Much like the internet exploded around the turn of the century, Michael Worry, CEO and CTO of Nuvation Energy said, the energy storage market is primed for the same kind of exponential growth. “Nuvation has the belief that energy storage is in the same place today as the internet was in 1995,” he said, presenting at the 2024 Honeywell Users Group Conference this week in Dallas. His presentation considered the factors contributing to energy storage system (ESS) growth, what technology might disrupt the ESS market, and the future of battery energy storage systems (BESS) in particular.
Nuvation Energy offers a variety of battery management systems (BMS), including cell interface modules, stack switchgear units, multi-stack controllers and energy management systems (EMS). Honeywell’s battery energy storage system (BESS) Ionic uses the Nuvation energy management system. The Honeywell Ionic system, Worry noted, features a scalable, modular design, flexible, low-cost installation, and is designed to work with multiple power conversion system (PCS) partners. It is a 688-kWh input system with 280A maximum output and is based on lithium ferrous phosphate (LFP) battery chemistry. “It’s very forward-looking technology. It’s very future proof,” Worry said.
In the U.S., BESS developers have installed 8.7 gigawatt-hours (GWh) of battery storage capacity in 2023, a 90% increase from the prior year. Meanwhile, the global market grew by 110 GWh of storage capacity in 2023, an increase of 149% from year before, and investment in the global storage sector grew by 76% in 2023.
“These are really high growth numbers,” Worry said. Currently, lithium battery manufacturing is dominated by China, with a much smaller percentage coming from North America. Europe, South Korea and Japan are also minor contributors. “What’s interesting is the level of investment going on in North America and Europe,” Worry said. While China continues to be the largest developer, the percentage coming from North America and Europe is predicted to increase exponentially, Worry added. The U.S. currently produces 59 GWh annually and is expected to grow to 865 GWh.
“The industry is definitely growing rapidly, and that supply chain will evolve,” Worry said. This will mean rapid growth in the battery storage market, but also there could be vast changes in the market players.
As an example, Worry continued his comparisons to the development of internet technology in the mid-1990s. Many of the early internet players, like Amazon, Yahoo, Google and AOL, are vastly different now. Amazon was in Jeff Bezos’ garage in 1995, and Google didn’t exist yet. “In 1995, it would have been completely hard to predict which of these companies were going to be widely successful and which ones were going to fail. In fact, in some cases, the answers are counterintuitive,” Worry said.
Like Yahoo and AOL, what energy storage companies will ultimately fail? Inevitably, some big players will, and some have already. It’s also worth noting that Amazon and Google were late to the game, as first to market is not always what equates to long-term dominance. “You can’t necessarily look at the landscape of energy storage and know that the leaders today are going to maintain that leadership,” he added.
Potential disruptions
What technologies out there might disrupt energy storage? Lithium-ion, specifically lithium iron phosphate or LFP, are on top now. Other battery technologies that could be the next leaders include lithium-ion NMC (nickel, manganese, cobalt), sodium-ion, solid-state, lithium-sulfur, zinc-air, flow batteries, sodium sulfur and lithium sulfur.
While internet growth was largely software-based and easy to scale, energy storage systems require big infrastructure investments and interconnect agreements, which one would think might slow growth comparatively, Worry suggested. However, comparing energy storage system growth to wind and solar installations, which require similar infrastructure investment, tells a different story.
Experts did not correctly forecast the growth of solar and wind power, Worry said. “Consistently, solar/wind installations were significantly underestimated,” he added. Experts ignored the potential for exponential growth, and they did not predict the substantial drops in cost over a short period of time. “We’re seeing these kinds of cost declines go on right now in energy storage,” Worry said. “It’s right in front of our eyes. We’re watching batteries cell costs drop right now.”
The other factor that was overlooked in solar and wind forecasts was the impact of government policy, which is also influencing energy storage. “The U.S. government is strongly encouraging energy storage, and specifically from U.S. sources, from the U.S. supply chain,” Worry said. Forecasts are suggesting that battery storage will rise even faster than solar and wind.
“There’s substantial investment and political attention toward growing battery cell manufacturing and control electronics in North America,” Worry said. “We used to be dependent on other countries who weren’t necessarily our friends.”
The U.S. Department of Energy would like for all battery manufacturing to take place in the U.S., Worry said. However, that can’t be a reality today with the majority of battery cells being manufactured in China, so DOD would like the focus to be on producing all control electronics domestically.
“In today’s day and age, there’s ever increasing attention on issues with overseas electronics and concerns around geopolitics, so we want to highlight that everything we do is manufactured in the U.S. and Canada,” Worry said.
No one can predict exactly where the market will go and exactly how it will get there, but Worry is eager and optimisitc for the future of battery energy storage.
