Bloomberg New Energy Finance has published a new report on the global storage market. 2017 Global Energy Storage Forecast reveals that this market will grow to a cumulative 125 GW/305 GWh by 2030, attracting US$103 billion in investment over this period. Although this will represent a fraction of total installed generation capacity, the electricity system will look fundamentally different. Utility-scale storage becomes a practical alternative to new-build generation or network reinforcement, especially for underutilised assets in some markets. Behind-the-meter storage will increasingly be used to provide system services, such as peaking capacity, on top of customer applications.
The global energy storage market will double six times between 2016 and 2030, rising to a total of 125 GW/305 GWh. This is a similar trajectory to the remarkable expansion that the solar industry went through from 2000 to 2015, in which the share of photovoltaic as a percentage of total generation doubled seven times.
Regionally, energy storage build will be roughly equally spread across APAC, EMEA and the AMER. In the earlier years, between 2017 and 2020, APAC will represent almost half of the total installed capacity as South Korea, Japan, Australia and China have supported earlier build in these markets. Eight countries will lead the market, with 70% of capacity to be installed in the US, China, Japan, India, Germany, the UK, Australia and South Korea by 2030.
Energy storage, both utility-scale and behind-the-meter, will be a crucial source of flexibility throughout this period and essential to integrating increasing levels of renewable energy.
In the near term, utility-scale storage is built to provide system-level applications, but aggregating behind-the-meter (BTM) energy storage becomes a viable alternative as the market for customer-sited storage grows. By 2030, BTM projects will represent just over half of total installed capacity.
Today, short-duration balancing and renewable energy integration are key applications for energy storage. Although energy storage continues to be used for short-duration balancing over the forecast period, ancillary services are a relatively shallow opportunity and the share of this application will fall over this period, especially in terms of energy capacity.
Opportunities emerge for renewable energy integration. A number of markets, such as Japan, Chile and Mexico, have begun requiring new renewable energy build to be co-located with energy storage. Meanwhile, South Korea is offering generous subsidy multipliers for energy dispatched from renewable energy+storage projects.
The residential and commercial and industrial (C&I) markets become dominant. By 2030, BENF expects 69 GW/157 GWh to be behind-the-meter, making up over 50% of total capacity. This is a major shift from today, where BTM is the smaller of the two segments. This is driven by retail tariff offset economics, demand charges and aggregation opportunities.
Energy storage is a potential alternative to traditional ‘poles and wires’ investments at transmission and distribution level. 8% of total storage build by 2030 based on power output will be located at the distribution level. Although distribution-level storage projects already exist, driven by utilities in the US and UK, more comprehensive regulatory reform will be required before energy storage for network deferral becomes commonplace. Aggregation, or greater control, of BTM resources could reduce the need for new grid investments. Transmission-level deployments will account for less than 2% of total storage build by 2030, as market operators focus on the distribution level.
In total, energy storage is a US$103 billion investment opportunity spread across multiple geographies. Energy storage project development will require significant investment to grow the market from 2.8 GW/4.9 GWh in 2016 to 125 GW/305 GWh in 2030.
Lithium demand will increase from 200 mt to 7,845 mt between 2016 and 2030. Demand for other key materials such as nickel, manganese and cobalt will also increase significantly over this period.
Average lithium-ion battery prices fell 73% from 2010 to 2016. The latest BNEF’s analysis indicates that average battery pack prices (cells+packs) will reach around US$73/kWh by 2030. Cell prices alone will be much lower. This is significantly below its previous estimate of US$120/kWh in the 2016 outlook and is based on a more detailed analysis of the lithium-ion battery experience curve and on its proprietary bottom-up cost model for lithium-ion batteries. This equates to an annual rate of cost reduction of around 10% from now to 2020, falling to around 7% annually by 2030.