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Better Batteries, Better World
JAMES MANYIKA is a Director of the McKinsey Global Institute. MICHAEL CHUI is a Principal at MGI. Both are based in San Francisco.See more by James ManyikaSee more by Michael Chui
Believe it or not, the electric storage battery -- a technology that has been around since the eighteenth century -- could change the economic course of the twenty-first century. Thanks to breakthroughs on the horizon, batteries qualify as one of 12 disruptive technologies that the McKinsey Global Institute has identified as part of a recent report on innovations that will change the way the world works. Each game-changing technology could affect hundreds of millions of people, create hundreds of billions of dollars a year in economic value, and reconfigure large sectors of the global economy. Advanced batteries, for their part, have the potential to shape global demand for fossil fuels, increase the use of renewables in the electric grid, bring reliable electric power to businesses in developing economies, and extend electricity -- and therefore access to the modern world -- to millions of the world’s poorest.
All told, energy storage could have as much as $635 billion a year in economic impact, which is a measurement of the value created by the use of a technology as well as the revenue that it generates for the companies that produce it. Value to users includes improved performance, better costs, greater convenience, time savings, and other benefits. The total value that we estimate could be created annually in 2025 by energy storage -- mostly achieved through fuel savings -- is almost equivalent to the GDP of Saudi Arabia and more than the potential estimated impact for such high-profile developments as 3-D printing, hydraulic fracturing, and renewable energy. Not bad for a technology that has been evolving for more than 200 years and can be found anywhere in both developing and advanced economies.
By definition, energy storage is any system or technology that allows you to generate energy at one time and use it at another. One of the most common forms of energy storage is pumped hydroelectric storage (PHES), which involves pumping water uphill into a reservoir and releasing it later to flow through a turbine and generate more electricity. Hydro companies use electricity to pump the water uphill when the cost of electricity is low and generate more power from the water when rates are high. Another common form of energy storage, of course, is your average battery.