Global market for energy storage poised for rapid growth to 2030, says Bloomberg study
Energize Weekly, November 29, 2017
The market for energy storage is set to soar in the next decade both in the U.S. and globally, according to recent market analyses.
The global energy storage market will “double six times” between 2017 and 2030, according to a forecast by Bloomberg New Energy Finance (BNEF). While that is robust growth, it starts from a low bar of less than 5 gigawatt-hours (GWh) in 2016 and reaches more than 300 GWh—125 gigawatts (GW) of capacity—by 2030.
Bloomberg projects $103 billion in energy storage investments over the same period.
“This is a similar trajectory to the remarkable expansion that the solar industry went through from 2000 to 2015, in which the share of photovoltaics as a percentage of total generation doubled seven times,” the Bloomberg analysis said.
The growth in renewable generation and storage are intertwined. “Energy storage, both utility-scale and behind-the-meter, will be a crucial source of flexibility throughout this period and will be essential to integrating increasing levels of renewable energy,” according to BNEF.
Declining cost is another factor. Since 2010, battery costs have dropped by 40 percent, the International Energy Agency (IEA) said in its 2017 Energy Outlook. Lithium-ion batteries account for 90 percent of the 2016 market, the IEA said.
BNEF projects utility-scale battery systems falling to less than $300 a kilowatt-hour in 2030 from a current price of $700 a kilowatt-hour.
GTM Research has already projected the U.S. energy storage market to grow twelvefold between 2016 and 2022 to about 7.2 GWh—2.6 GW of capacity.
The single biggest American market has been California, and it will continue to be over the next five years, GTM said. Arizona, Hawaii, Massachusetts, New York and Texas will be vying for second place.
Globally, eight countries—the U.S., China, Japan, India, Germany, U.K., Australia and South Korea—will account for 70 percent of the market between 2017 and 2030, according to BNEF.
“With the rise of renewables in much of the world, understanding and managing flexibility is becoming a cornerstone of energy markets,” EIA’s Tracking Clean Energy Progress 2017 said. “Energy storage played a much greater role in providing flexibility in 2016, with important deployments in both short-term and long-term balancing markets, particularly in Europe and the United States.”
The EIA projects 21 GW of aggregate energy storage capacity by 2025. The biggest uncertainty is in the behind-the-meter market for homes, businesses and industry. “Growth in this area was significant in 2016, albeit from a very low base of 20 megawatts and regulatory uncertainty subduing outlook,” the EIA said.
The market will need additional technological innovation to continue growing, the EIA said. “While evolutionary improvements to the technology appear to be sufficient to meet short-term deployment needs, advanced technologies, particularly those decreasing material requirements and increasing energy density, will be required to stay on track,” the agency said. “In 2016, larger players began to acquire start-ups that are developing these next-generation technologies.”
Two other big issues are the regulatory environment for storage and how it is valued, the EIA said. “Coherent policies need to complement promising technological developments to fully realize the potential of energy storage,” the agency said. “The use of storage by grid operators is limited at present, largely due to the lack of clarity and transparency in market rules and regulations, the lack of markets for flexibility and ancillary services, and the low penetration of new business models.”