Powering Tomorrow: Manufacturing Energy Storage Systems to Meet Demand in the Utility Sector

With the increasing adoption of renewable energy sources worldwide, energy storage systems have become a critical component of the modern power grid

Energy storage systems play a pivotal role in the power grid helping to  avoid temporary drops in voltage, meet peak demand,  ensure grid resiliency and reliability, and reduce greenhouse gas emissions. They also support demand charge management by optimizing flexible loads and reducing overall demand charges. 

The market for energy storage products is experiencing a remarkable surge, driven by the rising demand for sustainable solutions. Currently valued at $17.7 billion, it is projected to reach $77 billion by 2033, showcasing an impressive compound annual growth rate (CAGR) of 23.4%.

While this growth is promising,  it also brings to light certain challenges that need to be addressed. The rapid expansion poses obstacles to scaling manufacturing and reveals gaps at various points along the supply chain. 

Categories of Energy Storage Systems: Residential, Commercial/Industrial, and Utility

Energy storage systems fall into three categories: residential, commercial/industrial, and utility. Each of these categories has its unique features and applications.

• Residential energy storage systems ensure individual households have a reliable power supply 24/7. While rooftop solar panels cannot generate electricity when the sun isn’t shining, storage systems retain excess energy for use at night or during power outages. They also  reduce peak demand charges and lower utility bills.
• Commercial and industrial energy storage systems ensure a consistent electricity supply for businesses and help reduce demand charges, which can account for a significant portion of a business’s total electricity bill. They can also help to store excess energy generated by renewable sources and use it during periods of high demand. 
• Utility energy storage systems are the largest and most complex of the three categories. These systems are designed to store energy on a massive scale and are used to balance the supply and demand of electricity in the power grid. They can also provide backup power during blackouts and help improve the power grid's reliability and stability.

Embracing a Modular Approach

Let’s focus on manufacturing, delivering, and installing utility energy storage systems. They  contain all the components and technology required by commercial and residential systems and also present unique challenges, including their size, weight, and the required number of batteries. As a result, manufacturers must design these systems with scalability in mind.

Creating a modular system for testing before integrating the components into the system ensures that problems are detected early in manufacturing, reducing the likelihood of issues arising in the field. Adopting a full build-out and test-in-the-factory approach , reduces the need for high-skilled labour in the field and enables better control of variables in the manufacturing process.

Adapting to the Battery Evolution

Lithium iron phosphate (LFP) batteries emerged on the market over 20 years ago and offer many benefits compared to other batteries including a longer life span.. The transition towards higher life-cycle LFP batteries is a significant trend in the energy storage industry and presents new challenges for energy storage manufacturers.

While LFP batteries are currently the most popular choice for stationary storage, new chemistries will likely emerge. This means that energy storage manufacturers must remain adaptable and flexible in their product design and development to stay ahead of the curve. Manufacturers must also consider where they source their batteries  to ensure reliable and cost-effective battery supply.

Scaling Manufacturing & Maintenance

Scaling production is another common obstacle. Manufacturers must consider floor space, supply chain, and quality control challenges while considering the size and weight of the materials they transport to their factories. These decisions will ultimately impact the cost of production and, therefore, the cost of energy storage products for consumers.

The continuous maintenance and repair of energy storage systems requires tursted partnerships with installation and maintenance providers. . However, establishing these partnerships and ensuring they possess the requisite expertise can be time-consuming and costly. 

Overcoming Obstacles

Energy storage manufacturers have a significant opportunity to speed production and reduce costs by investing early in infrastructure, partner infrastructure, floor space, and automation and testing equipment. Manufacturers can increase efficiency and streamline production processes by setting up a battery room and ensuring appropriate power is available in the building. Additionally, carefully considering the supply chain can help manufacturers find the right suppliers for their production needs, whether in the prototype stage or producing thousands of enclosures annually.

Another way to reduce costs and increase efficiency is  during the product lifecycle. By continuously improving the design and functionality of their energy storage systems, manufacturers can provide greater value to customers and drive down costs over time. This may involve updating components or modules, adjusting handling and insurance regulations, or exploring new chemistries and technologies that improve the performance of energy storage systems. With these strategies in mind, energy storage manufacturers can keep up with the industry's rapid growth and meet the increasing demand for energy storage products.

The challenges facing energy storage manufacturers require careful planning and execution, from the design and testing phase to the transportation and installation phase, to ensure the delivery of high-quality, reliable products to customers. Our integrated solutions and proven leadership in power electronics span the entire product lifecycle – from design to development and delivery. With over 25 years of expertise in high-reliability design, engineering, manufacturing, and supply chain solutions, Celestica helps innovative industrial and smart energy companies take their ideas further and faster into the future.

The power to create a safer, greener, and more productive future is in our hands. Together, we can unlock the potential across the smart energy ecosystem. Reach out to our energy storage team to learn more.