The global energy storage market is expected to increase 13-fold over the next five years and add as much as 146 gigawatt-hours (GWh) of new capacity by 2024, according to a new report published Tuesday by Wood Mackenzie Power & Renewables.
“From 2013 to 2018, we saw fledgling market growth,” said Ravi Manghani, Wood Mackenzie Power & Renewables Research Director, writing this week to accompany a new report entitled ‘Global energy storage outlook 2019: 2018 year-in-review and outlook to 2024. “This was reflected in a global GWh compound annual growth rate (CAGR) of 74%, although we did observe relatively small deployment totals of 7 GW/12 GWh for the period.
“Nevertheless, these developments have shifted the minds of global regulators, policymakers, grid operators, asset operators and developers, in terms of how energy systems can be balanced,” Manghani continued. “Market structures have generally struggled to keep up with the pace of this technology, illustrated by the limited number of revenue streams available to appropriately compensate storage. More than half of the GWh during this period came online in 2018 alone, beckoning an inflection in storage demand.”
“Half of this GW capacity was front-of-the meter (FTM), driven by accessible ancillary service revenues in key markets,” added Le Xu, Wood Mackenzie Power & Renewables Senior Research Analyst. “There was also a notable trend for solar-plus-storage projects providing semi-dispatchable renewable capacity.
“In terms of residential storage, state incentives, reduction in solar export tariffs and the need for backup facilitated storage deployment. Due to rapid system cost reductions, we expect sustainable growth to continue in markets where subsidies are being curtailed. With or without a subsidy, consumers are willing to pay a premium to increase their use of rooftop solar power and, in the process, mitigate the risk of electricity bill increases.”
“The non-residential segment overtook the residential segment for the first time helped by subsidy and growth in South Korea. However, it continues to be the most complicated proposition in several markets where it will take more time to de-risk, attract financing and become scalable.”
Looking forward, Wood Mackenzie expects the storage market to mature and grow at a compound annual growth rate (CAGR) of 38%, with deployment numbers of 63 GW/158 GWh.
The United States and China will unsurprisingly lead the way, accounting for 54% of the gigawatt-hours deployed by 2024 thanks to strong market reforms, state mandates, but most importantly, what Wood Mackenzie describes as “the most significant energy sector transformation since the Dash for Gas.”
The front of the meter (FTM) sector will remain the largest segment through 2024, and is expected to displace diesel, oil, and gas peakers, particularly in fuel import countries where conventional plant run costs are higher, as the trend moves from short-duration systems to long-duration systems.
“We expect renewables-plus projects to become a popular trend through 2024,” said Rory McCarthy, Wood Mackenzie Power & Renewable Senior Research Analyst. “This is especially true for solar-plus-storage projects, as the requirement for clean and dispatchable renewables is widely accepted.
“In investment terms, we estimate the cumulative global energy storage market – defined, in this context, as total system capital expenditure on electrochemical and electromechanical energy storage systems, excluding pumped hydro – to grow six-fold to a total of $71 billion by 2024. $14 billion of that total will be invested in 2024 alone.
“The electrification epoch will unfold more rapidly over the next 5 years. With it, energy storage will become a necessary technology to enhance system flexibility and enable clean, rapid system balancing, while de-risking ever increasing intermittent assets and portfolios.”
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