Someday Energy Storage Will Be Worth As Much As Facebook


If you’ve been following any greentech blog or research firm over the past year, you’re well aware that entrepreneurs, investors and utilities, as well as the vendors that sell to them, are getting all hot and bothered over energy storage: technologies like batteries that store energy to be used for the power grid. It’s not unusual to see stats and figures floating around for the energy storage market that sound astronomical. For example, this morning, Pike Research reported that the global energy storage market will reach $35 billion in 2020, and earlier this month, SBI Energy said the global utility-scale energy storage market could grow 15.8 percent per year to over $10 billion in 2015.

But are those stats really all that high? Considering there are tens of thousands of utilities, clean power project developers, municipalities and corporations that could be looking to reap the benefits of energy storage over the next decade, backed by some aggressive federal subsidies throughout the world, $35 billion actually seems relatively low.

In comparison to the web and computing worlds, some speculate that Facebook will have a market cap between $35 billion and $40 billion if it goes public next year. The cloud computing market (on-demand, virtualized computing in a cloud) is estimated to become a $55 billion global market by 2014, according to IDC, whereas the market for energy storage might only be $35 billion in 10 years.

I think that ultimately, the cost of energy storage technologies has to come down dramatically for utilities and others to buy these technologies more aggressively. Lithium-ion battery tech is the one that’s coming down the fastest so far. The global market for lithium-ion batteries for utility applications will grow at a rate faster than at least 10 other energy storage options for the grid, according to Pike Research, including pumped hydro (pump water up a hill and it flows back down), compressed air (energy made by releasing air compressed in a device or underground) and flow batteries (large chemical batteries). Lithium-ion batteries have received the cost benefits of years of development for gadgets, laptops, and now electric vehicles, but lithium-ion battery tech is still, by no means, cheap.

The U.S. has seen a faster growth rate than most other countries in its energy storage market, with a pace of 14.4 percent per year between 2006 and 2010, and the market is expected to grow 26.6 percent per year to nearly $2 billion in 2015, according to SBI Energy. I’d bet that the U.S. federal stimulus funds — both the grants for the smart grid, and the ARPA-E investments in energy storage innovation — have contributed to that expected increased growth rate. Vice President Biden should point to figures like that, instead of suggesting that the cost of solar dropping in half has been due to the stimulus.

As most of us know, energy storage will be crucial to remaking the power grid to be much more efficient and to emit much less carbon. However, the market is moving slowly enough that it will be worth the same in a decade as Facebook could be worth next year. As Bill Gates said earlier this month, Moore’s Law has truly spoiled us for the energy revolution.

For more research on the smart grid and batteries check out GigaOM Pro (subscription required):

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Image courtesy of NREL.

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