The world will see over 3,000 GW of new renewable energy installations by 2030, as calculated based on targets set by governments around the globe. The figure may exceed 5,000 GW by 2030, as ESS InfoLink projected.
Growing electricity production from renewable sources not only challenges grid stability, but puts the frequency regulation capability to the test. Connecting energy storage systems to the grid is the fundamental solutions for providing ancillary services and developing smart grids to achieve energy transition. Therefore, the ESS market is expected to grow dramatically in the coming decade.
Emergence of lithium-ion battery
Over the past three to four decades, the rise and the practice of electric vehicles prospered the automotive electronic and lithium-ion battery industries. International manufacturers expand production capacity, establish joint ventures, and merge as strategies towards staying ahead of competitors and securing market share. There is no denying that the EV industry will be the largest market for lithium-ion batteries in the coming decade. This, combined with global acceleration towards energy transition, provides a backdrop for the lithium-ion battery-based energy storage systems to thrive.
Lithium-based ESS market saw considerable growth in 2020. However, high costs and safety concerns restricted its developments and applications. Fortunately, the rise of EV market leads to advanced lithium-ion battery technology, increasing production capacity, and lower costs. Additionally, with countries across the globe making commitments to achieve carbon neutrality, the energy storage industry is expected to become the second largest market for lithium-ion batteries in the coming decade. Senior analyst Yuan Fang-wei of ESS InfoLink projects that by 2030, lithium-based ESS market will reach at least 500 GWh, or 800 GWh in the most optimistic scenario, with 30-40% of compound annual growth rate.
Drivers behind market growth
Terms such as the Paris Agreement, carbon neutrality, and net-zero emission are more and more frequently seen around the globe, reflecting the recognition that climate impacts must be tackled. Global energy transition path is on track, as 128 countries have set dates by which they will achieve net-zero emission. For instance, China set the “30-60 decarbonization goal,” whilst the U.S., the EU, Japan, and South Korea are dedicated to achieving net-zero emission by 2050. To fulfill these goals, countries all drew up relevant policies regarding the renewable energy targets, such as wind and solar PV power, and electricity trading.
Energy storage systems emerge amid carbon neutrality push. ESS InfoLink expects the U.S. and Europe to continue leading energy storage developments in the recent term. China, which is accelerating energy storage deployment, is likely to catch up or even surpass the U.S. in market share between 2025 and 2030. By 2030, the U.S., China, and Europe are expected to reach 400 GWh, 350 GWh, and 100 GWh energy storage capacity, respectively, dominating more than 80% of global energy storage demand. Of which the U.S. and China will account for a combined share of more than 75%.
Clearly, China, the U.S., and Europe are the most sought-after markets, evidenced by growing numbers of ESS manufacturers based in Europe and the U.S. as well as expansion of leading battery manufacturers in Asia into Europe and the U.S. In light of this, the outlook for the energy storage industry looks bright.