The off-grid storage market will grow from $9.9 billion in 2011 to $13.5 billion in 2016, according to a new report from Boston-based Lux Research. Emerging technologies will be the fastest-developing –increasing from $1.5 billion in 2011 to about $4 billion in 2016. But only developers who hone in on this opportunity quickly and aggressively will capture a meaningful share of the market, the experts predict.

Emerging electrical storage developers who are struggling to penetrate the transportation and grid-related markets, have started prospecting off-grid opportunities as a way to attain scale and lower costs. The report, titled Off-grid: A Modest Meal for Starving Storage Developers, forecasts opportunities for emerging battery, flywheel, ultracapacitor, and fuel cell technologies in off-grid markets, such as telecommunication networks, datacenters, and mobile and semi-permanent military bases.

“Considering the current financial and regulatory state of grid-connected storage, the off-grid market presents a relatively bright opportunity for emerging storage technologies,” said the report’s lead author, Steve Minnihan. “But given the sheer number of developers competing for a share of the market, decisive action is needed to succeed.”

The report bases its analysis on a lifetime cost calculation for each technology, market, and application it covers. Among its key conclusions:

• Lithium-ion (Li-ion) rechargeable batteries are experiencing small, steady growth in diversified markets. Li-ion batteries will grow from $795 million in revenue in 2011 to $2.2 billion in 2016. Thanks to its improved cycle life and energy density over lead-acid batteries, lithium-ion will see narrow penetration into the high-end datacenter market, netting 6.8 percent of unlimited power supply (UPS) capacity and 5.8 percent of telecom backup capacity in 2016. If Li-ion developers can trim costs 33 percent to $400/kWh and demonstrate improved lifetimes, then the technology could usurp further market share in the telecom backup market in the latter half of the decade.

• Flywheels and ultracapacitors will supplement, not lead, the UPS market. Together, flywheels and ultracapacitors will capture 10 percent of the datacenter UPS market by 2016. Flywheels will grow from $49 million in 2011 to $104 million in 2016, while ultracapacitors will expand from a base of $88 million to $248 million in 2016. High reliability, superior cycle life, unsurpassed power density, and minimal maintenance costs all help make these technologies strong candidates, but their limited energy capacity raises barriers against broad adoption.

• Fuel cell potential is strong, with room for growth beyond 2016. Fuel cells will grow from $536 million in 2011 to $1.3 billion in 2016, through adoption in the off-grid telecom power and datacenter market. This expansion won’t be enough, however, to support the expansive list of fuel cell developers, leading to fierce competition and consolidation.

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Cheryl Kaften is an accomplished communicator who has written for consumer and corporate audiences. She has worked extensively for MasterCard (News - Alert) Worldwide, Philip Morris USA (Altria), and KPMG, and has consulted for Estee Lauder and the Philadelphia Inquirer Newspapers. To read more of her articles, please visit her columnist page.

Edited by Jennifer Russell