Coming on the heels of yesterday’s announcement that California is moving closer to setting grid energy storage mandates for utilities in the state, today Pike Research released a new report that says the grid energy storage market could reach as much as $35 billion by 2020.

According to the research company, demand is being driven by several key trends including the proliferation of renewable energy from variable sources such as wind and solar, the expansion of utility smart grid initiatives, and the introduction of plug-in hybrid and electric vehicles. The new report, “Energy Storage on the Grid,” indicates that the market will increase from $1.5 billion in 2010 to $35.3 billion annually by 2020.

Pike Research analyst David Link said that today utilities use grid energy storage to mitigate wind and solar energy variability, for load following and for renewable energy time shifting. “In the coming years,” said Link, “the number of applications for energy storage on the grid will expand to include the opportunity for utilities to defer transmission and distribution (T&D) capital upgrades, time of use energy cost management for the commercial and industrial (C&I) segments, and conventional energy time shifting.”

Of storage technologies Pike research sees major growth in the areas of the compressed air energy storage (CAES), Li-ion batteries, and flow batteries. Other storage technologies in use today include pumped hydro and sodium sulfur (NAS) batteries.