The global grid-connected energy storage market despite disruptions from the Covid-19 pandemic will rebound this year and top 15 gigawatts in 2025, IHS Markit said.
“The fact that the energy storage industry is proving resilient and has resumed a growth trajectory during the pandemic and subsequent economic shock proves that the 2019 market retraction was an aberration,” IHS Markit research manager Julian Jansen said when presenting an updated forecast this week
“The 2020 rebound highlights the importance of the technology and the strength of the underlying market fundamentals.”
Energy storage is increasingly important in regions with a high penetration of intermittent wind and solar power to maintain a continuous and reliable electricity supply.
The researchers at the energy storage service unit of IHS Markit expect global installations to grow by more than 5GW this year, up from 3.1GW in 2019. Installations volumes were pushed higher by the increasing competitiveness of battery energy storage to provide critical capacity in the US, the world’s largest market, as well as by a rebound in China.
The analysts going forward expect a five-fold global growth in grid-connected storage to a capacity of 15.1GW with an output of 47.8 gigawatt hours in 2025.
Grid-connected energy storage has already ballooned into a multi-billion dollar market.
Despite falling battery module prices, hardware revenues from energy storage are expected to more than double from $4.2bn this year to $9.5bn in 2025.
Growth in the US is expected to be driven by an ambitious round of state-level targets, a strong pipeline of solar-plus-storage projects capitalizing on the ITC (Investment Tax Credit) and increasing competitiveness of batteries as a source of firm capacity.
The dynamics of the US market were shown this week, when grid infrastructure developer LS Power brought the Gateway Energy Storage project in San Diego County, California, online. The 250MW/250MWh facility is the world’s largest operational battery project, and started amid a historic heatwave in the state that already is suffering from rolling blackouts as a rise in air conditioning use is a burden on the power grid.
“The increasing competitiveness and critical role of battery energy storage assets in supporting the decarbonisation and resilience of the electricity system means that opportunities for energy storage continue to develop despite the turmoil caused by the Covid-19 pandemic,” Jansen added.
A second major growth market will be China, the researchers predicted.
The Asian giant is slated to see a resurgence in energy storage uptake as provinces begin to look to storage co-located with solar PV as a means of firming up increasingly high penetrations of renewable assets on the grid.
IHS Markit forecasts China to install 6.5GW through 2025 and be the second largest market throughout the forecast period.
In Europe, new opportunities are seen developing in a wide range of countries, such as France, where a capacity auction will support 253MW of energy storage by 2023.
The researchers also said that wholesale arbitrage is becoming a major driver for front-of-the-meter (battery) energy storage in Australia and the UK, signaling a turning point as merchant energy storage breaks into a new opportunity.