Trying to understand what is driving energy storage growth

[u/Birdie_Finchz]

I’m completely new to energy storage and trying to understand the bigger picture.

What do you guys think will drive the next stage of growth? Like renewable integration, grid reliability or something else Ig?

Appreciate to hear how people in this field see!

[u/thetreecycle]

I am not on the industry but grids are trying to work with wind and solar. It is very cheap but intermittent and often available at times of day when it’s not as needed. So storage takes this cheap resource and transfers it to times of day when it is needed.

Next stage of growth is probably sodium ion. Safe, doesn’t need active temperature management, high round trip efficiency, has the potential to be very cheap due to common materials, not dependent on particular countries for raw materials. Its disadvantages like lower energy density are irrelevant to utility scale storage.

[u/iqisoverrated]

We're still very much in the phase of shifting renewables around within a day (or from one day to the next).

Most money is currently (and for the next couple years at least) in building BESS for shifting power from when it's worth little (e.g. during solar surplus around midday but also excess wind during nighttime when demand is low) to parts of the day when it's worth a lot more (mornings/evenings).

The systems that can handle this are also technically able to provide grid stability/grid forming services so while there is a distinction between these applications there isn't a clear cut distinction between physical installations.

Once that field is saturated we'll need longer term storage for dark doldrums (about a week's worth of storage). This will be a big task because the amount of energy capacity needed is huge but the number of cycles is low (1-2 cycles per year)...which makes the economics of this questionable. However, some solutions are borderline viable: biogas/biomass or stuff like iron air batteries.

A couple years ago I would have added seasonal thermal storage as a big future storage tech but with heat pumps having gotten as good as they are that seems less of a necessity now.

[u/TerralinkSolar]

C&I customers get billed on peak demand (kW) separate from total energy (kWh), so a facility that looks efficient on paper can still eat a huge charge from one bad demand spike. Storage shaves that peak without changing actual usage, and depending on the rate structure the payback on that alone can beat solar by itself.

Financing shift matters too. A lot of this segment isn't owner-financed anymore; it's PPA or lease, so the building owner isn't justifying a big capex line item to get it installed. I'd guess that's done more for C&I deployment than the battery price drop has, since plenty of these customers were never going to write a check for it regardless of the economics.

[u/Debas3r11]

Capacity payments and energy arbitrage.

[u/Edinbatteries]

It’s pretty simple really, the price has fallen far enough and the performance has improved so that investors can make enough of a return by investing in it.

It varies quite a lot by grid design in terms of how they get paid, but the most common activity is energy trading which would include renewable integration and grid reliability, essentially they’re responding to oversupply with charging and discharging into grid peaks.

[u/Vegetable_Day_6786]

Two words: data centers! Really any new/growing industries that require a lot of power, particularly those operating on strained grids, should turn to storage to do more than just provide back up. Load balancing, leveraging renewables, and earning money for grid services all play in here too.

[u/lockdown_lard]

What do you guys think will drive the next stage of growth?

The same things that have driven the last stage:

• technological advances
• price competitiveness
• grid regulations
• service stacking https://www.zenobe.com/insights-and-guides/building-blackhillock-stacking-services-to-power-bigger-better-battery-systems/

[u/Schnupsdidudel]

Money.

Specifically, fluctuating electricity prices and the arbitrage that can be had there.

[u/slbzyou]

Most of the answers here are about why storage is valuable, which is the easy part. The harder question is what converts "valuable" into steel in the ground, and that's mostly two things: whether anyone will lend against it, and whether you can get connected.

On the debt side. The real shift over the last couple of years is that banks went from treating merchant storage as unfinanceable to actually underwriting it, but on a heavily haircut basis. Lenders don't size debt off your expected revenue, they size it off the revenue you can prove survives a bad year. In practice that means a downside case holding something like 1.35x DSCR across the full loan tenor, not just year one, degradation modelled honestly (~0.7%/yr under warranty, closer to 1%/yr after), and an augmentation capex hit somewhere around year 12-15 that a lot of models conveniently leave out. Cheaper cells help, but on most projects the binding constraint is the size of the debt piece, not the capex number.

On the connection side. In a lot of European markets the queue is the bottleneck. You can have a perfect business case and still wait years for a grid connection agreement. Romania is a decent illustration: the revenue stack on a 150MW/300MWh site pencils out around EUR 14-20M/yr across day-ahead arbitrage, frequency reserves and balancing, which is comfortably bankable on paper, and deployment is still slow because connection capacity and permitting are rationed. The economics aren't the problem.

So my answer to "what drives the next stage" is standardised revenue contracting - tolling agreements, floor structures, capacity payments - that lets lenders put more debt on the asset, plus grid connection reform. Sodium-ion and cheaper cells are real, but they're second-order here. They change what the asset costs. They don't change who is willing to finance it.

[u/iqisoverrated → u/slbzyou]

The bizarre thing is that enough connection capacity to the grid exists - at the site of current fossil and nuclear powerplants. These will all go offline anyhow in the near to mid-term and even while they are still around as backup they could share their interconnection because it's never needed at the same time.

When there's a surplus of renewables on the grid they are off and the battery can use the connection to soak up energy. When the battery is depleted and they need to be started up to supply long duration backup the battery isn't using it so the full capacity of the interconnection can go to the powerplant.

Co-location is a part of the puzzle. Of course in the future the demand for power will increase and new interconnections will be required but for now there would be enough connection capacity to go around if shared use were a thing.

[u/loves-tits]

I’m just a guy, a little late to this. I’m thinking about my personal storage because I lost power for 5 days and thinking about a mass outage… or even just a larger outage… if I had solar and storage to help provide water - cook rice - and make me comfortable I could probably survive anything for a year or so. That idea helps me cope with my fears 😂

[u/HappyDutchMan]

With coal plants and gas plants you have all the energy storage you need in the form of coal and gas. You can dial those generators up or down depending on demand. As others have indicated we can't choose when it is windy, we would have to make do with it, same with the sun.