Growth in the United States to date has been led by California, where market trends and legislative actions have combined to create a rapidly growing market for both distributed and utility-scale energy storage. In 2010, the state passed AB 2514 – the country’s first energy storage mandate – requiring utilities to procure 1.3 GW of energy storage by 2020, of which 875 MW must be distribution grid-connected or customer-sited storage. Southern California Edison (SCE) was the rst utility to procure energy storage under these requirements and announced contracts for 261 MW of new energy storage capacity, five times the amount required under the new state law. SCE’s contracts for energy storage included a 100 MW battery system from AES Energy Storage and a 26 MW thermal energy storage system from Ice Energy.

Many of the energy storage projects procured to meet California’s energy storage requirements will be installed over the next five years, and additional procurements from utilities will continue. In 2015 the state passed SB 350, modifying the state’s RPS to require utilities to generate 50% of their electricity from renewable sources by 2030. More energy storage projects are expected to come online in order to help integrate variable renewable generation.

The majority of the market for advanced energy storage comes from battery technologies, which have seen significant reductions in price along with improvements in capabilities and functionality in the last two years. An average utility-scale Li-ion energy storage system, which could be installed for around $1,500/kWh in 2014 are now being built for under $1,000/kWh. Li-ion batteries have undergone technological advancements in recent years. But cost and operational life continue to present an obstacle to deploying Li-ion storage at utility-scale. New advancements in liquid metal batteries, pioneered by Ambri, are designed to help solve the problem of cost-effective, utility-scale battery storage. Ambri’s liquid metal battery is made from abundant materials, is designed to handle high voltage, and made to last for signi cantly longer than most Li-ion batteries. If successfully commercialized, Ambri’s batteries could also be made at a fraction of the cost of Li-ion batteries.

But batteries aren’t everything that’s hot in energy storage. Other interesting developments include advances in modular thermal energy storage from companies such as Ice Energy and Calmac. Their technologies are used to reduce the energy demand from air conditioners by freezing water at night to provide cooling during daytime peaks. Significant advances have been made in flywheel technology in recent years by companies including Amber Kinetics, Temporal Power, and Beacon Power. New ywheel systems now allow energy to be stored for up to four hours. This technology has the advantage of a longer lifecycle with potentially lower operating costs compared to batteries.

While battery and other hardware improvements will continue, much of the industry’s focus is now on innovation in software and energy management controls. Many leading storage system integrators such as, Greensmith, Invenergy, RES Americas, AES Energy Storage, Stem, and Younicos offer proprietary software and controls that are designed to maximize the value of a system by providing multiple services to the grid or end-users, thereby capturing the maximum possible revenue.

Energy storage enabling technology – including power conversion (primarily focused on inverters), system-level software and controls, and systems integration services – is a portion of the energy storage value chain getting intensive attention. While battery prices have fallen 40% to 60% in the past 18 months, thanks to manufacturing innovations and volumes, energy storage systems overall still vary wildly in terms of price. Now that battery prices have started to come down, the balance of plant—or the enabling technology portion of overall cost— needs to deliver on pricing. Once this happens, the industry will scale further and faster.

Learn more about the growth of energy storage, as well as the rest of the advanced energy industry, by downloading the free report below: