The global market for grid connected storage is expected to see a compound annual growth rate of 12% until 2025, according to the snappily titled Market outlook for energy storage strengthens due to demand for utility scale solar colocation, growth in China and new residential incentives report, published by IHS Markit.
Analysts at the U.K.-based market research agency expect 4.3 GW of new storage capacity will be installed this year, with the U.S. becoming the largest market thanks to procurement of new solar-plus-storage and peaking capacity.
The report also notes last year was the best ever for deployment of grid connected storage, albeit mainly due to project delays carrying over installations begun in 2017 as well as strong growth in the front-of-the-meter [off site] segments of China, South Korea and the U.S. South Korea was the largest market last year, followed by the U.K.
Nice prospects through 2025
IHS Markit predicts 10.6 GW of new storage capacity will be added in 2025 and says the storage hardware revenue of $3.7 billion observed last year will rise to $8.4 billion in 2025, with stronger growth expected in China, where infrastructure investment and regulatory reform will drive the market.
“Stronger drivers for renewable colocation mean that IHS Markit expects front-of-the-meter installations to account for more than 50% of annual additions over the forecast period,” the authors of the report wrote. That means countries where behind-the-meter residential installations currently prevail, such as Japan and Germany, may also see higher levels of development. “The expiration of feed-in tariffs (FITs) and new incentives will accelerate the growth of residential energy storage in Japan and Australia,” the report added.
New technology trends
The analysts also highlighted how the use of storage is swiftly becoming a mainstream option for renewable power projects, after initially taking root as a provider of frequency regulation for power suppliers.
Batteries with more than two hours of storage duration are becoming standard options, the IHS Markit report states, as recent developments in South Korea, the U.S. and China have demonstrated.
“Pressure on li-ion battery prices has softened at the start of 2019 as cobalt prices have decreased, new production capacity has come online and a continued shift towards lithium iron phosphate (LFP) has influenced global average pricing”, the report stated, adding long duration applications are making technologies other than those based on lithium ion increasingly competitive.