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In 2021, the epidemic continues to ravage the world, but the economy is rapidly recovering and many industries have started to recover. For the international energy storage market, 2021 is a year of both opportunities and challenges. Energy Storage Alliance will review what happened in the international energy storage market in the past year through five aspects.
Global carbon reduction consensus, energy storage becomes a key element
According to the REPORT of the United Nations Environment Programme (UNEP), more than 120 countries and regions have committed to carbon neutrality, and most of them have set the date for 2050. Renewable energy has become an important starting point for achieving carbon neutrality and an important engine for green economic recovery in the post-covid-19 era.
According to New Energy Outlook 2021, global energy-related carbon emissions need to fall 75 percent from 2019 levels by 2040 to reach net zero emissions by 2050. This will require a major transition to renewable energy, which also means overcoming challenges such as how to store renewable energy and the intermittency of the grid. Achieving this will require rapid deployment of significant new renewable energy infrastructure with energy storage systems.
Energy storage is a key solution for rapidly decarbonizing power systems, spreading clean energy around the world, and making communities more resilient to climate-driven weather extremes that will see explosive growth.
In addition, energy storage is becoming a key link in the energy revolution. On the one hand, it can connect clean energy, and on the other hand, it is closely related to power batteries and new energy vehicles. With the continuous advancement of new energy replacing fossil energy, energy storage will also face new opportunities and challenges.
The scale of global new energy storage market exceeded 10GW
Despite the pandemic, the global energy storage market will set a new record in 2021. According to Wood Mackenzie, new energy storage projects will be put into operation globally in 2021, up from 4.9GW in 2020 and just over 1GW five years ago in 2016. This is just the beginning, however, as the global market for storage capacity is expected to grow year by year, reaching 70GW by 2030. The US, China and Europe are driving a surge in the size of the global energy storage market.
Among them, the United States, ushering in the era of super-scale energy storage in 2021, has deployed and put into operation a number of GWH-class energy storage projects, with the newly added scale exceeding 3.5GWh in the third quarter alone. Connecticut, Virginia and Maine have set energy storage procurement targets, plus the extension of the solar investment tax credit. Independent energy storage systems are expected to receive investment tax credits and other favorable policies, which will have a significant driving effect on the market.
In China, in the first half of 2021, the new installed energy storage capacity exceeded 10GW, with a year-on-year growth of more than 600%. In addition, the government has set a target of 30GW+ energy storage capacity by 2025, which would be a 10-fold increase.
Europe, driven by the goals and commitments of various countries on renewable energy and the opportunities of various grid service markets, is expected to complete the installation of 3GWh of energy storage by 2021. In addition to the mainstream regions such as the UK and Germany, France, Portugal, Spain, Belgium and some other regions with market mechanisms, These mechanisms, including renewable energy auctions, capacity markets and procurement targets, will also come to the fore.
There is still a long way to go to ensure the safety of energy storage
The construction scale of individual energy storage projects is increasing, and the number of large-scale energy storage projects is increasing. More and more energy storage technologies are applied in power supply side, power grid side, industrial and commercial users side, and even residents side. The safe operation pressure of energy storage increases sharply, and the safety risks of projects increase.
In 2021, a total of 8 energy storage safety accidents occurred in Overseas markets such as South Korea, Australia, the United States, France and Germany, among which two accidents triggered hot discussions in the industry. One was Moss Landing project in California, where some battery modules overheated after the second phase expansion was just completed. The integrated safety system detected that several battery modules were operating at above-standard temperatures and triggered a sprinkler system to spray water on the affected modules. No fire or injuries were reported. Another is earlier than it happened more than a month ago Australia Victoria major battery project, the project during the battery test fires, and continue to burn for four days, according to the state of Victoria later energy security ESV website information shows that the root cause of the accident is due to the lithium battery leak shorting Megapack electrical components of the cooling system, Which triggered a fire in the battery compartment. After the cause was identified, the project resumed testing and officially reached full capacity before the end of the year.
