Advanced battery energy storage — known as ABES — is one of the few technologies that has the potential to permanently disrupt America’s energy markets.
Although still a nascent industry — with only around 700 megawatts of capacity installed on the U.S. grid by the end of 2017 — ABES is poised to take off, thanks to rising investments in renewables and the declining costs of utility-scale batteries. Some industry experts believe America’s storage market could increase ninefold from 2017 to 2022, albeit from a low base.
In S&P Global Ratings’ view, once the economic rationales improve for batteries, ABES could upend America’s existing power model, creating ramifications for both the energy and capacity markets. The prospects for the battery industry could be further supplemented by ongoing state-level policies to decarbonize the grid. Once these factors become stronger, the power industry likely will reach a point of no return: Battery storage could become a mainstay on America’s grid, complementing the parallel developments in the renewables space.
How advanced is the technology?
Discussions with investors, sponsors and regulators all point to a similar conclusion: Advances in battery storage technologies are inevitable. It’s unclear when the industry will see meaningful change, and answering the question of where battery storage could advance may be easier. We can expect ABES capacity to be installed in areas where both the regulatory and economic rationales are most favorable — given the supplementary effect that battery storage can bring about for states with a higher proportion of renewable generation sources.
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