US, Germany, Japan and China continue to be key markets on the back of supportive regulations and incentives, finds Frost & Sullivan
Frost & Sullivan - Despite the current COVID-19 pandemic, the medium term future for energy storage remains bright. Frost & Sullivan's recent analysis, Outlook for the Global Energy Storage Industry, 2020, predicts the market to decline, as project delays, including the lack of access to residential and commercial clients, takes its toll. An additional insight, Global Battery Energy Storage Market, analyzes the impact of the pandemic and notes the market is forecast to rebound strongly in 2021 and experience an accelerated growth period from 2022 onwards, with global annual capacity additions forecast to hit 23.3 GW per year in 2025, up from just 4.1GW in 2019.
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"The fundamentals behind an investment in energy storage remain strong", said Jonathan Robinson, Energy Program Lead, Industrial at Frost & Sullivan.
"Residential and commercial customers are facing high energy costs and
want to do something to reduce them, as well as guaranteeing security of
supply –energy storage enables them to achieve this."
The United States and China are set to be the biggest markets for energy storage in terms of installations and installed capacity. South Korea,
which was the global leader in energy storage solutions in 2018, is
likely to drop a few positions but remain one of the top five along with
Germany and Japan.
Among end-user categories, strong progress is forecast across
residential, commercial and industrial and grid-scale applications. High
electricity prices, declining feed in tariffs, increasing grid demand
charges and declining technology and project costs all mean that energy
storage is becoming a much more attractive proposition for consumers
from households to heavy industry.
"Project sizes and values can vary significantly within the
commercial and industrial, and grid spaces, depending on the volume of
storage required and for what time period," noted Robinson. "Each
project needs to be thoroughly assessed to ensure the solution is
right-sized for customer needs – otherwise the actual ROI will not match
the projected one."
Energy storage system companies can also explore the following opportunities to stimulate growth:
- There will be a growing market for retrofitting existing solar PV
systems with additional energy storage capacity, while new solar PV
installations will increasingly be paired with a storage system at the
time of purchase. To leverage this opportunity, storage manufacturers
should develop strong relationships with solar system integrators and
- Leveraging big data analytics will enable utilities to determine
likely demand in a particular locality and deal with fluctuating
- Battery manufacturers must forge partnerships with energy
management solution providers to offer in-built, cloud-based battery
monitoring and fault diagnosis platforms with relevant cybersecurity
measures to continuously monitor and optimize the performance of a large
pool of batteries.
- Battery manufacturers must incorporate machine learning algorithms
to develop smart self-learning systems that can optimise storage
depending on renewable loads.
- Companies should either develop or partner with the providers of virtual power plant solutions, as these will become increasingly important in the decentralized energy markets of the future.
- Integration of innovative business models and multiple revenue streams such as revenue stacking must be adopted by storage providers to tap the full potential while enhancing the attractiveness of energy storage solutions.
Outlook for the Global Energy Storage Industry, 2020 and Global Battery Energy Storage Market are a part of Frost & Sullivan's Energy and Environment Growth
Partnership Service program, which helps organizations identify a
continuous flow of growth opportunities to succeed in an unpredictable