Part 1: Will energy storage live up to the hype? Factors shaping the energy storage industry
By Jennifer G. Gallegos, director of programs and communications, Yotta Energy
Throughout the last few months, we have seen a radical shift in looking at renewable energy alternatives due to the ongoing energy crisis. What used to be just a vision for the future or “something that we would eventually transition to” has quickly been pushed to the forefront of our reality as we look to build energy resilience and break free from dependence on fossil fuels. Despite many renewable energy options emerging, such as solar, wind and even hydrogen, there is one common theme: we need innovative energy storage solutions. While the energy storage industry is in its infancy, it is constantly evolving with innovative technologies. For example, key factors drive growth in the energy storage sector and accelerate development and deployment within the next few years. This article examines the main growth factors for energy storage, how they shape the renewable energy industry, and why energy storage needs to live up to the hype to play a prominent role in the global energy economy.
Power shortages and outages
During the last several years, natural disasters, from wildfires to winter storms, have ravaged our existing electric grid and disrupted the flow of energy. The Texas blackout last winter, caused by three winter storms, left millions of homes and businesses without electricity for days. And history could easily repeat itself as state leaders continue to urge local communities to be prepared for possible power shortages.
California also faces similar challenges on the opposite side of the natural disaster spectrum. With wildfires causing planned and unplanned power outages, California residents are seeing an increased risk of powerlines catching fire, causing massive damage. While California has faced these issues for years, the state has yet to develop a solution to address them.
Hurricane Ida also left hundreds of thousands of businesses and homes from Louisiana to Massachusetts with extreme flooding and no power for over a week, which restricted rehabilitation efforts and led to many deaths. We’ve learned that no area of the country is immune to power outages caused by natural disasters. As natural disasters become more frequent and more intense, we need to develop and implement ways to bolster the existing electric grid. Deploying more renewable energy and energy storage in our communities are two ways we can increase the antifragility of the grid.
Increased policy by the new administration
During the first two years of his presidency, Joe Biden has made it clear through planned and already passed legislation that he is pushing renewable energy and energy storage technology innovation development and deployment forward with federal policy.
The infrastructure bill was a good start and included $14 billion for resilience programs — where energy storage is a likely investment — as well as $11 billion in grant funding for states, utilities and other operators of energy storage that want to make investments in resilience, according to Energy Storage News.
In addition, Joe Biden recently invoked the Defense Production Act, which will allow the United States to secure sources of critical materials like lithium, nickel, cobalt, graphite and manganese that are used to make batteries for electric vehicles and energy storage. This comes as gas prices have significantly increased since last year.
We still need more federal legislation to support research into technological innovations and the deployment of renewable energy and storage initiatives. We also need local and state governments to pass policies to deploy more renewable energy and achieve carbon emissions reduction goals. Some states have already begun to do this, such as California. Introducing more federal and state policies will be a tremendous driver and necessary for increased renewable energy and storage deployment.
Supply chain shortages
With COVID-19 still taking a global economic and social toll, including foreign conflict, the worldwide supply chain shortage stretches across nearly every sector. The ongoing supply chain disruptions will be a significant factor in the energy transition. We have already begun to see several new initiatives that will bring manufacturing back to America. For example, Tritium announced its new manufacturing facility to build chargers for EVs in Tennessee earlier this year, and Intel has released plans for a new semiconductor plant in the Midwest.
Adding to the supply chain woes is a new investigation into circumvention tariffs on solar products from Cambodia, Malaysia, Thailand and Vietnam. This issue has caused the solar and storage industry to inquire about increasing stateside manufacturing. With those four countries providing 84% of U.S. imports and many deliveries being canceled due to the investigation, there is a severe gap in the market that must be filled to move solar and storage adoption forward. It’s difficult to predict if this investigation will increase domestic manufacturing of solar modules. New solar module technologies may now have an edge as companies look to adopt and install what’s currently available on the market.
More investments in climate technology
Last year, climate tech received $37 billion in global venture capital, 2.5-times pre-pandemic investment levels.
When the United States rejoined the Paris Agreement and attended COP26 this past fall, it signaled that renewable energy initiatives were once again a top priority for the U.S. government. Likewise, VCs have followed suit and increased capital investments for renewable energy companies and clean technology startups. The influx of capital will fuel innovative businesses to further research, develop and scale their technology, thus causing the industry to flourish and grow at a much more rapid pace.
Growth of EVs
The rising adoption of EVs is also a huge factor in moving energy storage forward. The soaring growth in EV sales is mainly due to the influx of new EV types available for purchase and the surging gas prices. As EV sales skyrocket, increasing adoption of onsite energy storage and solar solutions will logically be the next progression in the energy transition. People will look for solutions that mitigate electricity costs by adding onsite EV chargers.
Global conflict
Due to international instability, specifically in Ukraine, there’s a strong impetus for countries worldwide to reduce dependence on fossil fuels. Natural gas has now reached historically high prices due to sanctions against Russia. This price hike will be another factor to drive growth in energy storage investment, especially in the United States.
In addition, cobalt and other rare metals come from unstable nations with growing civil unrest. Ukraine and Russia are also suppliers of lithium and nickel, used to produce EV batteries. These global conflicts can potentially shape how we source the materials needed to build batteries for energy storage systems. Depending on the outcome, the industry might need to look elsewhere or at other chemistries to support the scaling and growth of energy storage technologies.
The world is constantly changing and evolving, and with that comes unique challenges for all industries, including energy. Despite waves of unrest and conflict rippling throughout the world, there is a silver lining — all things point to the fact that we need to initiate a significant shift in the way we produce, store and use energy. Renewable resources and energy storage have emerged as the most practical and economically viable solutions. The factors noted above will continue to drive the renewable energy sector forward and lead to many new trends that we have yet to see in energy storage deployments and technological innovation. We don’t know what the future of energy storage will look like precisely. However, we can glean that it will augment the existing electric grid as we move to fully utilize the clean energy we produce.
Read Part 2 here.
