Smart Cities

Conservative Forecasting is Hiding the Speed of the Energy Storage Revolution

Our power system is evolving. Too slow for some and too fast for others. The evolution is symbolized by renewable energy and the infrastructure necessary to manage its fluctuating electricity supply, but there is more to our power evolution than the grid. Smart buildings, smart cities, smart homes, electric vehicles, district heating, and a range of other elements have developed the abilities required to become nodes of a more dynamic and responsive electricity network. At the heart of this renewables-friendly power system evolution is energy storage. Efficiency reduces consumption while intelligent software predicts and responds to enable the multimodal infrastructure that renewables demand, but energy storage brings the underlying flexibility that will lay the foundation for the future of energy provision. In that future, buildings and homes will store and share energy with one another and the grid, electric vehicles will park and plug-in offering additional grid-connected batteries, and all that combines with utility-scale energy […]

Stay ahead of the pack

with the latest independent smart building research and thought leadership.

Have an account? Login

Subscribe Now for just $200 per year per user (just $17 USD per month) for Access to Quality Independent Smart Building Research & Analysis!

What Exactly Do you Get?

  • Access to Website Articles and Notes. Unlimited Access to the Library of over 1,700 Articles Spanning 10 Years.
  • 10% discount on ALL Memoori Research reports for Subscribers! So if you only buy ONE report you will get your subscription fee back!
  • Industry-leading Analysis Every Week, Direct to your Inbox.
  • AND Cancel at any time
Subscribe Now

Our power system is evolving. Too slow for some and too fast for others. The evolution is symbolized by renewable energy and the infrastructure necessary to manage its fluctuating electricity supply, but there is more to our power evolution than the grid. Smart buildings, smart cities, smart homes, electric vehicles, district heating, and a range of other elements have developed the abilities required to become nodes of a more dynamic and responsive electricity network. At the heart of this renewables-friendly power system evolution is energy storage.

Efficiency reduces consumption while intelligent software predicts and responds to enable the multimodal infrastructure that renewables demand, but energy storage brings the underlying flexibility that will lay the foundation for the future of energy provision. In that future, buildings and homes will store and share energy with one another and the grid, electric vehicles will park and plug-in offering additional grid-connected batteries, and all that combines with utility-scale energy storage to provide deep and distributed flexibility for the grid.

Bloomberg New Energy Finance (BNEF) predicts a “122-fold boom of stationary energy storage” over the next two decades, driven by the falling costs of wind and solar power technology, as well as the reducing cost of batteries for energy storage. The total demand for batteries from the stationary storage and electric transport sectors is forecast to be 4,584GWh by 2040, compared to 17GWh in 2018, according to the 2019 report.

“Demand for storage will increase to balance the higher proportion of variable, renewable generation in the electricity system. Batteries will increasingly be chosen to manage this dynamic supply and demand mix,” states BNEF. “The report finds that energy storage will become a practical alternative to new-build electricity generation or network reinforcement. Behind-the-meter storage will also increasingly be used to provide system services on top of customer applications.”

The BNEF report bases its prediction on the forecast of wind and solar making up almost 40% of world electricity in 2040, thereby increasing the demand for, and reducing the cost of, flexibility-enhancing stationary batteries. This, in addition to figures from BNEF Electric Vehicle Outlook 2019, which predicts 57% of all passenger vehicle sales and over 30% of the global passenger vehicle fleet will be electric by 2040, further driving down battery prices. While 40% may seem ambitious to some, the history of renewable energy predictions suggests that BNEF’s 122-fold growth forecast may actually be underestimating the future demand for energy storage.

In 2000, the US Energy Information Administration (EIA) predicted that by 2015 we would see 2.6 billion kilowatt-hours of solar power produced in the US, but by 2014 there were 29 billion kWh installed, fifteen times more than their estimates. The same year, the International Energy Agency (IEA) projected 30 gigawatts of wind power worldwide by 2010, yet wind power produced 200 gigawatts in 2010, seven times more than their estimates. Bloomberg, Goldman Sachs, and almost all the leading forecasters wildly underestimated solar and wind power penetration.

The IEA has a significant impact on both political and economic decisions of governments and stakeholders regarding energy. The World Energy Outlook (WEO) report they publish annually is often used as a basis for policymaking on renewable and conventional energy, WEO projections are, therefore, crucial for economic and environmental prosperity. Research by Metayer et al. in 2015, studied the deviation between the real figures and WEO forecasts from 1994 to 2014.

“The results obtained so far show that projections for solar technologies and wind energy have been strongly underestimated, whereas projections for nuclear energy are contradictory from one year to the next,” reads the paper. “A key reason for the high deviations of solar PV and wind capacities in the projections and the historic data is an incorrectly applied growth pattern. The WEO reports assume linear growth, whereas history shows an exponential growth for the new renewable energy (RE) technologies. The current exponential growth is part of long-term logistic growth of new RE technologies.”

