Julian Jansen, senior analyst, solar and energy storage, IHS Markit
In 2016, 1.3 gigawatt (GW) of grid-connected energy storage was deployed, which will grow to 4.7 GW in 2020 and 8.8 GW in 2025.
- The grid-connected energy storage market is projected to grow from annual revenues of $1.5 billion in 2016 to more than $7 billion in 2025 with a CAGR of 16 percent.
- Today utility-scale storage dominates the global market: In 2020 for the first time more than 50 percent of cumulative annual installs will be deployed behind-the-meter.
- The United States will be the largest market, deploying 1.2 GW in 2020, seeing a CAGR of 21 percent from 2017 to 2025. In the short term, South Korea, Japan, Germany, Australia and the United Kingdom will be the next biggest markets.
- Lithium-ion battery module prices have fallen 70 percent since 2012, and will fall below $200/kWh by 2019.
Energy storage outlook strengthens as the market for longer-duration systems establishes.
The global market for energy storage remains poised for growth, with the market outlook strengthening until 2025, reaching a total installed base of 52 GW. Overall, IHS Markit predicts that annual deployment if grid-connected energy storage will grow from 1.3 GW in 2016 to 4.7 GW in 2020 and 8.8 GW in 2025.
As part of the continuous research carried out by IHS Markit across the energy storage industry, a number of macro-trends are emerging. Early markets for energy storage from 2013-2015 were driven by single applications, such as frequency regulation in the PJM market, or self-consumption in the German residential segment. However, over the course of 2016 and the first half of 2017, new value is emerging for utility-side-of-meter storage, primarily from capacity requirements, the integration of utility scale solar and island micro-grids. This leads to greater growth in the longer duration storage segment, especially systems of 2-4 hour duration.
At the same time in the behind-the-meter segment, system aggregation and demand response programmes are enabling value stacking and improving economics, aided by regulatory support and subsidy programmes in California, South Korea, Japan or Germany. Therefore IHS Markit predicts that in 2020 for the first time more than 50 percent of cumulative annual installs will be deployed behind-the-meter.
On a regional level, three key markets currently stand out:
- IHS Markit is seeing a continuous increase in the forecast for the United States behind-the-meter market with SGIP funding in California driving deployment across the various applications and revisions to NEM programmes supporting the long-term development of residential markets.
- Sustained growth in South Korea, despite the completion of major frequency regulation projects in 2017. Over the coming years increasing utility-lead programmes for renewable integration and mandates for energy storage in public building support annual deployment of more than 300 MW p.a. from 2018 onwards.
- Public tenders and large-scale solar plus energy storage are igniting the Australian utility-side-of-meter market, as shown by major announcements from players such as Tesla and Lyon Group.
As prices for energy storage systems continue to fall, previously uneconomical applications, such as the co-location of battery storage with solar PV, are becoming feasible. Driven by declining Lithium-ion battery module prices, which have fallen 70 percent since 2012, the technology will dominate the market over the coming years. With prices for Lithium-ion battery modules predicted to fall further, reaching less than $200/kWh by 2019, Li-ion batteries will also establish themselves as the leading chemistry in longer duration systems aimed at the two-to-four hour duration segment.
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