Energy storage market to grow to USD250 billion by 2040

Energy storage is being touted by many energy industry analysts as the key to achieving a global transition to clean energy, by incorporating storage technology and flexibility into future smart grids and into homes. The latest report from Bloomberg New Energy Finance (BNEF), the New Energy Outlook 2016, has backed up this believe with forecasts that the global battery market will skyrocket over the coming years, as demand will force the prices down.

Looking at the entire global energy industry, BNEF’s report sees encouraging signs in the energy storage market, which inspired expectations of a market valued at $250 billion or more by 2040. In the shorter term, BNEF expects 25 GW of storage devices to have been deployed over the next 12 years, which, the BNEF analysts pointed out, is about the same size as today’s rooftop PV industry.

This is an ambitious forecast, considering that there is less than 1 GW of storage devices operating on world grids combined today. However, there are some large-scale battery projects currently in development, notably a 100 MW facility in Long Beach, California, being developed by Edison International.

“Batteries will get a boost as costs drop and developers see the chance for lucrative new revenue streams,” said Julia Attwood, storage analyst at Bloomberg New Energy Finance. “Batteries could offer a whole range of services to the grid — they have the flexibility that will allow renewables a larger stake in energy generation.”

Price drop

One of the main drivers for the massive scaling-up of the market is an expected drop in prices for lithium-ion battery technology. The report said that this drop in price is likely to come from an increase in demand due to the spread of electric cars, which is enabling manufacturers to increase production.

“The battery industry today is driven by consumer products like computers and mobile phones,” said Claire Curry, an analyst at Bloomberg New Energy Finance in New York. “Electric vehicles will be the driver of battery technology change, and that will drive down costs significantly.”

One of the huge benefits of incorporating batteries into the energy mix is that they can help to support renewable energies, especially solar and wind. They do this by filling the gaps when there is a lack of sun or wind, which is currently being done by fossil fuels.

A number of home storage systems have entered various global markets in the past year, most notably Tesla’s Powerwall, which has the double benefit of gaining from both the rise in electric vehicles and in residential solar. The E.ON Aura storage system is another one, which was recently released into the German market.