Lithium Ion Batteries to Become a $1 Billion Segment of the Stationary Energy Storage Industry

The ability to capture and store energy for later use is an elusive goal that utilities and other companies in the power generation business have long pursued. Energy storage will be especially important in compensating for the intermittent nature of wind and solar energy sources, which is often out of synch with the peaks and valleys of customers’ electricity demand. Of the eleven competing energy storage technologies analyzed in a recent report from Pike Research, the cleantech industry analyst firm forecasts that Lithium Ion (Li-ion) batteries will be the fastest growing category for utility-scale applications, growing to a $1.1 billion worldwide business by 2018.

“Utilities will be the downstream beneficiaries of innovation and investment in Lithium Ion batteries for the transportation sector,” says senior analyst David Link. “While Li-ion was once limited to consumer electronics devices, it is quickly becoming the battery of choice for electric vehicle manufacturers. Improved storage capacity and economics will lead the utility sector to adopt Li-ion, as well – we anticipate that 2011 will be the inflection point for growth in this category.”

Pike Research forecasts that revenue from Lithium Ion batteries will represent 26% of the $4.1 billion global stationary energy storage business by 2018. Important storage technologies also include other advanced batteries such as Sodium Sulfur (NAS), as well as kinetic storage techniques like Pumped Hydro and Compressed Air Energy Storage (CAES).

Pike Research’s study, “Energy Storage Technology Markets”, analyzes the opportunity for several key technology categories including advanced batteries, pumped hydro, compressed air, flow batteries, and frequency regulation for utility-scale applications. The report assesses energy storage market drivers, challenges, and regulatory/legislative issues, and also provides detailed market forecasts and profiles of key industry players. An Executive Summary of the report is available for free download on the firm’s website.

Pike Research is a market research and consulting firm that provides in-depth analysis of global clean technology markets. The company’s research methodology combines supply-side industry analysis, end-user primary research and demand assessment, and deep examination of technology trends to provide a comprehensive view of the Renewable Energy, Clean Transportation, Clean Industry, Green Consumers, and Environmental Management sectors.

Plug-in Hybrid Electric Vehicles

The electrification of the automobile has been slowly progressing over the last 10 years, ever since the arguably false start in the late 1990s. While hybrid electric vehicles (HEVs) have been proliferating recently, a new breed is on the verge of launching: the plug-in hybrid electric vehicle (PHEV). Promising dramatically improved fuel economy, PHEVs have come about largely from the convergence of two technologies: HEVs and lithium ion (Li-ion) batteries.

A mix of consumer demand and government incentives is fueling the development of PHEVs. Governments are encouraging improved fuel economy either implicitly by regulating it, as in the United States, or by charging high fuel taxes or limits on vehicle emissions, as in Europe. In addition, automakers are counting on consumers who have demonstrated strong interest in HEVs to show similar willingness to purchase PHEVs. Pike Research forecasts that PHEV programs will initially focus on the small car segment (80% of sales in 2015), followed closely by the small SUV segment (10% of sales by 2015). By 2015, we anticipate the U.S. will be the largest market for HEVs and PHEVs, selling approximately 640,000 vehicles in these two categories combined. China will be the second-largest market with more than 560,000 hybrid vehicles sold that same year. By that time, Pike Research forecasts that there will be a total of 1.7 million PHEVs on the world’s roadways.

This Pike Research report analyzes the emerging PHEV market with a focus on business issues and demand drivers, technology issues such as the use of advanced batteries and the need for electric vehicle charging infrastructure, the effects of regulatory standards and government incentives around the world, and an in-depth assessment of major OEMs’ PHEV programs. Detailed market data and forecasts include PHEV sales and registrations for world markets, sales figures for the total light vehicle and HEV markets to provide context for these numbers, and projected PHEV market shares for selected manufacturers.

Electric Vehicles on the Grid

Electric vehicles will begin shipping in volume starting in 2010. These vehicles will require the rollout of a new infrastructure for charging access at home, at work, and around town. By 2015, access to vehicle charging will be available at more than one million charge points in the United States alone. Vehicles will be primarily charged at home as early adopters will prefer the convenience. China, which has mandated the production of electric vehicles, will be the world leader in charging stations, selling nearly half of the global total of 1.5 million units in 2015. Bidirectional smart vehicle-to-grid charging will remain a niche application for the foreseeable future due to technical difficulties and utilities’ conservative deployment strategies.

Utilities in the U.S. will slowly see revenue from vehicle charging increase from $3 million in 2010 to more than $200 million in 2015. The added demand will have little overall impact on grid reliability, but could diminish performance in neighborhoods with the highest EV concentrations. Utilities will prepare for the additional load to the grid by tracking vehicle sales and creating new customer billing programs. Charging equipment sales will initially be driven by government funding of public stations. Fees for commercial charging will be low due to the availability of free and low-cost charging at residences and public locations. Retailers will install public access stations primarily as a marketing tool and not to generate direct revenue from charging fees.

This Pike Research report examines the many open questions surrounding business models and technology issues for electric vehicle charging infrastructure. It analyzes and forecasts the market for residential, public, private, and workplace charging stations through 2015 as well as examining operational and technological impacts of plug-in hybrid and battery electric vehicles on the grid infrastructure. Analysis includes an in-depth assessment of market drivers and barriers, along with profiles of charging infrastructure vendors, utilities, automakers, and smart grid companies.