WORLD-GEN June/July 2018

WORLD-GENERATION JUNE/JULY 2018 9 PERSPECTIVE The drivers behind the rapid growth of battery storage around the world extend far beyond the technology’s flexible, quick deployment and falling prices, according to Deloitte’s new study, “Supercharged: Challenges and opportunities in global bat- tery storage markets.” The study explores the eight main market drivers and four remaining barriers for the technology.   EIGHT MAIN MARKET DRIVERS  Driver 1: Cost and performance improvements: Declining costs and improved performance, particularly relating to lithium-ion batteries. Lithium-Ion battery prices fell 80% from 2010-2017, according to BNEF. Driver 2: Grid modernization: Batteries generate value by adding capacity, shifting load, and/or improving power qual- ity and help unlock the full potential of smart technologies. Driver 3: Global movement toward renewables: The critical role batteries can play in offsetting the intermittency of renewables and reducing curtailment is well known, but the strength and pervasive- ness of the desire for clean energy among all types of electricity customers is growing. Driver 4: Participation in wholesale electricity markets: Nearly every nation examined (Australia, Chile, Germany, Japan, India, Italy, South Korea, UK and US) is revamping its wholesale market structure to allow batteries to provide capacity and ancillary services, such as fre- quency regulation and voltage control. Driver 5: Financial incentives: The widespread availability of government-spon- sored financial incentives further reflects policymakers’ growing awareness of the range of benefits battery storage solutions can deliver. Driver 6: Phase-outs of FITs or net metering: Low or declining feed-in-tariffs (FITs) or net metering payments emerged as a driver of behind-the-meter battery deployments, as consumers and businesses seek ways to obtain greater returns from their solar photovoltaic (PV) investments. Driver 7: Desire for self-sufficiency: A growing desire for energy self-sufficiency among residential and C&I customers emerged as a somewhat surprising force behind storage deployment. Self-sufficiency is a strong driver in Germany, Italy, the UK, and Australia. Driver 8: National Policy: Many countries see renewables plus storage as a new way to lessen their dependence upon energy imports, fill gaps in their generation mix, enhance the reliability and resiliency of their systems, and move toward environ- mental goals and de-carbonization targets.  Although “storage” and “renewables” are often used interchangeably, battery solutions can be used to make the overall grid more efficient and resilient, regardless of the generation sources. This makes the storage story all the more compelling. CHALLENGES Though market drivers are converging to propel storage deployment forward, chal- lenges still exist. The more prominent bar- riers can be traced to the speed with which battery storage technologies and their applications are evolving, and to the multi- plicity and flexibility of battery storage. REGULATORS  Overall, while regulators are generally amenable to opening up markets to new participants and compensating providers for multiple value streams, it can take years to redesign retail and wholesale electricity markets, which has left storage providers searching for ways they can add value and grow in the meantime.  BARRIERS FORTHE TECHNOLOGY Barrier 1: Perceptions of high prices: Costs have been dropping so quick- ly that decision-makers may have outdated notions about the price of systems. Barrier 2: Lack of standardization: Participants in early stage markets must contend with diverse technical require- ments as well as varied processes and poli- cies. Barrier 3: Outdated regulatory pol- icy and market design: Regulatory policy is lagging the energy storage technology that exists today. One regulatory construct that may need to change is to enable stor- age to be classified as generation, load or transmission and distribution infrastruc- ture. Barrier 4: Incomplete definition of energy storage: Energy storage is having an identity crisis, with stakeholders and pol- icymakers around the world wrestling with how to define fast-acting battery storage. ABOUTTHE AUTHOR  As an executive director for the Deloitte Center for Energy Solutions, Deloitte Services LP, Andrew Slaughter works closely with Deloitte’s Energy, Resources & Industrials leadership to define, implement, and manage the execu- tion of the Center strategy; develop and drive energy research initiatives; and man- age the development of the Center’s emi- nence and thought leadership. During his 25 year career as an oil and gas leader, he occupied senior roles in both major oil, gas, and chemicals companies and consulting/ advisory firms. THE BATTERY STORAGE SOLUTION BY ANDREW SLAUGHTER