Energy storage: evolution, not yet revolution

Although the automotive industry is a key area for new energy storage technologies, research, development and deployment has been extended to new and overlapping industries, for applications that range from the storage of kinetic energy and demand-side management in the energy utility industry, to energy efficiency in the non-automotive transportation industries.

The electric vehicle industry represents significant market potential for new energy storage technologies, as evidenced by some of the world’s largest vehicle manufacturers’ sizeable forays into the world of plug-in hybrid and electric vehicles. For the utility industry, on the other hand, power storage presents a way of delivering longer-term energy efficiency strategies at a time of increasing energy import dependency, capacity constraints, onerous environmental regulations and lucrative public incentives.

All have spurred the addition of record levels of solar energy and wind power assets, whose technical efficacy and commercial appeal can be enhanced by promising energy storage technologies.

For these reasons, power storage technologies rightly belong on investors’ radar screens, as they offer the promise of mass, albeit progressive, commercialization in the medium term. In the process, however, energy storage technologies will have to overcome some significant hurdles. Costs are still disproportionally high relative to technical capabilities and added value. Worthy of mention, also, is the fact is that the auto industry is only slowly recovering from the economic downturn, having been one of its heaviest casualties.

Nevertheless, in 2009, public funding opened the door for $472m of private venture capital investment in energy storage globally. In the same year, the US stimulus package set aside $2 billion in advanced lithium ion batteries manufacturing grants and up to $25 billion in loans for advanced electric cars.

Now, the biggest rollout of electric vehicle infrastructure in the world is about to begin in the US, with 11,000 charging stations scheduled to be built across 11 major cities by the end of 2010. While the automotive and utility giants have clearly turned their attention to energy storage technologies and infrastructure, it is worth highlighting that both are particularly slow moving.

Smaller niche pure-players (the likes of Tesla) will have a big part to play in driving innovation and cutting costs in order for the industry as a whole to survive the wait for the mass take-up of electric vehicles and the development of grid market applications. The energy storage manufacturers that are most likely to survive this waiting period are those with applications that span multiple industries.

Against a backdrop of heightened government and venture capital interest, Datamonitor expects the amount and pace of energy storage announcements – both technical and financial in nature – to increase in the months and years to come. In the immediate to short term, however, most will fail to deliver the innovation that will spur the mass take-up of electric vehicles and deliver more renewable grid energy. The investment community is, nevertheless, deeply entrenched in the energy storage market, a trend which is likely to continue.

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