These value streams are growing both in value and in market scale (Exhibit 1). It is also uniquely flexible in its ability to stack value streams and change its dispatch to serve different needs over the course of a year or even an hour.
A complex technology, its economics are shaped by customer type, location, grid needs, regulations, customer load shape, rate structure, and nature of the application. Storage can be deployed both on the grid and at an individual consumer’s home or business. Our analysis is directed mostly at developments in Europe and the United States the evolution of storage could and probably will take a different course in other markets. In this article we consider, as these trends play out, how storage could transform the operations of grids and power markets, the ways that customers consume and produce power, and the roles of utilities and third parties. Eventually, combining solar with storage and a small electrical generator (known as full grid defection) will make economic sense-in a matter of years, not decades, for some customers in high-cost markets. We believe these markets will continue to expand, creating a significant challenge for utilities faced with flat or declining customer demand. providing power-quality services, and supporting renewables integration.įurther, given regulatory changes to pare back incentives for solar in many markets, the idea of combining solar with storage to enable households to make and consume their own power on demand, instead of exporting power to the grid, is beginning to be an attractive opportunity for customers (sometimes referred to as partial grid defection). Examples include using storage as replacement capacity after the Aliso Canyon shutdown in Southern California, as well as storage participating in a tender for capacity in Australia and in capacity-market auctions in the United States. At today’s lower prices, storage is starting to play a broader role in energy markets, moving from niche uses such as grid balancing to broader ones such as replacing conventional power generators for reliability, 1 1. McKinsey research has found that storage is already economical for many commercial customers to reduce their peak consumption levels.
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