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Frost & Sullivan: Emerging Business Models in Energy Storage Market Close the Gaps in Distributed Power Generation

Frost & Sullivan: Emerging Business Models in Energy Storage Market Close the Gaps in Distributed Power Generation


SINGAPORE, May 19, 2017/ — Growing demand for distributed energy generation and energy storage system (ESS) technologies is producing new ESS business models. In Organization for Economic Co-operation and Development (OECD) countries, innovative models will open up opportunities for ESS original equipment manufacturers (OEMs), project developers, and ESS aggregators. In non-OECD countries, ESS leasing companies and distributed ESS aggregation companies will benefit. To capture these new market opportunities, consumers need to be properly supported with financing options for ESS installations.
“Changing customer needs, emergence of prosumers with renewable energy (RE) generation and ESS capacity, and the development of technologies and smart infrastructure are bolstering the global ESS market,” said Frost & Sullivan Energy & Environment Industry Analyst Avanthika Satheesh Pallickadavil.
“Since the ability to integrate, control, and monitor distributed ESS solutions is key to most ESS models, substantial investments in information technology platforms, including smart meters and control devices, will be required for smooth operation,” she added.

Emerging Business Models in the Global ESS Market, 2017 is part of Frost & Sullivan’s Energy Storage Growth Partnership Subscription and explores eight business models across grid scale, residential, and community-level ESS segments. Emerging business models in grid scale ESS are transmission or distribution system operator (TSO/DSO)-owned assets, third-party owned assets, and shared assets. Upcoming models in behind-the-meter ESS are virtual power plant (VPP) model 1—demand response (DR) aggregator model, VPP Model 2—generation company (GENCO) aggregator model, and technologies/service provider model. For community storage system, new business models include community energy trading system and district storage system.
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The majority of new ESS models are focussed on installations on the consumer side. While this is the fastest growing market segment, the high capital expenditure (CAPEX) involved is a concern. As such, ESS business models that can ease the CAPEX burden will become popular in the consumer segment.
However, inefficient and old infrastructure remains a key drawback for the ESS market, and may delay adoption of new business models. The electricity grid in some countries is old, with significant upgrades required to improve the efficiency of existing assets and integrate new solutions to support the large-scale deployment of renewable sources. Until grid investments by utilities are on track, customers will be unable to implement their ESS models.
“Nevertheless, most of the emerging models facilitate an alternative revenue stream for existing ESS assets, which is bound to generate interest amongst stakeholders. Therefore, new ESS models should aim at minimising the payback period to encourage participation,” noted Satheesh.
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