Research firm IHS Markit said 2021 marks the start of a continued period of rapid growth for the global energy storage industry, forecasting more than 12 GW of installations in total this year.
This is 2 GW more than the company predicted in February and more than 7 GW more than the market size of 2020. Three years from now, in 2024, the figure will exceed 20 GW and exceed 30 GW by 2030. This is broadly in line with recent BloombergNEF forecast of an annual market of 34.2 GW by 2030.
Interestingly, in Fluence’s recent Form S-1 filed with the United States Securities and Exchange Commission (SEC) ahead of its scheduled IPO, the energy storage technology provider cited forecasts from BloombergNEF. In doing so, Fluence noted that it – and most other forecasts for the energy storage industry – underestimate the size and opportunities of the market.
Indeed, the forecasts “generally only take into account the expenses associated with the physical energy storage asset and do not take into account the associated service and digital expenses,” reads a section on “Our Industry and Our Services. market opportunities ”in Fluence Form S-1.
Supply constraints are real, but will not last more than 18 months
This expected increase in facilities will occur despite tighter battery supply chains, driven largely by the growth in demand for lithium-ion cells from the electric vehicle (EV) sector. Despite the beginnings of custom cell production for stationary energy storage, which was discussed by McKinsey battery expert Nicolo Campagnol in our recent webinar on battery costs, the same cells are widely used. in battery storage than in electric vehicles.
Electric vehicle manufacturers are also increasingly using lithium iron phosphate (LFP) cells for some of their cars, in addition to the higher energy density nickel manganese cobalt (NMC) for cheaper, shorter range vehicles. . This was not the case before and with LFP favored by some stationary storage companies and their customers, it has exacerbated the constraints.
The lower share of demand from battery storage compared to electric vehicles leaves the risk of shortages, as manufacturers favor larger and often longer-term orders from automotive customers over storage system integrators from energy.
Growing constraints could lead to delays in commissioning projects and supply shortages. However, IHS Markit said that the diversification of the supplier base by system integrators and the strengthening of supply plans for the electric vehicle sector means that the disruptions encountered will subside within a year and a half.
IHS Markit Senior Clean Energy Technology Analyst George Hilton said “Delays associated with tight supply have not yet resulted in a significant reduction in the industry’s outlook.” and as the global supply of lithium-ion batteries increases to meet market demand, IHS Markit “is still waiting [battery storage] facilities to develop strongly ”.
Politics will be a major driver of battery storage growth, with China recently announcing an energy storage target of 30 GW by 2025 – a significant part of a total of 87 GW of similar commitments at the level national taken worldwide announced during this year.
These goals set what IHS Markit described as an increasingly aggressive trajectory for the industry, requiring the development of new market opportunities and the adoption of regulatory changes to enable this trajectory.
“The growing attention to energy transition as a means of boosting green growth has led to a flood of ambitious energy storage targets announced by governments around the world. This has significantly strengthened our outlook for the industry as it prepares to enter an extended period of strong growth until 2030, ”said George Hilton.
China’s goal may make it the world’s largest energy storage market for annual installations by 2025, growing “significantly faster” than any other region; Installations in the United States and Europe are expected to grow four times and three times as much respectively by 2030, but those in China could be 14 times higher in 2030 than in 2020, predicts IHS Markit.
In an analysis released in April by rival research group Wood Mackenzie Power & Renewables, the Americas region is expected to overtake the Asia-Pacific region in terms of energy storage deployed by 2025, accounting for more than half of the entire global capacity by 2030. However, this prediction was made before the announcement of China’s target, which covers non-pumped hydropower storage technologies.