Grid-scale Battery Storage Market

Global Industry Analysis (2017 – 2020) – Growth Trends and Market Forecast (2021 – 2025)


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Growing Need for Renewable Energy Integration Drives Grid-scale Battery Storage Demand

Grid-scale or utility-scale battery storage is one of the innovation choices that can improve power framework adaptability or stability. Grid-scale battery storage enables high levels of renewable energy integration for power system operators and utilities to store energy for power backup. Grid-scale battery systems are engineered to augment or replace generation, transmission, and distribution assets across the grid. Large-scale energy storage systems can make the grid more reliable and more flexible as they decouple energy services from a particular fuel source. Driven by technological advances, power facilities are being built with grid-scale battery storage systems that can hold sufficient renewable energy to power hundreds of thousands of homes. Thus, presence of grid-scale battery storage systems provides energy security during peak hours as well as backup power during power failure/breakdown.

Boom in Renewable Power Fuels Deployment Rate of Grid-scale Battery Storage

The year-on-year increase in grid integration of renewable power has boosted the demand for grid-scale battery storage. Modification of conventional grids to integrate with renewable energy followed by rising investments in stand-alone microgrids networks is expected boost the demand for energy storage batteries. Rising need for power system flexibility, coupled with the declining cost of energy storage batteries, has paved the way for energy storage batteries to play a key role in the power system in recent years. As the need for power system flexibility increases in line with the integration of wind and solar power with conventional power grids, more policymakers, regulators, and utilities are seeking development of policies to jump-start battery energy storage system (BESS) deployment.

Current applications of grid-scale batteries are peak shaving, load shifting, and renewable sources integration. Although grid-scale Battery market yet to mature, it is expected to grow exponentially over the next decade owing to the increase in renewable energy demand, government regulations and technological advancements. The environmental impact of conventional energy sources has led to a significant demand pull for renewable sources. By 2060, solar energy is expected to produce 60% of electricity globally. This shift towards renewable sources will lead to increased demand for grid-scale batteries as they are essential for negating fluctuating power in grids.

On the flipside, high initial costs, safety concerns, and low life cycle of batteries are strangling the market. Asia Pacific region Grid Scale Battery market is expected to exhibit the strongest growth rate because of rapid technological advancements taking place in Japan, and South Korea. Backed by respective governments, companies in both nations are creating safe, efficient, sustainable, economical, and high energy density batteries. Lithium ion-based batteries have high demand compared to other chemical-based batteries.

Lithium-ion Energy Storage Batteries Hold a Promising Future in Electric Utility Networks

Grid-/utility-scale battery can be deployed in several locations such as electricity transmission distribution networks near load centres and co-located with VRE generators. Lithium-ion battery dominates the global grid-scale battery storage market. Other energy storage batteries that are widely deployed in grid-scale networks include flow battery, lead acid battery, and sodium-based battery. The increasing share of lithium-ion batteries in storage capacity additions has been largely driven by the lithium costs further leading to a drop in Li-ion batteries, which has in turn been driven by the ramp-up in production to meet the growing demand for electric vehicles (EVs). Li-ion battery sales are prominent for EVs; however, grid-scale demand for lithium-ion battery follows behind EVs. Increasing penetration of lithium-ion battery is grid-scale application, particularly in developing economies, is expected to benefit the demand for grid-scale battery storage in the foreseeable future.

High Market Opportunity Abound in Asia Pacific

Asia Pacific remains the most attractive region for grid-scale battery storage market. High opportunities lie in Australian and Indian market, of which the former has several deployments of battery energy storage for large-scale grid applications. Since 2017, the Hornsdale Power Reserve, a 100 MW/129 MWh lithium-ion battery installation, the largest lithium-ion battery energy storage system (BESS) in the world, has been in operation in South Australia. In India, grid-scale storage is still at an introduction/early stage. The country is currently undergoing an energy transition, with an increased penetration of renewable power and high focus on grid integration of renewable power. In 2017, the Central Electricity Regulatory Commission released a staff paper on energy storage requirements for the Indian grid. A subsequent discussion paper in 2018 proposed a market mechanism for technology-agnostic ancillary services procurement. Once implemented, this mechanism is expected to create an appropriate regulatory framework for deploying grid-scale battery storage. Thus, India is expected to witness rampant deployment of grid-scale battery storage with higher renewable energy (RE) penetrations levels.

The UK is one of the key nations in the European market, aiming high penetration of grid-scale battery through a pipeline of over 16 GW of projects with the potential for deployment over the next few years. The US dominates the North American market and the Federal Electricity Regulatory Commission (FERC) Order 755 has mandated a separate compensation structure for fast-acting resources such as batteries than that for slower acting conventional resources. This incentivised use of battery storage systems is likely to provide frequency regulation, which has already been adopted by various system operators in the country. This has spurred the demand for grid-scale batteries, thereby pushing the demand for grid-scale battery storage. Increasing investments in renewable power sector, followed by sustainable micro grids, are expected to witness rise in energy storage batteries in electric utility networks across the globe. This is likely to benefit the demand for grid-scale battery storage in the near future.

Global Grid-scale Battery Storage Market: Competitive Landscape

Key players in the grid-scale battery storage market include Hitachi, Ltd., Tesla Inc., Panasonic Corporation, LG Chem, BYD Company Ltd., Mitsubishi Electric Corporation, GS Yuasa Corporation, SAMSUNG SDI CO., LTD., GE, and Toshiba Corporation. Tesla Inc.  has commissioned the world’s largest Li-ion battery storage capacity of 100 MW / 129 MWh at the 315 MW Hornsdale Wind Farm in South Australia to provide contingency reserves and frequency regulation services to the South Australia grid. In April, 2021, Hitachi ABB Power Grids signed a collaboration agreement on battery energy storage for renewable energy projects in the Americas, with Atlas Renewable Energy.

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