Recently, residential and commercial storage deployments represent just 15 percent of the nascent U.S. energy storage market. In a new report, The Behind-the-Meter Energy Storage Landscape 2016-2021, GTM Research identifies major shifts in the market that will result in a boom for the behind-the-meter segments, which GTM Research forecasts to reach 1 gigawatt, representing half of U.S. energy storage deployments by 2021.
According to the report, key drivers that will allow the behind-the-meter segments to surpass the gigawatt mark include geographic diversification, emerging financing opportunities, business model evolution and adoption by utilities.
The bulk of behind-the-meter storage deployments today are concentrated in four regions: California, New York, Hawaii and PJM. As costs fall and more financing becomes available, the market will inevitably grow to new state markets.
Financing is beginning to gain traction; however, no specific model currently dominates the market. The report identifies three models and provides examples of companies offering each. The models include shared savings, leases and one akin to a PPA, all of which provide distinct benefits and drawbacks.
“Residential financing is very rare at the current juncture,” said Brett Simon, GTM Research storage analyst and lead author of the report. “Today, most financiers are not comfortable with storage, given its technology risk and lack of decisive economic case compared to other technologies, though as the market matures and clearly monetizable value streams emerge, more financing will become available.”
The report notes that project developers and commercial and industrial (C&I) energy management service providers are increasingly adding storage to their portfolios. As costs continue to come down, storage will be deployed to lower customer bills and provide increased resiliency in the C&I segment.
Utilities too will begin to offer energy storage to end customers as part of their business model. Behind-the-meter storage will increasingly be called upon to supply grid services, offering new opportunities for project developers, and requiring advances in aggregation and dispatch software.
“Leveraging behind-the-meter energy storage presents a significant opportunity for U.S. utilities to supply grid services and lower system peaks,” said Simon. “Furthermore, utilities offer an additional sales channel for storage system vendors to bring their products to market, while end customers can benefit from reduced electric bills and the opportunity to have a storage system for backup power.”