3 things that are holding back grid energy storage

AES Energy Storage project in Chile. Image courtesy of AES Energy Storage.

There are only a little over 500 deployed energy storage projects in the world, according to Pike Research. Energy storage technologies include things like battery farms, compressed air storage (pushing air into a container and letting it out) and pumped hydro (pumping water up a hill and then letting it flow back down).

The sector is emerging, and grew just 8 percent over the first half of 2012, says Pike. While there are now 649 energy storage projects that have been announced, of those, there are only 514 projects deployed.

So what’s the hold up? Energy storage has long been considered the key to adding more clean power onto the grid. Because solar and wind only generate power when the sun shines or the wind blows (called variable energy) they need to be connected to energy storage projects to level out that generation. Storage projects can bank, say, the extra power from a wind turbine on a windy day, and then release that energy when the wind stops blowing. Power companies can also use energy storage projects to better manage the grid for a variety of applications.

According to Pike, here’s three reasons for the slow moving sector:

1). The technology is still too expensive: The costs vary a lot between different types of energy storage technologies. Pumped hydro is one of the cheapest forms, as is compressed air energy storage, but lithium ion batteries are far more expensive. A report from EPRI last year found that if energy storage prices dropped to $500 per kilowatt hour that could boost the market.

2). The market is overstated: There are more projects that have been announced — and are even inactive — than are deployed. Some of these announced projects might not ever get built. Inflating the market isn’t good because it creates hype around a sector that still has substantial hurdles.

3). Advanced energy storage tech is dependent on government support: Many of these projects have relied upon government support in terms of grants. The flow battery project in Modesto that I detailed this week is being built with a Department of Energy grant.

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