Written by Mark Carter, Vice President of Smart Solutions
Battery energy storage has become a critical component in the transition towards cleaner and more sustainable energy systems, and recent projections show that the global market is set to undergo exponential growth in the coming years. By 2030, experts estimate that the size of this market will increase by a staggering 15-fold compared to current levels. This means that we can expect new energy storage installations to reach an impressive capacity of 411 gigawatts or 1,194 gigawatt-hours in less than a decade.
The United States is expected to experience significant growth in its annual energy storage installations, with estimates suggesting an increase from 4.6 gigawatts to over 27 gigawatts by the year 2031. In contrast, gas-fired resources are set to reach their peak and start shrinking by 4% yearly. This expansion is driven by numerous factors including advancements in technology, decreasing costs, new funding opportunities and increasing awareness around climate change and sustainability concerns.
What is Energy Storage?
In the past, many have relied on traditional fuel sources such as coal or natural gas. However, advances in technology have enabled us to develop more efficient ways of storing energy.
Energy storage refers to the process of capturing energy produced at one time and using it at a later time when needed. It is an important technology that has been gaining increasing attention over the past few years, thanks to its potential for reducing energy costs and improving grid reliability. The need for large-scale energy storage systems has arisen with the help of the growing renewable energy sources such as solar and wind power. According to the International Renewable Energy Agency, approximately 83 percent of all power capacity added in 2022 was created by renewables.
Why Energy Storage
Energy storage can help balance supply and demand on the electric grid. Energy storage systems can store excess electricity generated during periods of low demand, such as overnight or during weekends when factories are closed, and then release that stored energy during peak times when electricity prices are high. This helps utilities reduce their dependence on expensive peaking power plants and improve their overall efficiency.
By connecting solar panels to an energy storage system, excess power generated by the panels during the day can be stored for use later when demand is higher. This not only helps to reduce reliance on fossil fuels during peak times but also ensures a reliable source of electricity even when the sun isn't shining. Similarly, electric vehicle (EV) charging stations can benefit from being linked to an energy storage system, as this allows for fast charging during periods of high demand without straining the grid.
Reaching Sustainability Targets with Battery Storage
As mentioned above, energy storage plays a crucial role in supporting renewable energy sources such as wind and solar power. These sources are intermittent by nature, which means they produce less power when conditions aren't optimal. The growing demand for electricity, coupled with efforts to improve the efficiency of power grids, has led to an increased focus on energy storage technologies. The goal is to capture excess energy generated during periods of low demand, store it efficiently, and use it during peak times when demand is high.
Energy storage systems can also be used as backup power sources during blackouts or other emergencies. As a result, they have become an essential component of modern-day power grids. One of the biggest advantages of using energy storage systems as backup power sources is that they are reliable. Unlike traditional generators, which can be noisy and require regular maintenance, these systems are quiet and require little upkeep. This makes them ideal for use in residential areas where noise pollution is a concern. Additionally, because they rely on stored energy rather than fossil fuels, they produce zero emissions and are environmentally friendly.
Energy Storage Initiatives
Energy storage is proving to be a significant strategic opportunity for municipalities, providing several benefits that improve grid operations and reduce energy costs. It can also provide backup power during storms and benefit the local economy. Across Massachusetts, the Energy Storage Initiative has set ambitious targets to make the Commonwealth a national leader in this emerging market. By December 31, 2025, they aim to achieve a 1,000 Megawatt hour (MWh) energy storage target.
The initiative's goal is driven by the need for more reliable and cost-effective sources of electricity while reducing greenhouse gas emissions. With an increased capacity for energy storage through batteries or other technologies, utilities are better equipped to manage peak demand times without relying on fossil fuel sources. The use of renewable energy can also be more effectively integrated into the grid with smart management systems using energy storage solutions.
Inflation Reduction Act Funding for Energy Storage
In 2021, the installed storage capacity in the United States more than tripled, signaling a significant shift towards clean energy sources. With the enactment of new federal income tax incentives for energy storage deployment and manufacturing under the Inflation Reduction Act of 2022 (IRA), this growth is expected to continue. These incentives will provide crucial support for organizations and municipalities seeking to invest in energy storage technology.
Broadly, the Inflation Reduction Act reserves around $370 billion for energy and climate expenditures. For energy storage facilities, this legislation provides an expected 30 percent federal investment tax credit with potential increases up to 50 percent. This additional support can be a significant incentive for municipalities looking to take advantage of opportunities in the growing field of energy storage technology.
How We Can Help
RealTerm Energy (RTE) can work with you to find strategies to meet your sustainability goals. From EV Charging Stations to Smart HVAC technology, we are your trusted energy efficiency advisor. To date, we have completed energy efficiency projects with over 350 small- to mid-sized municipalities across North America.
Feel free to reach out to me to learn more about your options and how we can help you meet your climate goals while reducing costs and enhancing your community’s experiences.
About the Author: Meet Mark
Mark is responsible for leading and driving strategy & growth across our Smart Solutions portfolio. He has formidable experience directing sales and operations teams at renowned organizations across the U.S., such as Honeywell International, in the automation controls, enterprise software, embedded semiconductor and lighting controls businesses. Mark takes a solutions-sales approach, prioritizing the identification of the customer’s underlying needs. Mark holds a BSc in Chemical Engineering from the University of Maine in Orono, Maine. Chat with Mark.