San Diego, Calif., December 15, 2011 -- The U.S. energy storage market totaled $3.06 billion in 2011 and is expected to exceed $5 billion in 2014, according to new estimates released by Climate Change Business Journal (CCBJ).

A proprietary survey conducted by CCBJ and the Electricity Storage Assn. (ESA) in October 2011 revealed that the utility energy storage market is expected to contribute sales of $220 million to this total, including equipment and services (design, engineering and construction).

Also included in CCBJ's energy storage total are transportation batteries, ancillary utility services, and arbitrage, i.e., using electricity storage as a means to buy low and sell high.

Renewable Energy Drives the Storage Market

"The leading driver for the energy storage business is the need to integrate more variable energy resources such as wind and solar power into the grid," said Jim Hight, senior editor of CCBJ.

However, storage technology can also be used for ancillary functions, such as frequency regulation and to avoid or defer investments in upgrading the capacity of transmission and distribution lines and substations.

Indeed, storage projects must be able provide these and other multiple benefits to create value and attract investment, according to experts.

Yet, the CCBJ/ESA survey ranked the biggest challenge facing the energy storage industry as regulatory frameworks that inhibit storage owners from earning revenue from multiple values such as reliability, deferral of investment, and energy sales.

"The policy challenge is to allow energy storage owners to more fully realize the value of their projects, since many of benefits, such as improved utilization of grid assets and air emissions reduction are not accounted for in today's electricity markets," said Hight.

Despite policy challenges and the fact that almost all U.S. utility storage projects are in the pilot phase, the pace of new renewable generation coming online demands a way to integrate variable power sources, noted Hight.

"Although other technologies can - and do - perform the balancing functions required by increased use of wind and solar, it's clear there is growing interest in energy storage among utilities. Those inside the energy storage industry expect to see annual billion dollar markets in new utility projects in the near future."

Inside this edition:

• Policy and market drivers, technologies and business models shaping an industry that CCBJ expects to reach $5 billion in the United States alone by 2014 (including transportation batteries)
  
   
• Storage technologies including pumped hydro, compressed air energy storage, thermal energy storage and batteries for electric utilities and electric vehicles
  
   
• Private equity investment in energy storage
  
   
• Profiles of Duke Energy, AES Energy Storage, Aquion, A123, Beckett Energy Systems, WEICA and Primus Power

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