The global grid-connected energy storage market — which endured its first ever year-on-year decrease last year — is expected to rebound in 2020 despite ongoing impacts from COVID-19, according to IHS Markit.
The IHS Markit Energy Storage Service sees global installations growing by more than 5 GW in 2020 despite the disruption caused by the global pandemic. The growth highlights the increasing competitiveness of battery energy storage to provide critical capacity, especially in the United States.
“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. The 2020 rebound highlights the importance of the technology and the strength of the underlying market fundamentals.” – Julian Jansen, research manager, IHS Markit.
The energy storage market has benefitted from a strong start to the year, with residential markets buoyant and large utility-scale pipelines being realised, as well as markets in the United States and China quickly rebounding from the drop 2019.
Growth will continue beyond 2020. IHS Markit has increased its forecasts and now expects a fivefold rise in annual installations from 2019 to 2025, reaching 15.1 GW / 47.8 GWh. Annual grid-connected energy storage hardware revenues are projected to more than double (from $4.2 billion (€3.5 billion) in 2020 to $9.5 billion (€7.9 billion) in 2025), despite falling battery module prices, which are expected to fall 32% during this timeframe.
“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.” – Julian Jansen, Research Manager at IHS Markit.
Changing dynamics and strengthening fundamentals in several markets will drive most installations in the coming years:
- The United States will remain the largest market with growth driven by an ambitious round of state-level targets, a strong pipeline of solar-plus-storage projects capitalising on the ITC (Investment Tax Credit) and increasing competitiveness of batteries as a source of firm capacity.
- China will 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. China is forecast to install 6.5 GW through 2025 and be the second largest market throughout the forecast period.
- The outlook in Europe has strengthened as new opportunities develop in a wide range of countries. For example, a capacity auction in France will support 253 MW of energy storage by 2023.
- Wholesale arbitrage is becoming a major driver for front-of-the-meter (battery) energy storage in Australia and the United Kingdom, signalling a turning point as merchant energy storage breaks into a new opportunity.
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