The global economy is undergoing an unprecedented shift toward renewables. In tandem with this drive is an increasing requirement for battery energy storage devices capable of creating long-term reliability and efficiency.
With energy storage becoming a critical element of the entire grid, new technology is emerging that augments resources from nuclear and fossil fuels and renewable energy resources such as wind and solar energy. This battery energy storage technology will enhance resilience by integrating energy generation sources while avoiding disrupting electricity supply during low generation periods from renewables (e.g. no supply from solar at night).
According to the International Energy Agency, energy storage capacity worldwide is expected to expand by 56% over the next five years, reaching 270 GW by 2026. Most of this growth is expected to lie in utility-scale batteries, with tax incentives driving its expansion and wide-scale adoption.
This increased demand for renewables and energy storage platforms will create new opportunities for all companies in the energy generation and distribution supply chain. OEMs, switchgear and control panel builders, and Power distribution and control unit (PDU) Manufacturers should ensure they are well-positioned to capitalise on these trends. Demand for their products will only increase as renewable energy sources and the adoption of energy storage systems rises.
Here are five energy storage trends you need to follow…
Demand for renewable energy is increasing
The global demand for renewable energy is rising, both in the developed and developing world. This rising demand for renewable energy is driven by a range of factors, including:
- Net-zero policies;
- Advances in technology;
- The growth of consumer goods due to wealth generation;
In 2022 alone, renewable capacity is expected to increase over 8% compared with last year, pushing past the 300 GW mark for the first time in history. Data from the IEA suggests that renewable energy will rise to more than 60% from levels seen in 2020. By 2026, renewable energy is predicted to account for
nearly 95% of the increase in global power capacity through 2026.
Solar PV is set to dominate this emerging market of all the renewable energy sources available. The IEA report predicts that 60% of the increase in global renewable capacity will come from solar power in 2022, representing a 25% gain over the previous year.
The additional growth of onshore and offshore wind power and the high levels of investment indicate a range of new opportunities for industry manufacturers.
Global grid modernisation requires more flexible solutions
The ascendance of renewable energy requires new approaches to how this power supply is managed and stored. Flexible solutions are necessary to meet the demands of global grid modernisation, including the energy storage system options to help facilitate this transformation.
According to a report from Smart Energy International, “How battery storage and grid modernisation can accelerate the energy transition”:
“Our research indicates that renewables will account for almost half of the European power generation mix by 2025. In order to manage this increased supply of power from intermittent sources, energy players will need to scale the use of batteries to capture and store energy to maintain grid reliability and security of supply.”
What this new kind of battery energy storage system will look like is open to debate, with multiple companies working on a range of technologies to fulfil this need. Lithium ion battery designs are currently leading the way, with production costs coming down as the scale of production continues to expand.
While China leads the Asian markets in Li-ion batteries, production continues to expand globally, with Europe expected to triple its market share of mega factories from 6% in 2019 to 18% by 2030.
This dispersion of the battery energy storage system production industry will only increase over time as supply chain issues arising in the wake of COVID-19 and current world conflicts force manufacturers to reduce dependency on foreign imports.
Grid modernisation will also include a digital transformation of how this critical infrastructure operates. Digital solutions will be required for increased security, the consolidation of communication networks, the automation of processes, and real-time remote asset monitoring. This digital transformation will open up additional opportunities for industry manufacturers to diversify their base of operations.
Different policy approaches are being tried around the world
As the world enters this new territory in which renewable energy sources combine with the energy storage market, governments are adopting different policy approaches. These policies are oriented towards a commitment to Net Zero Emissions by 2050 and range from establishing targets to subsidising industries where green technology is set to thrive.
An energy storage report from the IEA reveals that battery storage investment increased by almost 40% in 2020 alone. Strong growth in China and the United States, including a solar investment tax credit system tied to the Better Energy Storage Technology Act, have seen funds exceeding $1 billion dedicated to researching new storage technologies over the next five years.
Additional incentives that governments around the globe are pushing include:
- A commitment to install over 30 GW of energy storage in China by 2025;
- The UK’s National Grid Electricity System Operator launched its Dynamic Containment frequency response service in October 2020;
- Support in Japan for behind-the-meter storage installations, which reached 300 MW in 2020;
- Federal subsidies in Korea that drove the country to become the leading storage market in 2018;
- A £7 million commitment from the UK government to develop innovative renewable energy storage technologies
This continued support, both direct through mandates and indirect through investment opportunities, will continue to drive the growth of the energy storage market.
Lithium-ion continues to be the dominant technology
Lithium-ion remains the dominant technology for grid-scale energy storage and has benefited from spillovers in the deployment of electric vehicles. These batteries are safe and durable, which is why they are favoured for large grid-scale installations.
Another approach to energy storage systems is the use of flow batteries, which have a longer life cycle than their lithium-ion counterparts, and an unlimited energy capacity. There’s still some work to be done before flow batteries are commercially viable. With more than 7,000 international patent families relating to electricity storage published in 2018 alone, the future energy storage technology is still unclear.
While investment in and development of lithium-ion technology is welcome, it also demonstrates how in-demand the technology is. Everything from mobile phone and laptops, to electric vehicles (EVs) and grid-scale energy storage solutions uses lithium-ion. As such, prices for the raw materials are on the rise. EV battery cell prices are expected to increase by 22% between 2023 and 2026, peaking at $138 per kilowatt-hour.
The shortage of lithium will affect a wide range of industries and sectors that rely on this raw material, with the price of EVs expected to be heavily impacted. So far, the necessary investment in additional mining projects has failed to come to fruition. According to a report from E source:
“With the price of lithium having risen nearly 900% in the last eighteen months, we had assumed the capital markets would unleash the floodgates to establish dozens of new lithium mining projects. Instead, the investments have come in dribs and drabs, with most of it originating from China for the Chinese supply chain.”
You can find out more about the EPO-IEA joint study on battery innovation in this video:
Consumer energy storage solutions are growing rapidly
Grid-scale energy storage solutions are set to increase over the coming years rapidly. But domestic energy storage solutions are also on the rise, for instance, with the predicted significant growth in the solar power bank market.
Well-known brands, including Powervault with Octopus energy and Tesla’s Powerwall are joining the race to dominate this emerging market. These systems allow consumers to store their own energy, such as that generated via a domestic solar installation, and store affordable electricity from the grid during off-peak hours.
The residential Solar Energy Storage Market share is projected to be worth $27.45 billion by 2030, registering a CAGR of 19.52% from 2022 to 2030. The Asia Pacific region is set to emerge as the dominating region, with key players including Tesla, Samsung, General Electric, and Evergreen Solar.
This demand will be driven by:
- The rising demand for sustainable electricity generation
- Increased demand for solar energy-generated electricity
- Additional government incentives and policies encouraging the adoption of solar energy
As famed management consultant Peter Drucker once said,
The entrepreneur always searches for change, responds to it, and exploits it as an opportunity. As renewable energy and battery storage technologies emerge and evolve, Termate’s commitment to delivering the standoff insulators, busbar supports, and other essential components for this sector will continue.