As emerging electrical storage developers struggle for a toehold in transportation and grid-tied markets, many have begun eying off-grid opportunities as a way to attain scale and lower costs. The off-grid market will grow from $9.9 billion in 2011 to $13.5 billion in 2016, a 6% compound annual growth rate (CAGR). Emerging technologies, such as Li-ion batteries and fuel cells, will lead that growth, expanding from $1.5 billion in 2011 in 2011 to about $4 billion in 2016, a 22% CAGR.
As the column on the left indicates, emerging technologies will only comprise 5% of new capacity in 2011, growing to 13% in 2016. Shown on the right: revenues tell a different story. Revenues from emerging technologies will comprise over 30% of the market in 2016, thanks largely to their higher capital costs: Lithium-ion batteries and PEM fuel cells run 6x the cost of lead-acid batteries and diesel generators, respectively.
With steady growth in diversified markets, Li-ion batteries will grow from $795 million in revenue in 2011 to $2.2 billion in 2016, a 23% compound annual growth rate. Improved cycle life and energy density over lead-acid batteries will drive narrow penetration into high-end data center applications, such as unlimited power supply telecom backup.
Fuel cell potential is also strong, growing at a 22% CAGR from $536 million in 2011 to $1.3 billion in 2016. Again, the off-grid telecom power market will drive growth, but not enough to support the expansive list of fuel cell developers, leading to fierce competition and consolidation.
Other emerging technologies, such as flywheels and ultracapacitors will supplement, not lead, the datacenter UPS market. Together, they will capture 10% share by 2016. Flywheels will grow from $49 million in 2011 to $104 million in 2016 (a 16% CAGR), while ultracapacitors will expand from a base of $88 million to $248 million in 2016 (a 23% CAGR). High reliability, superior cycle life, unsurpassed power density, and minimal maintenance costs all help make these technologies strong candidates, but their limited energy capacity raises barriers against broad adoption.
Source: Lux Research report “Off-grid: A Modest Meal for Starving Storage Developers.”
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