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Market research firm IHS estimates that only 340 MW of commercial grid-connected energy storage systems (ESS) were installed across 2012 and 2013, with these installations generally demonstration projects. However, the firm forecasts annual installations will reach over 6 GW in 2017.

The U.S. will be the largest region for grid-connected ESS installations between 2012 and 2017, IHS says, accounting for 43% of MW capacity installed during that period. Other regions that will see significant deployment of grid-connected ESS will be Germany and Japan, where the installation of energy storage will be promoted by increasing renewable penetration, growing peak demand and the increasing financial attractiveness of self-consumption of renewable energy.

IHS reports that lithium-ion batteries will account for 64% of energy storage installations between 2012 and 2017. However, opportunities also exist for other storage technologies, including sodium sulfur, sodium nickel chloride, flywheels, flow batteries and alternative compressed air ESS, in the long term.

At present, IHS notes, commercial deployment of grid-connected ESS has been inhibited by the high upfront costs of storage technologies and limited proof of the advantages of storage. However, annual installations are forecast to rapidly accelerate, promoted by the availability of financial incentives to reduce the upfront cost of an ESS, introduction of energy storage procurement/installation targets and changes in electricity grid regulations that create business case opportunities for an ESS in the grid.

Longer term, IHS adds, growth will be driven by legislation and the increasing need for flexible capacity as a result of growing levels of renewable penetration. In general, IHS concludes, grid-connected ESS will be critical in upgrading electricity grids to manage the increasing levels of renewable penetration and balancing increasingly complex supply-and-demand requirements.

"The grid-connected energy storage market is set to explode, reaching a total of over 40 GW of installations by 2022," says Sam Wilkinson, solar research manager at IHS.

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