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Global energy storage billed to expand 2024 – Woods

Research institute Wood Mackenzie has predicted global energy storage market to see 13-fold expansion any time 2024, saying that it has been creeping into carbonizing markets five years running.

Commenting on the report, Ravi Manghani, Wood Mackenzie Power and Renewables Research Director, said: “From 2013 to 2018, we saw fledgling market growth. This was reflected in a global GWh compound annual growth rate of 74%, although we did observe relatively small deployment totals of 7GW/12GWh for the period.

“Nevertheless, these developments have shifted the minds of global regulators, policy makers, grid operators, asset operators and developers, in terms of how energy systems can be balanced. Market structures have generally struggled to keep up with the pace of this technology, illustrated by the limited number of revenue streams available to appropriately compensate storage. More than half of the GWh during this period came online in 2018 alone, beckoning an inflection in storage demand.”

The report noted that 2018 saw 140% year-on-year growth in GWh terms – with a total of 3.3 GW/6GWh deployed globally.

The report said: “Half of this GW capacity was front-of-the meter (FTM), driven by accessible ancillary service revenues in key markets. There was also a notable trend for solar-plus-storage projects providing semi-dispatchable renewable capacity.

“In terms of residential storage, state incentives, reduction in solar export tariffs and the need for backup facilitated storage deployment. Due to rapid system cost reductions, we expect sustainable growth to continue in markets where subsidies are being curtailed. With or without a subsidy, consumers are willing to pay a premium to increase their use of rooftop solar power and, in the process, mitigate the risk of electricity bill increases.

“The non-residential segment overtook the residential segment for the first time helped by subsidy and growth in South Korea. However it continues to be the most complicated proposition in several markets where it will take more time to de-risk, attract financing and become scalable,” added Le Xu, Wood Mackenzie Power & Renewables Senior Research Analyst.

Wood Mackenzie Power and Renewables also expects that between 2019 and 2024, major storage markets to thrive – with a more mature, but still early stage, GWh CAGR of 38%. Additionally, deployment numbers are expected to boom to 63GW/158GWh.

Projected to dominate the market are the U.S. and China both of whom expected to make up 54% of GWh deployed capacity by 2024, to be driven by market reforms, state mandates and, most importantly, the most significant energy sector transformation since the Dash for Gas.

Storage is expected to move from short-duration systems providing high value power services that are limited sized value pots, such as frequency regulation, into the realm of long-duration systems, at which point diesel, oil and gas are likely to be displaced, particularly in fuel import countries where conventional plant run costs are higher.

“We expect renewables-plus projects to become a popular trend through 2024. This is especially true for solar-plus-storage projects, as the requirement for clean and dispatchable renewables is widely accepted.

“In investment terms, we estimate the cumulative global energy storage market – defined, in this context, as total system capital expenditure on electrochemical and electromechanical energy storage systems, excluding pumped hydro – to grow six-fold to a total of $71 billion by 2024. $14 billion of that total will be invested in 2024 alone.

“The electrification epoch will unfold more rapidly over the next 5 years. With it, energy storage will become a necessary technology to enhance system flexibility and enable clean, rapid system balancing, while de-risking ever increasing intermittent assets and portfolios,” said Rory McCarthy, Wood Mackenzie Power and Renewable Senior Research Analyst.



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