The alternative option for energy storage makers: off-grid

When electric vehicles merely trickle into the market and utilities move at a snail’s pace when it comes to buying grid-tied batteries, where can an energy storage developer turn? To the somewhat generic, but decidedly non-power-grid-connected “off grid market,” according to a report put out Tuesday morning from Lux Research.

Analysts with Lux say applications such as cell phone base stations, data centers, and pop-up military bases — disconnected from the power grid and often in remote locations — are an intermediary market that energy storage companies should tap as the EV and grid-storage markets slowly develop. Lux says the off-grid storage market will grow 6 percent over the next five years, from a size of $9.9 billion in 2011 to $13.5 billion in 2016, and newer technologies like fuel cells, fly wheels, advanced batteries and ultracapacitors will have solid chances of scoring in this market.

For data centers, energy storage technologies are used as an uninterruptible backup power supply (UPS), which provide continuous power if the grid fails. Internet companies need to keep high-traffic websites running even if there’s a blackout. Currently, UPS services often rely on large blocks of lead acid batteries or generators, but flywheels and ultracapacitors could score 10 percent of the datacenter UPS market by 2016, says Lux, and lithium-ion batteries could carve out another 6.8 percent of the UPS market by then. The number of data centers will only grow throughout the world as more and more devices and people get connected.

Cell phone base stations and telecommunication networks are another type of infrastructure that will continue to get deployed as more people, particularly in the developing world, buy cell phones. Base stations provide a wireless signal for cell phones in a certain area to pick up the signal, so phone companies deploy these all over the place, and these base stations need back-up power if the grid happens to go down. Often, that back-up power is provided by diesel generators.

Lux estimates lithium-ion batteries could gain 5.8 percent of the market for telecom backup capacity by 2016, and fuel cells will gain a substantial share, too, and are already being used more frequently by telcos in rural and isolated places. Sprint (s s) is doing a 250 fuel cell test in the U.S. using a Department of Energy grant. Vodafone spinout P21 is testing mobile telecom backup fuel cells in Europe, and Deeya Energy is shipping its flow batteries to back up cell towers in India.

Eventually, the grid-tied energy storage market will break out, and the folks at the Electric Power Research Institute (EPRI) peg 2012 as a turning point because by then, companies that have collectively received more than $250 million in federal stimulus funding are expected to complete research and development work and move into field trial stages in the U.S. Electric vehicles are also supposed to one day become more mainstream, but will take years to reach any kind of mass adoption.

Image courtesy of emperley3.