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Japan energy storage subsidies to spark market growth

Wed, 03/19/2014 - 11:44am
Sam Wilkinson, IHS research manager for Energy Storage

The introduction of subsidies for consumers and businesses installing energy storage in Japan and Germany is forecast to spark a drive to install the systems and help drive down costs just as they did for the solar PV industry over the past decade.

The recent introduction of a subsidy in Japan will help drive nearly 100 MW of energy storage to be installed in Japan in 2014. Japan’s share of the total global grid-connected storage market – including all interconnection locations - will reach 12 percent in 2014 whilst Germany which last year initiative a PV energy storage subsidy will claim a 11 percent share of that market this year. Just as these two countries fuelled the dramatic growth of the solar PV industry throughout the past decade by introducing feed-in tariffs and subsidies to help lower the cost of solar PV and create a roadmap to continued cost reduction, we expect a similar path to occur for energy storage.

IHS expects that the ¥10 billion (~$98M) budget set asides by Japan’s Ministry of Economy, Trade and Industry will be sufficient to subsidize approximately 60 MW of behind the meter energy storage installations.

The PV subsidies pioneered by Japan and Germany have subsequently been used as a template in dozens of other countries which has led to dramatic growth and massive cost reduction, allowing PV to compete with traditional sourced, unsubsidized in many markets. We predict a similar story for energy storage and expect other countries will follow suit in the coming years, introducing storage as they see the benefits that it can bring to ageing grid infrastructure with increasing penetration levels of renewable sources. As such we expect 6 GW of storage to be installed in 2017, with 1.5 GW of this being co-located with utility-scale renewable sources and over 2 GW in behind-the-meter systems, many of which will also include PV systems. At the same time, and driven by these and other subsidies, we expect the price of energy storage systems to fall by nearly 30 percent by 2017, allowing them to become economically viable solutions in several markets and applications.

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