By 2024, the market for utility-scale battery storage is expected to increase 18-fold and achieve revenue of US$8.4 billion, a recent report by Frost & Sullivan reveals.
According to the report, the 'Global Utility-scale Grid-connected Battery Energy Storage Systems Market', “impressive technological breakthroughs and growth in manufacturing capabilities,” will drive the growth in this sector.
Additionally, favourable government policy initiatives, such as subsidies, special tariffs and targets will spur growth.
Combined with an increase in renewable energy generation and growth in the electric vehicle market, “battery storage has the ability to impart flexibility to the grid across a variety of end-use applications,” says Ross Bruton, Frost & Sullivan energy and power analyst.
“It's greatest advantages are the provision of distributed, variable renewable energy firming and energy time-shift, and rapid short-term electricity balancing for ancillary markets.”
Global battery storage hotspots
The battery storage market will be led by the US, followed by China, Japan and Germany. Despite an overall positive outlook, there are significant market challenges to overcome.
It is estimated the total storage market will equate to between 10 and 12GW by 2024.
Challenges which will impact the market over the next decade include:
- High costs
- Low technology maturity
- Lack of a clear business case and value proposition
- Limited practical application data to support laboratory efficiencies and safety standards
- Inadequate incentives, targets, and supporting policies, and
- Few market consolidations for turnkey solutions
- Low oil and gas prices
In a report published in January, the International Renewable Energy Agency (IRENA) said that growth in battery storage will be driven by:
- island systems and off-grid/rural electrification with renewable energy deployment
- households with solar photovoltaic (PV)
- variable renewable energy smoothing and energy supply shift
- fast, short-term electricity balancing in ancillary markets
“Overall, attractive pricing, combined with a surge in manufacturing and supportive policies for renewable energy development, will increase the bankability of renewable energy associated storage projects,” concluded Mr Bruton, analyst at Frost & Sullivan.