Looking Forward: 2021 is Primed and Overflowing with Energy Storage Trends
Presented by Nikola Power with Jonathan W. Postal (J.W.) - Founder/CEO, Dr. Reza Ghorbani - CTO and Margaret-Ann Leavitt - SVP Strategy & Marketing
It goes without saying, 2020 has been a unique, difficult and life changing year and the renewable energy industry is not alone in dealing with the upheaval from the Covid-19 Pandemic.
It goes without saying, 2020 has been a unique, difficult and life changing year and the renewable energy industry is not alone in dealing with the upheaval from the Covid-19 Pandemic.
Despite feeling a bit like a blur, after some early serious hiccups in March/April with the original shutdowns, most industry verticals rebounded and rebounded strongly. Specifically, energy storage surged by more than 240% quarter-over-quarter, and almost 5x compared to Q3 2019. (Source: Wood Mackenszie U.S. Energy Storage Monitor).
Big news abounds in front of the meter too with surges in utility scale projects showing serious change in acceptance, excitement level and need for energy storage from utility and grid operators. This surge coupled with strong demand from homeowners to secure energy as they shelter, school and work at home in the wake of the pandemic, have driven strong market demand in both the hardware and software sectors.
Another big trend is the move to interconnected distributed resources. A hot topic among start-ups and around the industry, it needed this powerful combination of intelligent software control systems and retail markets to take off; however, with the passage of FERC order 2222, the floodgates are now open and opportunity abounds. The Federal Energy Regulatory Commission mandate and the rising market opportunities will mean energy storage assets paired with solar, wind, EVs and smart appliances trying off and kicking off a significant market/economic growth trend over next 10 years.
Americans made a clear choice at the ballot box that they want and believe bold action is needed to mitigate and prepare for our new climate reality.
Victory at the Polls
The Biden/Harris victory will also be a driving industry force. Climate change policy will be on the table at both the White House and the new Congress. Americans made a clear choice at the ballot box that they want and believe bold action is needed to mitigate and prepare for our new climate reality.
Amidst the 2020 chaos were an unprecedented number of natural disasters - fires, floods, hurricanes and more. Most notably, warmer temperatures caused a crazy violent fire season disrupting lives, threatening communities and providing stark evidence for the need for policies that support clean energy.
Battery Pack Pricing
In 2020, we saw battery packs for large EVs (busses) drop to the $100 kwh. This is a breakthrough price point and will accelerate the adoption and fortuitous price loop. According to Bloomberg, Lithium-ion battery pack prices, well above $1,100 per kilowatt-hour in 2010, have fallen 89% in real terms to $137/kWh in 2020. By 2023, sources indicate, the average price in all categories will near in at $100/kWh. (Source: BNEF).
Wall Street, VC, Private Equity - All Going Green
Climate tech, climate-focused companies with solutions in EV, batteries, solar, wind, carbon reduction, fleets and charging, is getting attention.
Climate tech, climate-focused companies with solutions in EV, batteries, solar, wind, carbon reduction, fleets and charging, is getting attention.
Investopia predicts the recent return of the highly speculative SPAC, a special purpose acquisition company (SPAC), is just one example. This unique organization with no commercial operations forms strictly to raise capital through an initial public offering (IPO) for the purpose of acquiring an existing company. Also known as "blank check companies," SPACs have been around for decades. In recent years, they've become more popular, attracting big-name underwriters and investors, and in 2019, raised a record amount of IPO money.
In 2020, more than 50 U.S. SPACs were formed in the U.S., amassing more than $21.5 billion. This red hot trend may be the Tulip investment bubble of the past or the most efficient and speedy way for smaller, private companies tackling climate change to move to the big leagues. Time will tell.
Investment Tax Credit
Earlier this week, it was announced a 2-year solar ITC extension. This will keep the rate at 26% through 2022 as part of the bi-partisan Covid relief package and will undoubtedly fuel the already expanding solar boom across all verticals.
For years now, the solar industry has been managing the declining tax credit. There have been multiple cliffs, extensions and arguments about the future; however, earlier this week, it was announced a 2-year solar ITC extension. This will keep the rate at 26% through 2022 as part of the bi-partisan Covid relief package and will undoubtedly fuel the already expanding solar boom across all verticals.
Energy Storage Tax Credit
Extending the 26% tax cut is a hugely positive step and a needed accelerator; however, with climate change hitting a pivot point, more aggressive action is needed.
Adding a 30% stand alone credit on energy storage technology would be a giant boom to the energy storage sector and renewables overall. Commercial projects have been limited due to high battery costs; however, a tax credit married with demand driving costs down would undoubtedly force an industry surge. It would also open a massive retrofit opportunity for installers and developers, enticing them to revisit completed solar projects to add storage which in turn would open a deluge of new jobs, driving economic benefits in-and-outside the sector. And it would dramatically increase the penetration of renewables and move the U.S. closer to being 100% fossil fuel free.
Bottom line, storage and intelligent software to manage and optimize storage are needed to dramatically increase the percentage of renewables on the grid and advance the green movement in a richly meaningful way. While it was an ugly year for the world, in many ways COVID better positioned a big green energy boom. The shutdown with less air and road traffic clearly showed the general public what was achievable and the true impact of CO2 emissions on air quality and beyond.
JW Postal is the founder and CEO of Nikola Power.
The time is now, and at Nikola Power, we are poised to announce our end-to-end platform of residential software tools for the residential market and new and exciting projects in the commercial space. Plus, we are doing innovative modeling in the multi-family low income space, commercial microgrids, off-grid microgrids, EV integrations and front of the meter storage analysis from coast-to-coast.
2021 is the year for green energy.
Stay tuned for more from Nikola Power. In the meantime, please reach out and let's talk more about collaboration, projects and our fossil fuel free future!