The two accidents attracted attention on the one hand because of the large scale of the projects, both of which are 100MW projects. Moss Landing Project is the largest lithium battery energy storage power station project in the world with a scale of 400MW/1600MWh after the expansion of phase II. Victoria Large Battery Project is also the largest lithium battery storage power station project with a scale of 300MW/450MWh. It is currently the largest lithium battery energy storage project in operation in the Asia-pacific region. On the other hand, the participants of these two projects are both leading enterprises in the industry with rich project experience. LG Energy Solution is the battery supplier of Moss Landing Project, Fluence is the integrator and general contractor of the project, and Tesla is the battery supplier of Victoria Large Battery Project. Neoen runs the project and the two have worked together on a hugely successful project in Hornsdale, South Australia.
When accidents occur, most people think it is the battery's fault, but in fact, the safety of energy storage is a system safety problem. Every component and link plays an important role in improving system safety, and the problem should not only be blamed on the battery itself. It also involves other electrical equipment, system integration, control software, monitoring system, container, fire extinguishing system, emergency plan, transportation, grid connection, and even fire training for fire fighters in energy storage accidents. As an emerging industry, energy storage will always be accompanied by safety risks on the road of large-scale development. It is indisputable that attention to safety must be an important industry trend.
Long-term energy storage ushered in the first year of development
In 2020, long-term energy storage began to enter the public's attention. With the acceleration of the decarbonization process of the global power system, the development momentum of long-term energy storage has been strong in just one year. Policy makers, energy companies, capital parties and end users are focusing on long-term energy storage.
This year, the U.S. Department of Energy launched Energy Earthshots, which aims to reduce the cost of long-term storage (lasting 10 hours or more) by 90% over the next decade.
This year, the Long-term Energy Storage Committee was formally established, with 25 start-up members dedicated to promoting the global deployment of long-term energy storage and accelerating the decarbonization of energy systems at the lowest social cost. The commission believes that by 2040, global deployment of 85 to 140TWh of long-term storage (lasting more than eight hours) could achieve net zero emissions from the grid.
This year saw extensive deployment of gigawatts of long-duration energy storage projects worldwide, with Hydrostor developing a 1GW compressed air storage project in California; Highview Power is developing 350MW/2.1GWh liquid compressed air storage projects in Spain. Eos Energy to deploy 141MWh Zinc air Storage project. In addition, Honeywell has released a new fluid flow battery storage product that lasts 12 hours.
This year, long-term energy storage has become the capital's favorite. A number of promising startups and emerging technologies are attracting investors, including Bill Gates and Chevron Technology Ventures. Breakthrough Energy Venture is investing $1.5 billion in a public-private partnership with the U.S. Department of Energy to accelerate commercialization of long-term Energy storage; Iron-flow battery company ESS Inc raised $246 million in a listing on the New York Stock Exchange. Iron-air battery company Form Energy raised $240 million in Series D financing. Energy Vault, a gravity Energy storage company, raised $100 million in Series C financing; Malta, a heat storage company, raised $60 million in Series B financing. Highview Power, a liquid-air energy storage company, raised more than $145 million.
Business models are more diversified
On the user side, especially for commercial and industrial users, previously driven by saving electricity bills and encouraging the use of clean energy, there is now a greater desire to increase resilience and be able to live normally in response to extreme weather disasters. For larger power - and grid-side projects, it is desirable to select suppliers who can consistently deliver solid products.
As the business prospects of the energy storage market improve and more financial institutions enter the sector, these new players are driving the demand for innovative business models such as energy storage as a service. We also see a huge demand for digital products that optimize assets, a business model that combines energy storage, services and digital product optimization. As the grid becomes more complex and asset owners look to optimize their assets to maximize returns, there will be increasing interest in digital tools to optimize overall asset allocation and economic effectiveness. At the purchasing end, there will be more market segments subject to the influence of regions, applications and purchasing preferences. For example, in terms of regions, in addition to the United States, China and Europe, energy storage markets in the Middle East, Southeast Asia, Africa and other regions are also emerging and their scale has begun to grow significantly. From the perspective of application fields, transmission and distribution side and renewable energy + energy storage are hot spots in the international market in recent two years.
In addition, we are seeing more and more energy companies and utilities purchase battery systems directly from battery manufacturers through framework agreements. In turnkey projects, the project owner/developer directly enters into a long-term service agreement with the battery manufacturer to maintain a stable supply of battery systems, which also replaces the previous EPC contract. While energy storage system integrators are increasingly moving to battery management system-level controls, battery providers are offering more sophisticated solutions. In addition, another trend we are seeing is the proliferation of battery management and market bidding software, giving project owners more options to optimize their revenue streams for participating in the electricity market.