1. What Energy Storage CEOs Are Thinking
They may not always be right, but here is a summary of what dozens of energy
storage CEOs think about the market.
(By Mike Munsell on dated October 31, 2013)
In his most recent report, Grid-Scale Energy Storage in North America 2013:
Applications, Technologies, and Suppliers, author Chet Lyons spoke with dozens of
energy storage CEOs and summarized their thoughts. Below is an excerpt of his
311-page report, highlighting eleven common threads shared by energy storage
executives.
1.) There is an increased focus on cost reduction. Over the past few years,
CEOs have focused on getting technologies to work and scaling them up to
commercial size. There are substitutable technologies for every application, so
success will ultimately be driven by costs. CEOs are working harder to understand
the costs of both conventional and substitute technologies, while creating programs
and roadmaps for major cost reduction. There is plenty of room for cost reduction,
especially on a total system basis.
2.) The future of Li-ion batteries is still bright. Most CEOs believe that Li-ion
batteries will not be quickly obsoleted, as some experts have predicted. Li-ion
technology is driven by two markets: EVs and grid-connected storage. No other
storage technology can make that claim. In theory, the resulting combined demand
for Li-ion batteries should exert a powerful influence in lowering the cost of Li-ion
batteries. As noted by one executive, improvements in the cycle life of Li-ion have
been significant in recent years. Given all these factors, most CEOs believe that Liion will become increasingly cost-competitive and some (the minority) believe that Liion batteries may even hold the potential to claim a significant fraction of the
stationary energy storage business.

2. 3.) Power versus energy applications still dominate. Most companies are
focusing on power applications versus multi-hour energy time-shifting. CEOs tend to
believe that for right now, the highest value of energy storage is in its power capacity
and locational value, not in the ability to shift large amounts of energy through time.
This is expected to change as storage costs drop. Flow batteries about to hit the
market are helping to shift industry thinking about the changing economics of energy
versus power applications.
4.) Direct regulatory and policy intervention is workable at the state level.CEOs
are active in their home states, but avoid federal efforts due to high cost and low
return. The cost of regulatory intervention at the federal legislative and FERC levels
is seen as highly prohibitive. CEOs are avoiding direct engagement at those levels,
and most want their industry associations to pick up the burden of FERC-level
regulatory intervention. In contrast, most CEOs said they are deeply and actively
engaged in efforts to influence policy and regulations in their home states because it
is impactful in the short term.
5.) Transitional business strategies are critical. CEOs are pursuing transitional
business strategies as a way to survive the early stages of the industry before the
onset of major market demand.
6.) Europe tops China as the most attractive international market. Most U.S.based storage companies have taken steps to enter or expand activities in the
European market via partnerships, agency, subsidiaries or other methods. In
contrast, while the enormous technical market potential of China is appreciated, the
lack of transparent market mechanisms in China and widespread concerns about
theft of intellectual property are keeping most players from making any serious
attempt to explore the Chinese market.
7.) Safety and environmental concerns are a key focus area. Safety and to a
slightly lesser degree low environmental risk have become far more important issues
for CEOs. There is a strong awareness that these will be defining factors in
determining whether a technology or system can ultimately achieve broad market
acceptance.
8.) Cheap natural gas won't kill storage. CEOs are emphatic that natural gas will
not kill the storage industry. However, their plans do take it into account. They
believe that application economics are project- and location-specific. Further, they
point out that applications that are optimized to provide high power versus energy
time-shifting are less impacted by the cost of natural gas.

3. 9.) Multiple value streams are real. CEOs believe that multiple value streams are
real and that if a project can capture multiple value streams, it can be a winner. For
example, a peak power substitution project can also perform frequency regulation
when not injecting peaking energy, while a large solar project that uses storage for
ramp mitigation (due to cloud effects) can also bid into the open-bid frequency
regulation market after the sun sets. The hard part is finding projects where multiple
applications don't significantly cannibalize one another and aren't transactionally too
complex.
10.) The probability of disruptive technologies is high. Most CEOs believe the
probability is quite high that one or more disruptive energy storage technology will be
brought to market within the next few years, five years at most. The arrival of
disruptive technologies is generally welcomed because they will expand markets for
storage and strengthen the industry.
11.) Project financing is starting to appear. A few companies are starting to take
steps to provide or arrange third-party financing for storage projects. The attention
that is now being paid to project financing is a sign that the storage industry is
beginning to mature. For example, American Vanadium has put a financing vehicle
in place so that customers can lease its vanadium redox flow battery system. And
Northwater Capital, a Canadian venture capital firm, has invested in NRStor, a firm
dedicated to energy storage project development that also provides project financing
(This article is from GreenTech Media)