandler and LEK Consulting for organizing a great event!