Outlook 2023: Paving the road to zero emission | Energy Storage

ENERGY STORAGE OUTLOOK

The rising adoption of the renewable energy sources is fostering the demand and for storage systems for renewable energy worldwide. This demand, aided by government support and investments towards RE development, will further drive the growth of the global energy storage systems market.

There has also been a considerable increase in the consumption of energy around the world; add to that the need for efficient energy sources, growing demand for battery, and most importantly the focus on clean energy, in all are boosting the growth of the energy storage sector. Greater consumption and efficiency requirements have brought about the need for development in grid management, regular load management, and uninterrupted power supply. These are factors that influence the ES market.

Through energy storage we can use energy more effectively, minimizing carbon emissions. To limit global warming to below 2°C energy storage capacity would need to increase from 140 GW in 2014 to 450 GW in 2050. Today, only 3–4 percent of electricity generated by utilities globally is stored, which speaks of the great potential for ESS.

The energy storage market is growing at a strong 23 percent compound annual growth rate, with annual additions projected to reach 88GW/278GWh in 2030, or 5.3 times the expected 2022 level for new installations, according to BNEF's 1H23 energy storage outlook. Despite higher energy storage costs, additions will reflect ~28GW/69GWh of energy storage by the end of 2023.

Multiple markets announced energy storage targets totaling over 130 GW by 2030. The US and China are set to remain the two largest markets with over half of the global storage installations, while Europe - still recovering from the current energy crisis - has some catching up to do. Asia-Pacific (APAC) region leads the global battery energy storage market, accounting for 68 percent of total market value through 2026. Leading the way are countries like China, Japan, India, South Korea, and Australia.

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The Americas region represents 21 percent of annual energy storage capacity on a GW basis by 2030. The U.S. is by far the largest market within the region, with large-scale projects in the pipeline in California, the Southwest, and Texas, according to the BNEF report.

The Europe, Middle-East and Africa (EMEA) region added 4.5 GW/7.1 GWh of new storage assets last year. Residential batteries led installations in the region, a trend that is expected to remain until 2025, as high retail electricity prices and government incentive programs in Europe support household deployments.

The Europe energy storage market is expected to grow at a CAGR of approximately 16.3 percent in the period 2022 to 2027, reaching 5.2GW of installed capacity. However, shortage in procurement of battery minerals is restricting the growth of the European energy storage market, and might result in fewer installations into 2023 and 2024.

Countries with large electricity storage capacity:

China has the largest electricity storage capacity in the world – though this is almost all contained in its 33.3 GW of pumped hydropower. It also has the most electricity generated from solar — 306 GW. The country planning to expand battery capacity to 30 GW by 2025.

The US has a massive 21.6 GW of hydroelectric power, 1.8 GW of concentrated solar power, and 6.6 GW of battery storage.

Spain's concentrated solar power capacity is 2.3 GW, due to an abundance of sunshine here. With 5.9 GW of hydropower, it has the largest capacity for storing energy in water in Europe. Though, it lacks adequate battery storage, the country has set an ambitious target of 20 GW by 2030.

India is home to the world's largest solar farm, but the bulk of the country's energy storage is made up of hydroelectric power. India's Central Electricity Authority has modelled a need for 27GW/108GWh of battery storage by 2030 to meet national goals of adding 500GW of renewable energy capacity from solar and wind, while battery storage could be an export opportunity as well.

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The government of India has set a target of achieving 450GW of renewable energy by the year 2030 - penetration of RE in the grid necessitates energy storage systems for grid balancing. Further, the Ministry of New and Renewable Energy has indicated that it is considering all future renewable tenders with inclusion of energy storage.

South Africa has made impressive improvement in its energy storage capabilities, which include large-scale battery projects. The country has 0.5 GW of concentrated solar power. There are plans to expand utility-scale battery capacity to accommodate South Africa's wind and solar farm installations.

The UK has just over 4,700 mWh in hydroelectric storage. Battery storage was at 1.3 GW as of 2021. There is an estimated 6.1 GW of battery capacity in the pipeline, which will contribute to the government's plan to have 30 GW of operational storage by 2030.

Furthermore, the global EV battery market is projected to grow at a CAGR of 19.0 percent from $56.4 billion in 2022 to $134.6 billion by 2027, driven by battery technology advancement, favorable policies and regulations, and introduction of new plug-in EV models.

EV demand is seeing a steady growth, despite post-pandemic effects, and materials supply chain disruptions. This growth is egging the automakers and their suppliers to scale-up battery production to meet the growing demand. Report by Benchmark Mineral Intelligence states that currently there are over 300 battery giga factories in the construction or planning stages around the world.

The market is dominantly led by Asian suppliers, despite efforts by the US and Europe to increase the domestic production of batteries. China remains on top of the industry, and by 2030 it is expected to have 226 battery plants in operation, representing ~4,500 GWh of annual production, or 70 percent of the global capacity.

Although China is expected to continue leading the production, its share of worldwide capacity could fall to around 65 percent as other countries ramp up battery production. For instance, Germany's capacity is projected to rise to 164 GWh, representing a 15-fold increase in just four years.