Morgan Stanley predicts market for grid storage will explode in next 3 years

by Steve Hanley, Clean Technica

A new report authored by Stephen Byrd, a utility and cleantech analyst at Morgan Stanley, and Adam Jonas, its auto analyst, shows that they are bullish on the market for grid storage products. “Demand for energy storage from the utility sector will grow more than the market anticipates by 2019–2020,” the pair says.

They predict the demand for grid-scale storage will increase from less than $300 million a year today to as much as $4 billion in the next 2–3 years. Byrd and Jonas believe there will soon be demand for up to 85 gigawatt-hours of storage — worth about $30 billion a year. 85 GWh would be enough to supply most of New York City for a year.

Their report, entitled “An Underappreciated Disruptor,” claims that the low price of wind and solar energy together with the falling price of grid storage products has created a situation in which renewable energy is now reliable enough to be considered a mainstay of the utility industry and not just a specialty player, such as on the island of Kauai in Hawaii.

Demand for electricity peaks in the morning and late afternoon. Traditionally, that’s when so-called “peaker plants” get brought online to handle the extra load. But firing up and then shutting down those facilities costs utility companies lots of money. If they have access to grid-scale storage, they can access it instantaneously and save substantial sums of money.
Owners of those peaker plants will be squeezed by an increase in grid-scale storage capacity.

“Storage effectively provides a low-cost source of power, eliminating the need for the highest cost, least efficient conventional power plant,” says the report. “We think utilities could deploy storage as a way to enable the growth of renewables and/or defer costly transmission and distribution projects,” says Byrd.

More grid-scale storage will also promote a more distributed grid architecture, one that employs a “plug and play” model that better suits the needs of utility companies, rooftop solar customers, and electric vehicle owners. “The grid of the future is becoming more complex, necessitating improved grid infrastructure to accommodate a proliferation of distributed energy resources,” Byrd and Jonas suggest in their report.