Only one organization came close to predicting the rise of renewable energy, the environmental NGO Greenpeace. Better known for disrupting Japanese whaling boats or protesting against fossil fuel and nuclear energy expansion, Greenpeace produces its Energy [R]evolution report, which analyses data to forecast future energy trends. Their growth predictions on renewable energy have consistently offered the most accurate results. The credibility of Greenpeace forecasts in business, investment, and political circles, however, remains low due to their label of environmental activists.

"Over the past 15 years, a number of predictions—by the International Energy Agency, the US Energy Information Administration, and others—have been made about the future of renewable energy growth. Almost every one of these predictions has underestimated the scale of actual growth experienced by the wind and solar markets. Only the most aggressive growth projections, such as Greenpeace's Energy [R]evolution scenarios, have been close to accurate," highlighted a report from the Meister Consultants Group, now part of Boston-based Cadmus Group.

Despite Trump’s coal devolution, we are entering a greener age of energy, one of technologies that challenge the status quo, championed by organizations that are labeled as activists. So, perhaps it shouldn’t be so surprising that Greenpeace offers the most accurate energy industry forecasts. By having its finger on the pulse of the clean energy movement they have consistently provided results that should ensure they are taken seriously as a source of analysis, by the industry, politicians, and the investment community.

"Our projections are much closer to actual renewable energy development than those from IEA because we have monitored global and national renewable energy market development and production capacities carefully since the mid-90s, and discuss possible growth rates with the solar and wind industries," Sven Teske, the lead author of the Greenpeace report, told Vice. "We know what they have in their order books for the next 3 to 5 years and extrapolate it for the next 5 years. This gives us a very good idea about what the renewable energy market will do within the next decade.”

Apply Greenpeace renewable energy forecasts to BNEF’s energy storage analysis and their “122-fold boom of stationary energy storage” over the next two decades would also look like a wild understatement. The only obvious argument would be that Greenpeace figures are inflated, as you might expect from activists, yet the numbers speak for themselves — Greenpeace offers the most reliable forecasts on renewable energy penetration. In fact, renewable energy growth has outshone even the activists’ seemingly inflated projections, further undermining mainstream forecasting.

“Forecasts for the share of renewable capacity in global energy demand will go beyond current estimates, due to the introduction of battery storage and decline in retail renewable electricity prices, and could account for 100% of global energy demand in a number of different scenarios by 2050,” state Green et al., within research published on Journal of Sustainable Finance and Investment. “We find that renewables and storage can be characterized as disruptive innovations and have the potential to change energy systems dramatically between now and 2050.”

Renewables, supported by storage, appear to be surpassing their own promises and are well on the way to becoming the primary form of power generation in the US and other developed markets. Opponents will say that renewable energy’s fluctuating supply limits its ability as a primary source of generation, which brings us back to energy storage — the key to the renewable energy puzzle. If renewable energy continues to out-perform all growth forecasts then the demand for energy storage will skyrocket and the cost of batteries will plummet, and a low cost of batteries enables a future of buildings, homes, vehicles, and city services enabled with storage as nodes of a more dynamic and responsive electricity network.

BNEF’s Energy Storage Outlook 2019, predicts a further halving of lithium-ion battery costs per kilowatt-hour by 2030 based on its seemingly-conservative figures. The analysis goes on to suggest that cheaper batteries can be used in many applications, such as energy shifting, peaking in the bulk power system, as well as for customers looking to save on their energy bills by buying electricity at cheap hours and using it later. If renewable energy continues to outperform so will the declining cost of batteries for buildings and vehicles. Making that green and flexible future power landscape even closer than expected… Maybe we should listen to the activists.

“Now renewable energy is cheaper than conventional energies, so we are working on a new projection: 100 percent renewable energy by 2050," said Teske, author of the Greenpeace Energy [R]evolution report. "We should be able to achieve at least 90 percent. Anything less would be a failure for the climate and our planet, therefore failure is not an option."

Most Popular Articles

Zaha Hadid Twinmotion Game Engines
Smart Buildings

The Game-Changing Potential of Game Engines for Building Design

What would it mean for the real estate industry if we could visit our facilities before they’re built? If we could walk around a virtual building to better understand the space and test how various systems work in real-time, before making adjustments. If we could take owners and investors on a tour of their future […]

Smart Buildings

Azbil Building Automation Business & FY2023 Financials Examined

In this Research Note, we examine Azbil, a Japanese public company with a leading position in the domestic building automation market. The financial highlights and growth strategy analysis of the Building Automation business is based on their FY2023 annual results, year ending 31st March 2024, Annual Report 2023, and investor presentations. Azbil Building Automation Financial […]

Subscribe to the Newsletter & get all our Articles & Research Delivered Straight to your Inbox.

Please enter a valid email

Please enter your name

Please enter company name

By signing up you agree to our privacy policy