Energy Storage Market Outlook from Battery Energy Storage Applications

Annual capacity additions from battery energy storage applications will multiply in the coming years as storage becomes a crucial element of the global energy landscape, according to Rystad Energy. Company models predict that annual battery storage installations will exceed 400 gigawatt-hours (GWh) by 2030, which is a tenfold increase from current annual additions.

Battery Energy Storage Systems (BESS) are a configuration of interconnected batteries designed to store surplus electrical energy and release it for the next demand. Consequently, BESS offer practical solutions to address the challenges of power intermittency. As the world moves towards greener sources of power generation, such as solar photovoltaics and wind, the development of battery energy storage will be essential to meet future energy demand.

As Rystad Energy reported, global BESS capacity increased by 60% in 2022 over the previous year, with total new installations exceeding 43 GWh. Another 74 GWh will be added this year - an increase of 72% - driven primarily by cost reductions from BESS systems, plus incentives in North America and government funding programs in Europe, along with strong renewable capacity expansion. in mainland China.?

Assuming business as usual, the company expects annual installations to exceed 400 GWh by 2030, taking into account that GWh refers to units of energy, while gigawatts (GW) is units of power. This equates to a capacity increase of about 110 GW in 2030 in power terms, almost equivalent to the peak residential electricity consumption of France and Germany combined. This projection is broadly in line with our climate change scenario, which meets the carbon budget of 1.9 degrees Celsius.

 “Batteries will play a fundamental role in the future of energy production and electricity demand, solving the problem of intermittent renewable energy generation. To decrease reliance on coal and gas as backup power generation sources, countries need to invest in BESS now,” said Sepehr Soltani, energy storage analyst at Rystad Energy.

International plans for energy storage

Government policies play an important role in incentivizing investment and capacity expansion. The US Inflation Cut Act of last year has catalyzed the expansion of renewable energy and clean technologies, boosting projected onshore wind and solar capacity by 40% and expecting to add more than 20 GW of capacity batteries compared to before the Act. As a result, US battery capacity will exceed 130 GW by 2030.

The Green Deal European Industrial Plan aims to accelerate the transition towards a low-carbon and sustainable industrial sector in Europe, and gradually supports the development of BESS in addition to local funding for BESS developers - for example, a program of £32m energy storage financing in the UK. China has pledged to reach maximum emissions by 2030 and sees battery development as a stepping stone to that goal. The development of clean energy in the country will accelerate in the coming years, increasing the share of renewables in its energy mix.

China's coal capacity expansion is primarily aimed at addressing energy security issues, providing the domestic power sector with enough flexibility to mitigate future energy crises. The country has matured its solar and battery production capacity and is expected to continue investing in local supply chain expansion to meet both domestic demand and China's role in the global export market across the chain. value of low carbon energy.

By 2030, BESS's annual market installation will reach 110 GW, 58% of which will be in Asia. North America will represent about 20 GW and Europe will have 18 GW installed, while the remaining 8 GW will come from the rest of the world. This is a departure from current trends, as the planned installation by the end of 2023 is expected to be dominated by North America, which will account for 45% of the total BESS capacity.

Commercial-scale battery storage is needed to solve energy security issues in national and regional power grids. Microgrids - autonomous local power grids - will become more prevalent and distributed power generation will dominate as primary energy sources, such as solar and wind, are not limited to specific countries or regions.

Residential market

Most of the capacity increase will occur at the utility level, but residential development is also critical. Consumer power prices will fuel the growth of stand-alone BESSs in the near term, and residential battery installations will grow alongside the adoption of rooftop solar PV. Countries with efficient and affordable solar power production will be pioneers in coupled residential battery systems.

The residential market lags behind the utility segment around the world, but we expect this to change. We expect residential adoption to grow in parallel and increase tenfold, surpassing 41 GWh of battery demand by 2030. Europeans are early adopters of BESS in their homes as tax breaks and high energy prices during peak periods have motivated consumers.