The microgrid market is expected to expand rapidly over the next 10 years, bringing with it increased demand for energy storage associated with these systems. Energy storage systems (ESSs) deliver services to microgrids similar to the services that ESSs deliver to the traditional grid: resource optimization (fuel, solar photovoltaic, wind), resource integration (photovoltaic, wind), stability (frequency, voltage), and load management. According to a new report from Navigant Research, the total worldwide capacity of ESSs for microgrids will grow from 817 megawatt-hours (MWh) in 2014 to 15,182 MWh by 2024.
“The primary value proposition of energy storage in a microgrid is in improving the payback period of the system, either by enabling an increase in the penetration of renewable energy sources, allowing participation in deregulated ancillary service markets, or reducing diesel fuel consumption,” says Anissa Dehamna, senior research analyst with Navigant Research. “High prices for diesel fuel, a stronger push for the utilization of renewable resources in microgrids, and ancillary service market reforms will all underscore the business case for energy storage for microgrids.”
Advanced batteries and, in some cases, flywheels will take progressively more market share from traditional lead-acid batteries as microgrid systems become more sophisticated and demanding, the report concludes. A 15 percent displacement of diesel generator sets in a remote microgrid would result in a payback period of 2-4 years across all energy storage technologies. The key for energy storage vendors is to find the right business models, partners, and demonstrate the longevity and robustness required of remote systems.
Navigant Research defines the fundamental concept of a microgrid as: “An integrated energy system network consisting of distributed energy resources (DER) and multiple electrical loads and/or meters operating as a single, autonomous grid either in parallel to or ‘islanded’ from the existing utility power grid.”
According to the report, the strongest markets for energy storage for microgrids will be the grid-tied customer-owned microgrid segment in North America, supported by robust growth in microgrids during the next 10 years and favorable regulatory developments that are expected to help improve return on investment (ROI) through participation in ancillary service markets. Technology adoption in this region is balanced between all technologies with a definite bias toward lithium ion (Li-ion) batteries, which are anticipated to take up to 40% market share of this specific market segment.
ESMG activity in Europe and Asia Pacific will be more balanced between remote microgrids, grid-tied customer-owned systems, and grid-tied utility-owned systems. Although Asia Pacific will be a strong market for advanced batteries, particularly Li-ion chemistries, Europe is forecast to adopt a more even portfolio of technologies.
In contrast, the markets in Latin America, the Middle East, and Africa are almost all remote systems, and, as a result, chemistries that are more rugged, cycle well, and can truly maximize renewables on a microgrid system will do better in these markets. These are the smallest markets for microgrids, but they are also the markets that could change rapidly. Energy insecurity and economic growth play heavily in Latin America and Africa, in particular, and could push these regions to innovate and leapfrog ahead of the forecast.
Source: Navigant Research