In Week 3 of Tamarindo Diaries, Adam Barber, Managing Director of Tamarindo Group, explores the potential for energy storage.
For me, the most interesting comment of the last 7 days came from the chairman of NextEra, Jim Robo, who said the following: "With the significant recent growth in our battery storage backlog, we increasingly see storage as an important standalone business in its own right".
Now, every revolution has a tipping point and I firmly believe that when we look back at the energy storage market and how it progressed through the 2020s then this is going to be it.
For context, NextEra is one of the key players in the US renewables market, and they have a portfolio of around 45GW. Now, 15GW of that is wind, 3GW of that is solar, and around 150MW of that is currently battery storage. This doesn’t feel like much, but that is fundamentally about to change because NextEra has a track record of publicly committing to what they’ve said. So they are going to be a very interesting player to watch in the storage market - and there are 2 reasons why this is important.
The first is because the price of battery storage is declining as manufacturing scales up, and so we’re starting to see some real cost investment analysis come into play.
The second reason is that this is going to have a profound impact on the peak power markets, particularly the way that natural gas plays in and how battery storage is expected to cannibalise it in the future too.
Now, for context, when we look at the North American market in the storage sector, there’s a prospective pipeline of around about 15GW estimated for projects that are going to be integrating battery storage over the course of the next 24 months. I think we can expect to see that grow as developers and investors become much more comfortable with hybrid power projects. So it’s certainly a market to watch and it’s certainly a market to keep tracking as we see some of the major players - NextEra, but also Duke and others - start to come into this market.
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