News Article
Off Grid Competition Growing
Lux predicts competitive posturing in off-grid sector
Struggling to get their feet in the door of transportation and grid-tied markets, emerging electrical storage developers have begun eying off-grid opportunities as a way to attain scale and lower costs. But the off-grid market represents a rapidly closing window of opportunity for emerging storage, only developers who take immediate and intelligent action will capture a meaningful share of the market, according to a new report by Lux Research.
The report, titled “Off-grid: A Modest Meal for Starving Storage Developers,” forecasts opportunities for emerging battery, flywheel, ultracapacitor, and fuel cell technologies in off-grid markets, such as telecommunication networks, datacenters, and mobile and semi-permanent military bases. The off-grid storage market will grow from $9.9 billion in 2011 to $13.5 billion in 2016, a 6% compound annual growth rate. Emerging technologies will be the fastest growing segment of the market, growing from $1.5 billion in 2011 in 2011 to about $4 billion in 2016, a 22% CAGR.
“Considering the current financial and regulatory state of grid-connected storage, the off-grid market presents a relatively bright opportunity for emerging storage technologies,” said the report's lead author, Steve Minnihan. “But given the sheer number of developers competing for a share of the market, decisive action is needed to succeed.”
The report bases its analysis on a lifetime cost calculation for each technology, market, and application it covers. Among its key conclusions:
• Li-ion sees small, steady growth in diversified markets. Li-ion batteries will grow from $795 million in revenue in 2011 to $2.2 billion in 2016, a 23% compound annual growth rate (CAGR). Thanks to its improved cycle life and energy density over lead-acid batteries, lithium-ion will see narrow penetration into the high-end datacenter market, netting 6.8% of unlimited power supply (UPS) capacity and 5.8% of telecom backup capacity in 2016. If Li-ion developers can trim costs 33% to $400/kWh and demonstrate improved lifetimes, then the technology could usurp further market share in the telecom backup market in the latter half of the decade.
• Flywheels and ultracapacitors will supplement, not lead, the UPS market. Together, flywheels and ultracapacitors will capture 10% of the datacenter UPS market by 2016. Flywheels will grow from $49 million in 2011 to $104 million in 2016 (a 16% CAGR), while ultracapacitors will expand from a base of $88 million to $248 million in 2016 (a 23% CAGR). High reliability, superior cycle life, unsurpassed power density, and minimal maintenance costs all help make these technologies strong candidates, but their limited energy capacity raises barriers against broad adoption.
• Fuel cell potential is strong, with room for growth beyond 2016. Fuel cells will grow from $536 million in 2011 to $1.3 billion in 2016, a 22% CAGR, through adoption in the off-grid telecom power and datacenter market. This expansion won't be enough, however, to support the expansive list of fuel cell developers, leading to fierce competition and consolidation.
