The compressed air energy storage market is expected to grow at a CAGR of more than 42% over the forecast period of 2020-2025. Factors such as renewable integration with compressed air energy storage systems and implementation of demonstration projects, coupled with technological developments in the compressed air energy storage systems, are expected to drive the market studied during the forecast period. However, the market for compressed air energy storage systems remained underdeveloped, due to several reasons, such as lack of investment and lack of technology, which prevented the development of new compressed air energy storage plants.
- As of 2018, the diabatic compressed air energy storage systems were the only type of systems that had been deployed for commercial purposes. The first diabatic compressed air energy storage plant, Huntorf compressed air energy storage plant, was built in Germany in 1978. This compressed air energy storage plant had a capacity of 298 MW and efficiency of only around 40%. The adiabatic and isothermal compressed energy storage systems are currently in the research phase. No commercial adiabatic compressed air energy storage plants existed, as of 2018.
- The use of compressed air energy storage in the offshore wind turbines is likely to increase as this technology is less expensive and environment friendly, creating new avenues for the compressed air energy storage players in the near future.
- At a regional level, large-scale renewable energy deployment, coupled with rising demand for large scale energy storage system, is driving the market studied in North America, which is expected to be the fastest market.
Key Market Trends
Diabatic CAES Technology to Dominate the Market
- The diabatic compressed air energy storage plants are a conventional type of systems, where, during the compression process the excessive heat generated is released to the atmosphere. During power generation, the required heat is generated generally using the natural gas.
- As a result, the diabatic compressed air energy storage systems, though simple and relatively less costly, have lower efficiency, and are less environment-friendly than other types of compressed air energy storage systems. The diabatic compressed air energy storage systems achieve an efficiency of around 50%, significantly lower than the other upcoming technologies.
- In 2018, the diabatic compressed air energy storage systems are the only type of systems that have been deployed for commercial purpose. The first diabatic compressed air energy storage plant, Huntorf compressed air energy storage plant, was built in Germany, in 1978. This compressed air energy storage plant has the capacity of 298 MW and efficiency of only around 40%. The second plant was built in Alabama, United States, in 1991, with a capacity of 110 MW and efficiency of above 50%. The adiabatic systems achieve efficiency about 20% more than the diabatic systems.
- The operating cost of the diabatic compressed air energy storage plants is significantly lower than the adiabatic and isothermal compressed air energy storage plants. As a result, the diabatic plants are generally more profitable to operate. However, as the plants require gas-firing for operation, the diabatic plants are less ecological. As the concerns regarding the climate change are rising globally, the other compressed air energy storage plants are being preferred over the diabatic plants.
- With the development in other technology, the share of diabatic compressed air energy storage systems in the market is expected to decline during the forecast period. Among the announced compressed air energy storage projects worldwide, none of the major projects use diabatic technology. A similar trend is expected to continue during the forecast period, which, in turn, is expected to restrain the market growth of the diabatic compressed air energy storage systems market.
North America to Dominate the Market
- North America is likely to be the fastest growing market and is expected to increase its growth in the compressed air energy storage technology in the market. The United States power sector is in the midst of profound transformation with the fast-paced replacement of coal-based electricity generation with natural gas. Owing to decreasing cost and vast environmental benefits offered, renewables integration has also picked up at a very rapid pace.
- In a bid to ensure the stability of the ageing power grid of the country, large-scale implementation of energy storage systems is being considered critical. Moreover, with the country trying to decarbonize the economy, considering the environment, the share of renewable for power generation is expected to increase. With the increase in country’s reliance on renewables for energy demand, an uninterrupted supply of power is necessary and owing to renewables being heavily reliant on prevailing weather condition, a need for efficient energy storage is expected to increase, during the forecast period.
- With compressed energy storage solution providing a viable technology for use, the market is expected to grow, during the forecast period. In the United States, as of June 2018, there were 4 operating CAES systems, with a combined rated power of 113.5 MW.
- Some of the major upcoming CAES projects include Pacific Gas and Electric Company underground CAES project, and Bethel Energy Center CAES Project that is expected to drive the growth of CAES market. However, certain projects, such as Iowa Stored Energy Park (ISEP) project, Iberdrola United States, Norton Ohio CAES, and LightSail company I-CAES were seized before commercialization.
The compreesed air energy storage market is consolidated. Some of the key players operating in the market studied are Siemens, Hydrostor, Apex CAES, and Ridge Energy Storage and Grid Services. Overall, the market studied is assessed to be consolidated, less competitive, capital intensive, and non-lucrative in nature.
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1.1 Scope of Study
1.2 Market Definition
1.3 Study Assumptions
2 RESEARCH METHODOLOGY
3 EXECUTIVE SUMMARY
4 MARKET OVERVIEW
4.2 Global CAES Capacity (in MW) and Future Potential
4.3 Recent Trends and Developments
4.4 Government Policies and Regulations
4.5 Market Dynamics
4.6 Porter's Five Forces Analysis
4.6.1 Bargaining Power of Suppliers
4.6.2 Bargaining Power of Consumers
4.6.3 Threat of New Entrants
4.6.4 Threat of Substitute Products and Services
4.6.5 Intensity of Competitive Rivalry
5 MARKET SEGMENTATION
5.2.1 North America
5.2.4 Rest of the World
6 COMPETITIVE LANDSCAPE
6.1 Mergers & Acquisitions, Joint Ventures, Collaborations, and Agreements
6.2 Strategies Adopted by Leading Players
6.3 Company Profiles
6.3.1 Siemens AG
6.3.2 Hydrostor Inc.
6.3.3 Apex Compressed Air Energy Storage LLC
6.3.4 Ridge Energy Storage and Grid Services LP
7 MARKET OPPORTUNITIES AND FUTURE TRENDS
Secondary Research Information is collected from a number of publicly available as well as paid databases. Public sources involve publications by different associations and governments, annual reports and statements of companies, white papers and research publications by recognized industry experts and renowned academia etc. Paid data sources include third party authentic industry databases.
Once data collection is done through secondary research, primary interviews are conducted with different stakeholders across the value chain like manufacturers, distributors, ingredient/input suppliers, end customers and other key opinion leaders of the industry. Primary research is used both to validate the data points obtained from secondary research and to fill in the data gaps after secondary research.
The market engineering phase involves analyzing the data collected, market breakdown and forecasting. Macroeconomic indicators and bottom-up and top-down approaches are used to arrive at a complete set of data points that give way to valuable qualitative and quantitative insights. Each data point is verified by the process of data triangulation to validate the numbers and arrive at close estimates.
The market engineered data is verified and validated by a number of experts, both in-house and external.
REPORT WRITING/ PRESENTATION
After the data is curated by the mentioned highly sophisticated process, the analysts begin to write the report. Garnering insights from data and forecasts, insights are drawn to visualize the entire ecosystem in a single report.