Asia-Pacific (APAC) was the largest market for battery energy storage systems in 2020, accounting for 49.9% of the global market installed capacity. The region is expected to maintain its top position in the forecast period up to 2025, as well as its market share of approximately 53.5% in 2025, followed by Europe, Middle East and Africa (EMEA) and the Americas, says GlobalData.
The company’s latest report, ‘Battery Energy Storage System, Update 2021 – Global Market Size, Competitive Landscape, Key Country Analysis to 2025’, reveals that the fall in battery technology prices, the increasing need for grid stability and resilience for the integration of renewable power in the power market are the primary driving factors for the battery energy storage market.
China will likely overtake the US and lead the market at the country level in 2025. The market for battery energy storage in China is estimated to reach $3.22bn in 2025. With its massive renewable energy capacity installation target, the cumulative installed capacity of the energy storage market in China is estimated to reach almost 12 GW in 2025.
With the number of grid-connected renewable electricity generation plants increasing tremendously, the APAC region will focus on frequency regulation in the electric grid to normalize the variation in power generation from renewables. By the end of 2025, the top four countries in the region, namely, China, South Korea, Australia, and Japan are collectively expected to install a cumulative capacity of 20.45 GW.
The EMEA region was the second largest market, accounting for close to 30% of the global cumulative installed capacity by 2020. The region is expected to register steady deployment of battery storage systems during the forecast period, primarily in countries in Europe. The UK and Germany are expected to be the top markets in Europe for battery energy storage. The Middle East and Africa markets are expected to have minimum impact on the regional market over the forecast period; however, they are expected to play a greater role in the long run.
The Americas region accounted for approximately 21.1% of the global cumulative installed capacity by 2020 and the US was the largest market globally. The deployment of storage in front of the meter for grid applications contributed to the growth in the US market. The country has a robust funding structure for energy storage. Likewise, California extended its successful self-generation incentive program, which will greatly contribute to behind-the-meter storage installations in the state. While the COVID-19 pandemic led a slowdown in commercial and industrial installations, residential growth remains strong in California and Hawaii as a result of incentives and resilience programs. Policy support is considered one of the top reasons for the growth of battery storage technologies in the US.
Over the last decade, various new digital and smart technologies have been integrated. Countries have been aggressively promoting the modernization of grids, and enhancing the grids’ capability to meet the requirements of the present and future. Additionally, batteries are being deployed to aid smart grids, integrate renewables, create responsive electricity markets, provide ancillary services, and enhance both system resilience and energy self-sufficiency.
Encouraging policies and high electricity charges are also nudging the market to renewables and/or storage plus renewables at the end consumer level. As the power sector evolves to accommodate new technologies and adapt to varying market trends, energy storage will play a crucial role in the transition and transformation of the power sector.