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NETWORK / 38 / OCTOBER 2016 26% 15% D O M E S T I C T O D O M I N AT E A growing domestic market could threaten established storage business models The Global Energy Storage Forecast from Bloomberg New Energy Finance (BNEF) has indicated that a surge in storage capacity will push behind-the-meter storage to become the biggest market by 2024. Currently, utility-scale storage developments represent 84% of total installed capacity globally, but by 2024, when capacity will reach 45GW, behind-the-meter will make up two-thirds of the market. The sheer volume of installed domestic ca- pacity will create the opportunity for companies to aggregate and provide grid services. This could threaten the business mod- els, only just established as is the case with National Grid's Enhanced Frequency Response (see more, opposite), which would otherwise be provided by standalone utility-scale assets. However, BNEF says this will be welcomed by regulators and market operators once behind-the-meter storage has been proven to be reliable because it will allow for a more effi - cient energy system. Such assets could provide peaking capacity, whereas a specifi c peaking facility would have a very low utilisation rate. In Europe, capacity growth will largely be driven by PV plus storage installations, going from a niche application to 64% of capacity in 2024 as the payback periods for end-user systems start making economic sense. PV plus storage will become a signifi cantly larger market opportunity than industrial and commercial demand reduction. S E C O N D - L I F E C A PA C I T Y A N D R E P U R P O S I N G C O S T S 29GWh Of which 10GWh will be suitable for reuse £19.54/kWh 5.2GWh £36.83/kWh 0.1GWh £75.16/kWh 95GWh S E C O N D L I F E The future of energy storage could already be in use Earlier this year the fi rst example of a "second-life" battery came to market in the UK when automotive manufacturer Nissan joined forces with a storage company to develop its xStorage product. The technology may be only in its infancy, but BNEF predicts that the global market for second-life batteries will be huge. In its new Advanced Transport report it says the volume of second-life batteries available for use in stationary storage will explode by 2025. Currently, all electric vehicles (EVs) on the road are around fi ve years old and will have experienced little loss in driving range. But by the time these vehicles reach 8-10 years the driving range will become signifi cantly affected and most owners are expected to either scrap the car or replace the battery, releasing 5.2GWh of battery capacity for reuse. By 2025 this will have risen to 29GWh, 60 times the 0.1GWh available in 2016, of which around 10GWh is expected to be suitable for reuse. While these batteries no longer meet the requirements of use in EVs, they can have as much as 70% capacity remaining. If there is fi ve years of storage life left, and they are not damaged, they may be suitable for use in stationary storage. BNEF says used batteries will be cheaper than new by the early 2020s, but it is not clear if this will remain the case as the cost of new batteries starts to drop. EV manufacturers have a strong interest in developing a second-life market, but a number of barriers also remain, meaning a sizeable market is not a foregone conclusion. Drivers: • Value retention – Early data suggests EVs do not hold their value compared with combustion engines. A second-life market would help maintain value. • Unregulated market – Car manufacturers will be keen to keep control of branded products. • Reduce costs – With 70% energy use left, reuse would reduce the lifetime cost of the battery. Barriers: • Undecided value – There is yet to be a market and agreed price. The price will largely depend on individual quality. • No warranty – Car manufacturers are refusing to warranty batteries used outside of vehicles, making purchasers wary. • Limited lifespan – Second-life batteries may only have fi ve rather than 15 years left. • No uniformity – Batteries vary from one manufacturer to another. Key numbers • Currently, utility-scale storage developments make up 84% of total installed capacity, but by 2024 behind-the-meter storage will account for two-thirds of capacity. • By 2024 capacity will reach 45GW, 16 times the current amount. • Energy storage will see investment totalling £33 billion by 2024 ($44 billion), compared with £2.9 trillion ($3.9 trillion) in power generation capacity. 2020 2025 2016