TODAY’S STUDY: THE OUTLOOK FOR ENERGY STORAGE

Market Evaluation for Energy Storage in the United States
February 2012 (KEMA via Copper Development Association)

Executive Summary

Project Summary

Commissioned by the Copper Development Association Inc. (CDA), this paper evaluates the near-term market for grid energy storage in the United States (U.S.) and the copper content associated with this market. The CDA is the market development, engineering, and information services arm of the copper industry, chartered to enhance and expand markets for copper and its alloys in North America. To support the CDA with its objectives for an energy storage market assessment, KEMA focused on four core points of analysis:

1. Defining the current market for energy storage in the U.S.
2. Assessing initiatives that are shaping the U.S. energy storage market
3. Forecasting the near-future U.S. market for energy storage from 2011 to 2016
4. Projecting copper demand associated with the U.S. energy storage market

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To forecast an annual market size of grid storage in the U.S., KEMA used its energy storage market penetration model. The analysis incorporated information on current and planned U.S. grid-storage activities, known grid-storage market trends, and proposed energy-storage incentives. KEMA supplemented analysis of the current market and five-year market potential with information on longer term market drivers to provide further insight into the U.S. market potential. The study considers technologies including electrochemical, mechanical and thermal storage, and grid applications ranging from distributed community energy storage (CES) to centralized, bulk storage. The study focuses on the four applications of ancillary services, transmission services, community energy storage, and other distributed storage.

To estimate the copper demand associated with the U.S. energy storage market, KEMA developed estimates of storage-device copper content based on its knowledge of storage materials and on input from storage developers. KEMA also estimated the storage intensity of storage installations, which it paired with the storage market forecasts to estimate market-wide copper demands.

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Methodology

The market for energy storage in the U.S. is a rapidly changing one, with new technologies being developed and new applications being investigated on regular basis. In the midst of this evolution, however, a number of common applications and technologies have arisen. To create a snapshot that is representative of the U.S. grid energy storage market, KEMA’s analysis focuses on these predominant applications and technologies positioned for near-term growth. As such, the first step of the analysis was to identify the predominant storage applications and pair them with the predominant technologies to identify technology/application bundles that represent the market. Current activities around copper-intensive technologies and applications are also examined and summarized in this step.

After identifying energy storage bundles, KEMA researched current and planned installations by bundle. To develop estimates of future growth, KEMA combined information on current activities and investments with its payback-based technology penetration model. The model leverages energy technology adoption “S-curves” developed based on KEMA’s experience with and insights on renewable and energy storage technologies; energy and utility market dynamics; and energy end-use market trends, dynamics, and forecasting. To account for the potential influence of financial policy, KEMA defined two scenarios: one that implements a tax incentive based on the latest proposal made by members of the U.S. Congress…and one with no financial incentive…

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Summary of Results

Based on the U.S. energy storage market assessment and analysis of the copper intensities of storage device and their installations, this research finds that the U.S. market for grid energy storage could result in a sizeable demand for copper. In particular, the copper intensity of storage installations appears to be significant though varied, ranging from zero to over three tons per megawatt (MW), depending on the installation configuration, type of electrical equipment, and storage type.2 The total incremental copper demand associated with U.S. grid energy storage is estimated to range from roughly 900 tons of copper to over 3,000 tons of copper. Additional findings from this research are noted below, by topic area.

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Copper Demand by Market Segment.

Applications for renewable energy integration and ancillary services appear to have the largest near-term associated demand for copper, with additional copper intensive applications, such as CES poised for strong growth.

• Renewable energy integration applications for energy storage appear to have a strong associated demand for copper. Because of the timelines of pumped hydropower investment, lithium-ion, compressed air energy storage (CAES), and lead acid storage are the largest contributors for this market. Estimates for the cumulative associated copper demand range from more than 650 tons to almost 2,200 tons, depending on the existence of financial incentives. The associated incremental copper demand ranges from over 300 tons to over 1,800 tons.

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• Energy storage for ancillary services also appears to have a strong associated demand for copper, due to its relatively high copper intensities and relatively high expectations for near-term growth. Estimates for the cumulative associated copper demand range from more than 630 tons to almost 840 tons, depending on the existence of financial incentives. The associated incremental copper demand ranges from over 520 tons to over 720 tons.

• Though the market for distributed thermal storage is relatively large, the copper intensity is relatively limited, limiting the overall associated copper demand of this segment. Other types of distributed energy storage have higher copper intensities, but will likely have limited market penetration over the next five years. Estimates for the cumulative associated copper demand range from more than 100 tons to 160 tons, depending on the existence of financial incentives. The associated incremental copper demand ranges from over 50 tons to over 100 tons.

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• The market for transmission-related storage applications is potentially limited in the near term, though the copper intensities for these applications can be relatively strong. Estimates for the cumulative associated copper demand range from more than 85 tons to more than 250 tons, depending on the existence of financial incentives. The associated incremental copper demand ranges from over 5 tons to over 170 tons.

• CES also appears to have a limited associated demand for copper in the near term, due to expectations of limited market growth over the next five years. However, because of its strong copper intensity and potential for large mid- to long-term growth, this area could have strong associated copper demand over time. Estimates of the cumulative associated copper demand range from almost 20 tons to almost 225 tons, depending on the existence of financial incentives. The associated incremental copper demand ranges from almost 15 tons to over 220 tons.

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Copper Demand by Application.

The demand for copper associated with the U.S. energy storage markets noted earlier comes from not only the copper content of the storage units themselves but also from the electrical equipment needed to operate the energy storage with the grid.

• The copper content of grid energy storage installations appears to be significant, ranging from zero to over three tons per MW.
– On average, the CES and ancillary services applications have an estimated associated copper intensity from around two to over two and a half tons per MW.
– Other distributed storage could offer high copper intensity, but the majority of these installations, such as thermal energy storage, offer the lowest copper intensity at 0.04 tons per MW.
– Applications for renewable energy integration and transmission services can range from 0.3 to 3 tons per MW.

• Copper intensities can vary significantly by installation and storage technology.
– With many storage applications in the demonstration phase, energy storage installations have yet to conform to standard configurations.
– Distributed applications, however, generally have higher copper intensities because they use more lower-voltage equipment, which typically has higher copper intensity. Lower voltage components are more likely to use copper due its higher conductivity and lower maintenance requirements.

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Copper Demand by Energy Storage Type.

At the unit level, energy storage devices range from zero to nearly 0.3 tons of copper per MW.

• Copper can play a role in the fundamental design of storage units by contributing toward internal connections and current collectors in battery technologies or motors for pumped storage or CAES devices.

• Lithium-ion, flow, and sodium batteries as well as flywheels, CAES, and pumped hydropower are strong users of copper at the unit level, ranging from over 0.10 to nearly 0.3 tons per MW

• Thermal storage, lead-acid batteries, and super capacitors exhibit the lowest copper intensities, ranging from 0 to 0.03 tons per MW.

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The U.S. Energy Storage Market.

Overall, opportunity abounds as the market is strong and robust, and has large potential. However, the market is still developing with technology and policy still evolving. The market needs to continue with initiatives to reduce costs and increase experience in order for growth to meet expectations. KEMA estimates that over the next five years, the U.S. grid storage market could grow to between two to four gigawatts (GW), depending on the existence of financial incentives.

• Many new technologies are under development and a handful is ready for commercialization.
– Mature energy storage technologies currently constitute the majority of the energy storage market today. These include thermal energy storage, pumped hydropower, and CAES.
– In the near term, battery technologies and thermal storage are expected to have the strongest growth areas.
– Second generation technologies are emerging and research is continuing to be fruitful.
– Venture capital investment is booming both inside and outside of the U.S.

• The ability to scale quickly is seen as a challenge, as is the ability to bring down costs.
– Financial incentives could have a large impact on market size in the next five years by defraying initial investment costs and helping to grow the market.

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• The U.S. markets around grid-storage applications are still evolving.
– Policy developments are continuing to shape the development of markets around grid applications, and demonstrations are continuing to define grid application success and inform technology value propositions.
– Markets around some of the grid storage applications are expanding now, such as ancillary services, and markets for other applications that are developing now, such as peaker plant applications, will likely come to fruition after five years.

• In the next five years, costs are expected to come down (via improved system integration, increased production, and enhanced distribution capability), investments are expected to continue, and areas currently in the demonstration phase will likely start to commercialize.

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Copper and Other Industries Associated with Energy Storage.

Because of its potential role in supporting the integration of renewable energy, energy storage may also help bolster the copper demand associated with renewable generation.

• Energy storage is one of many tools available to help address renewable intermittency.

• Energy storage can also assist in the integration of renewable energy by helping to address transmission constraints.

• The estimated copper intensities of typical wind farms and typical centralized solar plants, according to prior CDA studies, are three to six tons per MW and two to five tons per MW, respectively.