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Energy Storage Market Overview
The installed capacity of the global energy storage market was 6,275.4 megawatt (MW) in 2017 and is projected to reach 51,426.0 MW by 2023, witnessing a CAGR of 42.5% during the forecast period. The market growth is driven by rising energy cost and rising demand for unconventional sources of energy generation.
GLOBAL ENERGY STORAGE MARKET, BY TYPE, MW (2013-2023)
Energy storage is a tool which enables effective storage of renewable energy that provides clean and resilient energy supply.
Based on type, the market is categorized into mechanical, electrochemical, thermal, chemical, and others; ‘others’ include fossil fuel and biological storage. Mechanical was the largest type in the market, with more than 70.0% installation capacity in 2017. This is attributed to the fact that it is comprised of systems such as compressed air energy storage (CAES), pumped hydro storage (PHS), and flywheels. These systems are extensively used for various large-scale industrial, commercial, and residential purposes.
The mechanical segment category is further classified into pumped hydro storage (PHS), liquid air energy storage (LAES), compressed air energy storage (CAES), and others; others include torsion or plate spring and flywheel. PHS was the largest type in the market in 2017. The electrochemical type is bifurcated into lithium-ion (LI-ION) battery, sodium sulfur (NaS) battery, and others. Others include lead acid battery, nickel-cadmium batteries, and sodium nickel chloride batteries. LI-ION battery is projected witness highest CAGR of 49.0% during the forecast period.
The thermal energy category in the market is further classified into pumped heat electrical storage (PHES), concentrated solar power (CSP), and others; ‘others’ include thermochemical storage (TCS) and sensible heat thermal energy storage. Of these, PHES was the largest category in the market, with more than 65.0% installation capacity in 2017. The market growth of PHES is attributable to the rising impetus on renewable energy generation and increasing demand for thermal systems in heating, ventilation, and air conditioning (HVAC). The chemical type is further categorized into hydrogen energy storage and solar power to gas.
Based on application, the energy storage market is categorized into fuel saving, arbitrage, ancillary services, back up supply, and others; ‘others’ include air conditioning and running mills. Of these, ancillary services was the largest application area in the market, contributing more than 45.0% share in 2017. Ancillary services held the largest share as these are the support systems that perform the transmission of electricity from its generation site to the customer, to help maintain its usability throughout the system.
On the basis of installation, the energy storage market is segmented into front of meter and behind the meter. Behind the meter held the largest share in the market, with more than 65.0% installation capacity in 2017. This is attributable to the fact that behind the meter installation helps large energy users to reduce both bills and carbon footprint.
Globally, North America was the largest energy storage market, accounting for more than 35.0% share in 2017. Energy storing systems are used to better manage onsite solar systems and take advantage of low utility rates when demand for electricity is low. In the U.S., various states are making integrated resource planning a necessary requirement for utility companies. Also, companies are themselves including energy storing options in their rate proposals which they are submitting to regulatory agencies, thus driving the market growth.
Energy Storage Market Dynamics
The major trend witnessed in the energy storage market is the rise in demand of energy storing systems. Additionally, the rise in demand for unconventional sources of energy generation and growing demand in power generation sector are the major drivers in the market.
The major trend witnessed in the energy storage market is the rise in demand of these systems due to poor power quality and pollution associated with traditional energy sources. It is seen that the traditional sources of power generation, namely, coal, oil, and natural gas are pollute the environment. Hence, energy storing systems are being readily adopted as these produce high power quality and store them for future use. This will help in using the energy when there is scarcity of power.
One of the main drivers identified in the energy storage market is the rising demand for unconventional sources of energy generation. With rapid urbanization, there is a growing demand for hydro power, solar energy, and wind energy. The main reason for this is that these sources of energy produce clean power, are readily available, and can meet the growing demand. Because some renewable energy technologies such as wind and solar has variable outputs, storage technologies have great potential for smoothing out the electricity supply from these sources, ensuring that the supply of electricity generation matches the demand.
Energy storing system is also valued for its rapid response; most storage technologies can begin discharging power to the grid very quickly, while fossil fuel sources tend to take longer to ramp up. This rapid response is important for ensuring stability of the grid when unexpected increases in demand occur. Hence, rising demand for unconventional sources of energy is expected to drive the energy storage market growth during the forecast period.
A major restraint in the market is the implementation of different governmental policies regarding the development of energy storing systems, in different countries. One of the basic regulatory challenges is the concern in which energy resources need to either be regulated, paid through the regulated tariff billed to all rate payers, or need to be competitive and paid through market prices. Allowing regulated assets to compete in competitive markets can cause market distortions. The developers face problems due to such stringent policies which are acting as a restraint in the growth of the energy storage market.
Energy Storage Market Competitive Landscape
Some of the major players operating in the global energy storage market are Greensmith Energy, S&C Electric Company, LG CNS, NEC Energy Solution, Younicos, Fluence, Advanced Microgrid Solutions, Duke Energy, Convergent Energy and Power LP, Duke Energy, Tesla, and Nextra Energy.