World Energy Storage Forecast Increased 13% — Thanks, IRA & REPowerEU!

Bloomberg New Energy Finance has upgraded its forecast for global energy storage (GES) by 13% thanks to recent developments in the US and Europe.

GES currently sits at 50 GW. Bloomberg New Energy Finance (BNEF) is predicting that it will rise to almost 150 GW by 2025, and over 400 GW by 2030. The core markets are the US, China, and the EU. As recently as November of last year, BNEF’s forecast was a cumulative installed capacity of 358 GW. (Note that this excludes pumped hydro energy storage.)

The Inflation Reduction Act in the US and REPowerEU will underpin the US and EU movement towards faster battery deployment. The IRA, for example, includes an Investment Tax Credit (ITC) that applies to standalone energy storage projects (no need for co-location with a solar power project).

“With ambition the energy storage market has potential to pick-up incredibly quickly,” Yayoi Sekine, head of energy storage at BNEF, added. “The nuts and bolts of how energy storage projects will materialize as result of big policies like the US Inflation Reduction Act still need to be sorted. However, companies are already scaling up operations to capture the upside.”

While US and European energy storage policies have stimulated the increased storage deployment forecast for 2030, neither is expected to be the largest market for stationary energy storage in 2030 on a power capacity (GW) basis. The Asia Pacific region is expected to be, driven by China’s energy storage market. That said, the Americas are expected to lead on new energy storage capacity (GWh). The reason is that “storage plants in the US usually have more hours of storage.”

The REPowerEU policy was produced in response to the Russian war in Ukraine. This has exposed European dependency on fossil gas imported from Russia. According to European Commission (EC) Vice President Maroš Šefčovič: “Energy storage will play a key role …. It will help facilitate the integration of renewables and the electrification of the economy, while increasing the flexibility and security of the energy system. Storages will be critical to reducing energy prices by pushing expensive gas power plants out of the market during peak price hours.”

Vice President Šefčovič highlighted that in the short term, the potential of batteries — and in the longer-term, power-to-X technologies — must be “exploited to make the most of the current global storage revolution.” Much of this storage will be used for energy generation, time shifting. A solar glut in the middle of the day can be stored for use at peak demand in the evening, thus displacing expensive gas power generation.

“The energy storage industry is facing growing pains. Yet, despite higher battery system prices, demand is clear. There will be over 1 terawatt-hour of energy capacity by 2030. The largest power markets in the world, like China, the US, India and the EU, have all passed legislation that incentivizes energy storage deployments,” BNEF analyst Helen Kou said.

Australia gets a note for its focus on decentralized, customer-sited energy storage, as does Germany. “Customer-sited batteries ­— both residential, and commercial and industrial — are also expected to grow at a steady pace. Germany and Australia are currently the leaders in this space, with sizeable markets in Japan and California too,” BNEF writes. “BNEF forecasts energy storage located in homes and businesses will make up about one quarter of global storage installations by 2030.”