While still a niche market today, the combination of energy storage and solar PV technology is an exciting field that is expected to grow rapidly in the coming years, both in the United States and globally. Market analysts expect the United States to become one of the top three markets for solar and storage over the next five years, along with Germany and Japan.

There are multiple reasons for this anticipated growth. Higher penetrations of solar in states including Hawaii and California are making storage more important to smooth out the mismatch between solar production and daily peak electricity demand, which occurs in the evening in both states. Additionally, as the price of both PV systems and batteries fall the economics of self-consumption are becoming more attractive in more market segments.


Proactive policies for new markets
This potential has been gaining a lot of attention from many parts of the solar industry, utilities, energy storage makers and power electronics companies. Currently the overall U.S. energy storage market is small, but growing. According to IHS, the United States installed 110 MW of energy storage in 2013, only 10 MW of which was behind-the-meter. The company estimates that this market will grow to 1.7 GW in 2017, and to over 2.5 GW in 2020.

The vast majority of energy storage deployed in the United States at present is not to accompany PV. Frequency regulation currently dominates U.S. energy storage applications, but as time goes on this mix will change, with IHS predicting that the U.S. solar and storage market will grow to over 300 MW in 2017.

The market is currently driven by policy, and in terms of proactive policies California leads the nation. In California, two policies are key: the Self Generation Incentive Program and AB 2514, through which the CPUC has mandated that the state's large utilities procure 1.325 GW of energy storage by 2020, including distributed storage. This policy alone is expected to double the size of the global energy storage market, excluding pumped hydro and underground compressed air.

California also leads in sheer volume of energy storage projects. Of the 330 U.S. projects either planned, under construction of deployed which have been identified by the U.S. Department of Energy in its Global Energy Storage Database, 119 are located in California.

It is important to note that different analysts have provided different estimates for the rate of growth of energy storage and PV, but that all major analysts are predicting rapid rates of market growth.


Lithium-ion batteries dominating technology
The technologies underlying grid energy storage represent a rapidly changing field that is wide open for innovation. A number of potentially disruptive battery technologies are being explored by various companies, including liquid metal electrolyte batteries, new generations of flow batteries, and zinc-air batteries.
Lithium-ion batteries are replacing lead-acid batteries as the dominant choice for pairing with PV. Not only do they offer high power density and more power cycles than lead-acid batteries, but continuous improvements are being made in lithium-ion battery technology, in part due to their use in electrical vehicles.