A Review of 2023 Highlights from Burns & McDonnell, an EPC Engineer in the Energy Storage Industry
Chris Ruckman: 2023 is another banner year for the energy storage industry. Installed capacity of energy storage systems deployed globally will continue to grow at a rapid pace, and energy storage systems continue to play a key role in the global power generation mix. For example, the market served by U.S. grid operator ERCOT Corporation (located primarily in Texas and covering more than 80 percent of the state) set an all-time peak demand record of more than 85GW this year, and energy storage systems are a key reason why this market was able to achieve this record and maintain steady growth.
With the volatility of the power market and the availability of energy storage systems, we work with our clients on collaborative EPC contracts, which allows us to work with our clients to discuss the scope, schedule and budget of their energy storage projects and identify the critical path to meeting their needs. Being able to self-execute the engineering, construction and integration of these facilities is critical to helping us deliver these energy storage projects on time in a market with supply chain issues and labor shortages. With the market changing so rapidly, getting energy storage projects online and operational as quickly as possible is often the key path to profitability, so our partnerships are critical to success.
How are energy storage projects and different market opportunities evolving as the technology matures and stakeholders understand it?
Chris Ruckman: We have been providing EPC services to the battery energy storage market for over a decade and can say that no energy storage project we have deployed has been the same. Technology is changing so rapidly that we are always looking to adopt innovative ways and approaches to improve processes to increase efficiency and complete deployments safely and smoothly.
The size of the energy storage projects we deploy is also growing every year. This is partly due to the increasing energy density of the technology, and partly due to the desire of users of energy storage projects to maximize their returns while minimizing the impact of factors such as planning permissions and delays in connecting to the grid.
We are also seeing demand from individual markets driving the U.S. energy storage market. For example, in ERCOT's service area, we rarely see energy storage projects that last longer than two hours; whereas in CAISO's service area, it's almost exclusively energy storage projects that last four hours.
It also appears that users are starting to buy more batteries than ever before, given lead times, capacity constraints of battery manufacturers, and the desire to control the supply chain.
In the U.S., we are also starting to see more utilities entering the energy storage space, which in the past has been largely dominated by energy storage developers. The Inflation Reduction Act (IRA) has sparked investment interest from utilities who are beginning to consider adding energy storage systems to their portfolios in order to meet decarbonization goals.
Everyone is looking at the energy storage market, and there are plans for foreign manufacturers that will produce battery storage products in the U.S., but it's not enough for the battery market to meet user demand. The current imperative is centered around initial basic needs, not necessarily add-ons like domestic content.
As an EPC contractor, we're working with battery storage suppliers to understand what they're doing from a materials and manufacturing perspective, how they're thinking about compliance, supply chain, manufacturing facilities, and the support they're willing and able to provide.
