Advanced Energy Storage Systems Market: Driving the Transition to Clean Energy

Advanced Energy Storage Systems Market: Driving the Transition to Clean Energy

Advanced energy storage is an emerging need for energy transition as well as grid modernization. Advanced energy storage technologies such as lithium-ion batteries are increasingly being adopted in grid-level energy storage applications to balance power supply and demand.

The Global Advanced Energy Storage Market is estimated to be valued at US$ 16.9 billion in 2024 and is expected to exhibit a CAGR of 5.6% over the forecast period 2024 to 2031.

Advanced energy storage technologies enable storage of electricity generated from renewable energy sources like solar and wind for use when power generation is low. Lithium-ion batteries offer higher energy density compared to conventional battery technologies, making them suitable for grid-level deployments. They are also more environment-friendly and have a longer lifespan. Utilities are adopting large-scale advanced energy storage solutions to integrate higher shares of intermittent renewable energy into their grids and maximize asset utilization. Advanced energy storage enables demand shifting and provides ancillary grid services like frequency regulation.

Key Takeaways

Key players operating in the advanced energy storage market are ABB Ltd., LG Chem, Ltd., Samsung SDI Co., Ltd, General Electric Company, and Tesla Inc. Major players are focusing on capacity expansions to cater to the growing demand from the utility sector. For instance, in 2021 Tesla Energy completed one of the largest battery projects in California with a storage capacity of 182.5 MWh.

The market is witnessing increasing demand for advanced energy storage solutions from the utility sector for large-scale grid-level deployments. Government regulations and policies promoting renewable energy adoption are also driving energy storage deployments. Countries globally have announced ambitious carbon neutrality targets which will require scaling up renewable energy capacity backed by energy storage.

Technological innovations are expanding the capabilities of advanced energy storage. Lithium-ion battery chemistries are advancing with higher energy densities. Research is ongoing on beyond lithium-ion battery technologies like solid-state batteries with much higher safety and capacity. Technology improvements will support cost reductions and integration of larger shares of renewables on the grid.

Market Trends

Cost reductions - With rising production volumes and technological advancements, costs of lithium-ion batteries have fallen sharply over the past decade. Ongoing cost declines will make advanced energy storage economically viable for a wider range of grid applications and support accelerated deployments.

Modular solutions - Energy storage solution providers are developing modular and scalable designs that offer flexibility to utilities. Modular advanced energy storage power blocks can be combined as per requirement to achieve any power and energy capacity. This eases business case evaluation and optimizes storage investments.

Market Opportunities

Renewable integration - Expanding renewable energy capacity will require commensurate growth in energy storage deployments for grid balancing. Advanced storage provides opportunities to cost-effectively overcome intermittency challenges of solar and wind.

Ancillary services - In addition to energy shifting, advanced storage can provide valuable ancillary grid services to system operators like frequency regulation and voltage support. This represents a lucrative market potential.

Electrification of transport and heating/cooling - Widespread adoption of EVs and heat pump technologies for decarbonization will place additional burdens on electric grids. Utility-scale storage can play a key role in managing load peaks from these distributed dynamic loads.

Impact of COVID-19 on Advanced Energy Storage Market Growth
The outbreak of COVID-19 pandemic has adversely impacted the growth of global advanced energy storage market during 2020. The imposition of lockdowns across various countries led to temporary shutdown of manufacturing facilities and disruption in supply chains. This affected the demand and supply of advanced energy storage solutions in various end use industries like utilities, commercial and industrial sector. The reduced industrial activities and lowered demand from commercial sector drastically reduced the deployment of new energy storage projects during the initial months of pandemic.

However, with governments allowing partial resumption of industrial operations and lifting of lockdowns gradually, the market is witnessing signs of revival since late 2020. The increased focus on development of distributed renewable energy resources is expected to boost the demand for advanced energy storage solutions in post-COVID times to ensure grid stability. The rising focus on development of microgrids and hybrid energy systems integrating renewable energy and energy storage is anticipated to open new growth opportunities.

Advanced Energy Storage Market in Europe

Europe accounts for one of the largest shares in global advanced energy storage market in terms of value. According to estimates, more than 30% of worldwide advanced energy storage installations are concentrated in European countries. Countries like Germany, UK, France have led the deployment of battery storage installations to support increased renewable energy integration into national grids. The favorable government policies and initiatives promoting energy storage adoption for grid balancing applications have boosted Europe's leadership. Meanwhile countries in Northern Europe including Norway, Sweden are emerging as hotspots adopting behind-the-meter energy storage solutions to boost self-consumption of solar power especially in remote communities.

Advanced Energy Storage Market in Asia Pacific

Asia Pacific region is poised to emerge as the fastest growing regional market for advanced energy storage over the next decade. Mainly driven by countries like China, Japan, South Korea and India, the region is anticipated to witness highest CAGR during forecast period on back of supportive policy frameworks and investments in renewable energy sector. Rising investments in large scale battery storage projects by power producers and low installation costs are encouraging widespread commercialization of grid scale stationary storage systems. Meanwhile countries like Australia, Indonesia, Vietnam have also emerged as promising emerging markets with increasing penetration of distributed renewable resources and growing need for flexible power support through advanced batteries and other energy storage technologies.