Smart Buildings

Greater Competition Can Only be Good for the Energy Storage Sector

New big names are entering the energy storage sector in 2016, in a market that already includes ABB, GE, LG, Panasonic, Samsung and Tesla. This month Daimler AG began deliveries of Mercedes-Benz stationary energy storage units for use in private homes. While global aerospace, defence and security firm Lockheed Martin have made clear their intentions to enter the sector, and rumours persist about BMW putting their name in the increasingly crowded hat. “Although energy storage is a nascent market, it is poised to become more significant in the years ahead. A number of factors including decreasing costs of battery energy storage systems, government funding programs and utility tenders are helping to increase both the interest and viability of distributed energy storage, particularly in developed markets”, according to Memoori’s latest report Smart Buildings Meet the Smart Grid. Daimler originally announced its stationary battery storage business in 2015 with its subsidiary Deutsche ACCUMOTIVE and has been continuously […]

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New big names are entering the energy storage sector in 2016, in a market that already includes ABB, GE, LG, Panasonic, Samsung and Tesla. This month Daimler AG began deliveries of Mercedes-Benz stationary energy storage units for use in private homes.

While global aerospace, defence and security firm Lockheed Martin have made clear their intentions to enter the sector, and rumours persist about BMW putting their name in the increasingly crowded hat.

Home Energy Storage
“Although energy storage is a nascent market, it is poised to become more significant in the years ahead. A number of factors including decreasing costs of battery energy storage systems, government funding programs and utility tenders are helping to increase both the interest and viability of distributed energy storage, particularly in developed markets”, according to Memoori’s latest report Smart Buildings Meet the Smart Grid.

Daimler originally announced its stationary battery storage business in 2015 with its subsidiary Deutsche ACCUMOTIVE and has been continuously expanding its activities in this growth segment ever since. The stationary energy storage sector presents new opportunities for growth. In addition to this, Daimler is playing an active role in the energy revolution and continuing the success story of battery manufacturing in Germany.

The lithium-ion batteries are being manufactured by Daimler and distributed through selected sales partners and partner companies. The company is systematically increasing its production capacities and has invested some €500 million in the construction of a second battery factory in Kamenz, Germany. The new facility is due to be put into operation in summer 2017. At present, the company’s partners include the energy service provider Energie Baden-Württemberg, as well as a number of wholesale traders.

"There is tremendous interest in our energy storage units and we have already received numerous orders. Over the coming months, we will continue to step up and expand sales both in Germany and on the international market", remarks Harald Kröger, Head of Development Electrics/Electronics and E-Drive Mercedes-Benz Cars.

Daimler’s network of qualified specialist installers take care of providing the end customers with on-site advice, planning, compiling an individual quotation for all components and the actual installation. With stationary battery storage units are generally installed together with a photovoltaic system, some 500 installers throughout Germany have already undergone training in collaboration with the partners.

“We can count on the support of expert partners for our sales of the Mercedes-Benz energy storage units. The ideal contact for the end customer is their local electrical specialist. We are convinced we can offer our customers an attractive product at a competitive price”, says Kröger.

Meanwhile, BMW has signed an agreement with Solarwatt, E.ON’s storage system supplier, to provide solar-powered carports for its electric car owners, and many experts have long suspected that the German automotive firm will soon announce their energy storage programme. “BMW wants to develop lithium-ion batteries as a new business in the field of private energy storage”, reported German news magazine WirtschaftsWoche.

Germany’s electric vehicle market could ultimately drive the economics of stationary storage in the country. “The electrification of transport revolutionises not just the battery space but also the whole electric system”, said Gerard Reid, founder and managing partner of finance consultants Alexa Capital.

Reid said that Germany has around 20 million houses but 40 million cars. Thus a wholesale switch to electric vehicles would represent a massive increase in the number of connections to the grid. “An electric car is a pretty extreme environment for a battery”, Reid said. “Realistically, they are going to replace these batteries after five years. That means you have cheap batteries for off-grid, residential and grid applications”.

Reconditioned electric vehicle batteries might be able to last an extra 10 years under the less stressful conditions typical of stationary storage applications. Since electric cars have fewer moving parts than traditional vehicles, Reid believes their lower servicing costs will increasingly force carmakers to seek alternative revenue streams. Stationary storage, based on second-life batteries, is an obvious choice, he suggested. “There is zero marginal cost because [the batteries] are paid for”.

However compelling, it is not a view shared unanimously across the industry. Dr Michiel Van Schalkwijk, group director for international sales at Solarwatt pointed out, “There are differences in voltages between what cars and homes need”. Electric car battery storage capacities are of the order of 22 kWh for a BMW and 80 kWh for a Tesla, while the average household requirement for 70% solar self-consumption in Germany is between 4 kWh and 6 kWh, Van Schalkwijk explained. Also, “for home storage you need a very stable battery with no losses”, he said. “In a car, losses are not so crucial”.

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Back in the US Aerospace giant Lockheed Martin, with a market cap of nearly $70 billion, has announced it is also joining the energy storage game. The company is pushing into the storage space on two fronts, firstly through the integration of lithium-ion systems. “While lithium-ion battery prices have come down significantly we've seen precious little innovation and cost reduction in the balance of system", Richard Brody, director of sales and marketing for energy storage at Lockheed Martin Advanced Energy.

“Developments in Li-ion batteries in particular are exciting the market, as they can store far more energy at a lower cost than previous generations of batteries, which have been dominated by lead acid technology”, states our recent report. “The cost of Li-ion battery storage will approximately halve between 2013 and 2020, falling from 700-800 $/KWh in 2013 to 300-400 $/KWh in 2020”.

Lockheed Martin is also working on bringing a new chemistry to market for flow batteries. The technology relies on an engineered molecule that is a platform for combinations of transition metal ions and ligands, according to Brad Fiebig, product manager at Lockheed Martin. He says the company is developing “fundamentally new flow-battery chemistry” that allows the use of conventional materials in the balance-of-system components.

The business case for automotive firms to enter the energy storage market is clear to see, and the likes of Lockheed Martin only strengthens a sector primed for growth. Such competition will surely bring down costs and encourage widespread adoption of this game-changing technology in the power sector.

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