Venture investments in “fragmented” energy storage technologies like batteries, flywheels, and fuel cells grew 74 percent to $709 million in 2007, a new study says.

The report by Lux Research described an investment theme whose technologies are shedding their teething pains and a market poised to grow by 55 percent over the next five years.

The report, “Alternative Power and Energy Storage, State of the Market Q2 2008: Making Sense of the Next Big Thing,” examined seven energy storage markets, including transportation and consumer electronics, and five technologies.

Stoking investor interest in alternative power storage will be initial public offerings by companies like A123Systems, a maker of lithium-ion batteries that is backed by Sequoia Capital, General Electric, and CMEA Ventures, the report said.

Among the report’s predictions:

--Fuel cells “will return from the dead” as sales increase from $92 million in 2007 to $1.8 billion in 2012. The growth will be driven not by fuel cell cars, but by applications in residential combined heat and power systems and distributed generation. Among the leading companies will be Ballard Power Systems and Ceramic Fuel Cells.

--The market for transportation energy storage will climb 54 percent, from $12.9 billion in 2007 to $19.9 billion in 2012, as light electric vehicle shipments go from roughly 500,000 to almost three million. Matsushita Electric and LG Chem will ride a surge in demand for NiMH and Li-ion batteries to lead the market.

--Bulk energy storage for utilities—potentially the biggest market—will see its growth stunted by timid utilities, the report said. The market will grow to only $600 million, the report said, compared to a potential $50 billion if 10 percent of installed wind power plants adopted energy storage.

Sales of lithium-ion batteries, now used widely to power laptop computers, will jump from $6.8 billion in 2007 to $16.9 billion in 2012 as the technology is adopted in the transportation industry.

Ying Wu, senior analyst at Lux and principal author of the report, said that the market also for flywheels will expand beyond data center to uses in the utility market.

Batteries based on zinc-bromide, vanadium redox flow, silver-zinc and zinc-air rechargeable will find profitable market niches, he said.