During the past two years, the energy storage industry has experienced significant growth in both the more mature early adopter markets and new markets where the technology has just begun to make an impact. In 2015, Navigant Research expected that the top five countries accounted for approximately 66% of global storage deployments that year. Based on new forecasts, it is now anticipated that the top five countries will account for only 57% of the new capacity installed in 2017.
The United States and Germany remain two of the leading utility-scale energy storage markets worldwide, driven by regulations and innovative vendors and project developers. However, over the past year, additional markets in Europe have emerged as some of the most attractive, notably the United Kingdom and Italy. Both countries have begun experiencing grid stability issues caused by a higher penetration of renewables generation, and both recognize the ability of energy storage to solve many of these challenges.
Early adopter utility-scale energy storage markets in Asia Pacific such as Australia, Japan, and South Korea have also seen significant market growth as they push toward ambitious grid modernization goals. Elsewhere in Asia Pacific, the potentially massive markets in China and India are gaining traction as regulations and business models continue evolving. Throughout the rest of the world, new energy storage projects are being announced at an increasing rate, leading to more utilities and regulators waking up to the benefits the technology can provide.
Although many markets have seen slower than expected growth in the past two years, the industry has matured significantly and is expanding to provide new applications in new markets around the world. Storage is now one of the hottest topics in the global electrical industry, and the pace of new projects being commissioned and announced continues to rise. Perhaps the most important trend fueling this growth in the past two years has been the dramatic decrease in the prices for components of energy storage systems (ESSs), mainly lithium ion (Li-ion) batteries.
Navigant Research estimates that the total installed costs for Li-ion ESSs today have fallen approximately 35% from prices seen in late 2015. This rapid decrease in pricing has resulted in Li-ion technology further establishing its dominance in the utility-scale storage market. While there will continue to be competition from various technologies depending on the services a system will provide, the flexibility of Li-ion technology allows it to effectively provide most grid applications. Another key factor in the popularity of Li-ion is the confidence customers have in both the technology and vendors. The strong reputations and balance sheets of leading Li-ion manufacturers allow them to offer attractive warranties and provide customers the assurances they need to make investments in new projects. Additionally, the success of many early storage projects is resulting in increasing interest and investments throughout the industry.
The new report from Navigant Research provides forecasts for utility-scale ESSs deployed in select countries in terms of power capacity (MW), energy capacity (MWh), and revenue generated from the development of new projects in 26 countries globally. Forecasts include the most common technologies for utility-scale energy storage, including electrochemical (batteries) and electromechanical (pumped hydro, compressed air, flywheels, etc.) technologies
According to Navigant Research, global annual utility-scale energy storage power capacity additions are expected to grow from 1,158.8 MW in 2017 to 30,472.5 MW by 2026.
The falling costs for batteries and other components of an ESS are resulting in new cost-effective applications and markets opening. After many years of speculation, the industry is beginning to see stacked revenue streams and applications, making new projects an increasingly economical investment. This transition is being fueled by the advances being made in energy storage software platforms that allow systems to be much more flexible in their operation to provide the most lucrative and beneficial service at a given time.
Source: Navigant Research