Challenges Remain in Understanding Energy Storage as an Investment
December 31, 2019
Big deployment numbers and falling costs won’t automatically translate into project finance for battery projects, the author writes.
Energy storage is a rapidly growing segment of the clean energy sector, and prices are dropping fast. Yet many are still struggling to understand how to value energy storage as an investment.
As a growing number of cities, states and businesses commit to 100 percent clean energy, storage is already playing a pivotal role in determining how they will meet these targets. Wood Mackenzie's latest Global Energy Storage Outlook projects that deployments will grow 13-fold over the next six years, from a 12-gigawatt-hour market in 2018 to a 158-gigawatt-hour market in 2024.
This emerging market represents a huge opportunity. Global investments of $374 billion a year will be needed to upgrade the grid with enough flexibility to account for the variable power generation profiles of renewable technologies like solar and wind. Storage solutions are now a growing part of this energy transition and will represent a $150 billion industry in the U.S. alone by 2023.
However, massive deployment numbers and dropping costs won’t streamline project finance for energy storage in the short term. As a nascent industry, battery storage lacks historical data, requiring investors and lenders to familiarize themselves with its unique qualities.