BloombergNEF predicts 30% annual growth for global energy storage market to 2030
The global energy storage market will grow to deploy 58GW/178GWh annually by 2030, with the US and China representing 54% of all deployments, according to forecasting by BloombergNEF.
The group’s H1 2022 Energy Storage Market Outlook report was published shortly before the end of March. While acknowledging that near-term deployments have been dampened by supply chain constraints, there will be a 30% compound annual growth rate in the market, BloombergNEF predicted.
In 2021, 10GW/22GWh of storage was deployed with the world reaching 27GW/56GWh of cumulative instalments by the end of the year.
The world’s biggest market by country is currently the US, installing 4GW/11GWh last year, bringing its cumulative capacity up to 7GW/17GWh.
However China, helped by its national policy to target 30GW of energy storage by 2025, is likely to overtake that lead, perhaps even before that 2025 deadline.
Germany meanwhile could be set for a resurgence to become the third-biggest market by 2024, again driven largely by policy, this time a 200GW solar PV target which will drive battery adoption alongside residential solar. Merchant opportunities for utility-scale energy storage are also reemerging, BloombergNEF said.
Other markets of note include Australia’s already merchant-driven utility-scale market and its rapid residential segment growth, which make it likely to reach fourth place by 2030, although BloombergNEF noted the lack of revenue certainty in that utility-scale segment could make financing projects tricky.
In other words, the economics of battery storage are good in Australia for utility-scale, with the rise of renewable energy and government support at state-level helping things along. However, the lack of coherent renewables policy from the federal government and the inability of storage to access long-term contracts are making it a market of pure merchant risk.
Australia installed around 345MW/717MWh of utility-scale in 2021 and a further 646MW/1,092MWh are forecast for commiss
ioning in 2022 pending delays. By 2030, BloombergNEF forecasts that Australia will be host to 7.3GW/16.4GWh of operational battery storage, but if revenue uncertainty persists and policy becomes more hostile to renewables, this could drop to just 2.3GW.
India will grow to be the fifth largest market by the end of the decade. As extensively reported at Energy-Storage.news and by our solar colleagues at PV Tech, the growth of India’s renewable energy industry and need to strengthen the grid as well as bring off-grid electrification to rural areas is driving interest already and the government appears keen to support both manufacturing and deployment.
In other regions, various Southeast Asian countries as well as Japan have introduced more favourable energy storage policies and the construction of large-scale projects in Chile, Mexico, Dominican Republic and El Salvador could signify the start of a turning point for storage in Latin America, where uptake has been limited thus far.
Africa and the Middle East are seeing a sharp rise in uptake of storage for energy shifting applications and this is expected to continue.
Meanwhile in Europe, long-term revenue contracts are being secured for large-scale projects in countries including Germany, Italy and Belgium, but on the whole the interconnected continental grid, relatively low energy demand and lack of policies supporting storage mean the market is still at a fairly slow pace of deployment.
However, it remains to be seen what sort of impact the Russian invasion of Ukraine which began in February has on the energy security plans of European countries.
BloombergNEF noted that lithium-ion battery storage contributed 95% of new utility-scale capacity globally last year, with only a “few rare exceptions” such as three new compressed-air energy storage systems in China totalling 170MW/760MWh.
The firm expects that lithium will maintain that grip on the market for the next few years, expecting that flow batteries, electrothermal and other longer duration technologies will still remain limited to small pilot or special purpose projects. Yet in the future, longer-duration energy storage could be a provider of emissions-free firm capacity to grids, BloombergNEF noted.
Supply chain challenges arrest decline in costs
Meanwhile on perhaps the current biggest topic in the industry — supply chain constraints — BloombergNEF said the US’ 2021 deployment figures were 18% lower than its expectations, with 1.3GWh/9.7GWh of projects delayed and pushing their commissioning dates back to this year from last year.
Regulated markets in California, the southwest, New York and Hawaii featured much longer delays than the Texas deregulated market, because of the need for developers in those regulated markets to renegotiate their contracts with utilities.
In the UK, found to be the world’s biggest utility-scale market, even the bigger players are facing challenges with their supply chains and seeing their projects delayed. However, continued recognition of the need for energy storage to deal with volatility on the grid means it is still seen as an attractive market.
Developers and investors in the UK also want to move forward with their projects as quickly as possible and enter market opportunities for ancillary services and other revenue streams before they become saturated.
China, which is of course the global supply chain hub of the battery storage industry, did not face direct delays to project timelines. However, the country’s energy storage industry does not have as much downstream deployment experience as it does in the upstream materials and manufacturing sector.
This means there is limited experience in designing and deploying large-scale energy storage projects, and led to lower installations in 2021 than BloombergNEF had been expecting.
Despite the supply chain issues, energy storage had a record-breaking year in 2021. Yet those constraints will continue to present challenges and price pressures caused by spikes in costs for materials like lithium, graphite and cobalt may not begin to ease until 2023.
Battery pack prices will hit US$135/kWh across the industry in 2022, driven by high commodity pricing and the continuous decline in costs enjoyed in consecutive years prior to 2021 has arrested.
The price of lithium carbonate has gone up 974% since the beginning of 2021, cobalt 201% and nickel 208%.
BloombergNEF surveyed battery manufacturers, energy storage providers and developers earlier this year, finding turnkey system prices for four-hour duration battery storage to range from US$250/kWh to US$400/kWh, for projects scheduled for commissioning in 2023.
In 2021, the average figure carried in BloombergNEF’s survey of energy storage system costs was US$227/kWh. Smaller companies were more badly affected by cost increases, as they were not able to lock in the sort of multi-year supply agreements in advance that their larger counterparts were able to get signed.