Dive Brief:

Global grid storage crossed the 1 GWh mark for 2015, hitting 1,090 MWh and bringing the cumulative total of installations to 1,788 MW and 3,460 MWh as of October 2015, according to the quarterly update of Lux Research’s Grid Storage Tracker.

Since 2011, the global grid storage market has been growing at a combined annual rate of 33% as rated by power capacity and 20% as rated by energy capacity, PV-Tech Storage reports.

In that same timeframe, the market for Lithium-ion (Li-ion) batteries has grown even faster than the wider storage market, with combined annual growth rates of 48% for power capacity and 62% for energy capacity for the technology.

Dive Insight:

So far this year, the grid storage market has more than doubled from the totals booked in 2014, even though not all of the 1,090 MWh installed in 2015 will be commissioned this year.

In terms of technology, much of the recent growth in the storage market has been dominated by the increasing market penetration of Li-ion batteries. Stationary Li-ion applications have grown sharply, but that growth is dwarfed by the growth of Li-ion batteries for electric vehicles. Plug-in and hybrid vehicles accounted for 2.3 GWh of Li-ion batteries in second-quarter 2015, according to Lux Research’s Automotive Battery Tracker.

The success of Li-ion batteries is putting increasing pressure on developers of other technologies, such as flow batteries and molten salt applications, to improve their performance characteristics.

But while the growth numbers represent a high water mark for storage, many storage projects still face challenges when it comes to earning a profit. Addressing that challenge will require developers of storage projects to work with utilities and system operators on issues such as battery asset ownership, locational value, and virtual power plant capabilities.

Those factors will be among the driving factors in the growth of storage installations, but the market itself is also rapidly evolving.

Wholesale markets such as the PJM Interconnection have seen robust growth with 263 MW and 148 MWh of storage since 2011, but continued growth could be limited. PJM is reportedly evaluating putting a 300-MW cap on storage products. But new opportunities could emerge in the utility sector. For instance, NextEra Energy CEO Jim Robo has predicted that storage could replace peaking power plants in the U.S. after 2020.