Global Energy Storage System Market
Energy storage systems are a critical component of grid resilience. They enable utilities to level load on their generation, transmission and distribution equipment and mitigate the duration, intensity and negative impacts of extreme weather events or cyber-physical attacks.
EV batteries and stationary storage systems can be locally controlled to participate in electricity markets, demand side management or microgrid operation. This improves grid resilience by enhancing supply-demand balance, relaxing constraints in energy resources utilization and providing ancillary services.
1. Reliability
Distributed energy storage systems provide a key enabling technology for a variety of solutions, including microgrids, net zero buildings, grid flexibility, and rooftop solar. These systems can help mitigate greenhouse gas emissions and power system instability, thereby promoting low-carbon and renewable energy generation.
Moreover, they can improve the reliability of the power system sector by providing ancillary services, such as voltage support and frequency control. This helps to optimize the entire electricity system sectors and reduce network congestion and loss of power quality.
In the past two decades, a growing number of studies have investigated the reliability impacts of ESS utilization. Most of these studies rely on solar and wind technologies, while research on other energy resources is still limited.
However, a substantial initial set-up investment and high cost of batteries are factors that could hinder the growth of this market in the near future. In addition, the price of lithium is expected to increase due to surging electric vehicle demand and geopolitics. This will further increase the cost of the ESS market. Nevertheless, the ESS market is expected to experience strong demand over the forecast period.
2. Flexibility
Today, most nations rely on and invest heavily in renewable energy sources to generate electricity, which creates huge demand for distributed energy storage technology that can help to store excess generation for use during peak demand. However, distributed energy storage systems are expensive to install and operate – partly due to the upfront cost of batteries – and policy incentives such as time-of-use electricity pricing are not always available.
Distributed energy storage systems are located within the distribution network close to end consumers. This makes them an ideal solution for local flexibility management at the bottom control level. Energy storage systems, smart inverters and central heat and power (CHP) units can be aggregated into virtual power plants (VPPs) and monetized in electricity markets to support DSO-led flexibility management programs.
In addition to reducing peak load charges for consumers, local flexibility can be used to address DSO congestion issues, defer T&D upgrades and support the integration of DERs. This can be done by combining energy storage with cluster voltage regulation, which consists of cyclically detecting overlimit cluster nodes and using their internal battery charging/discharging to adjust the node’s voltage.
3. Cost
The growing demand for smart grids, which improve distributed energy storage system reliability and flexibility of power transmission, distribution, and generation, is fueling the growth of the energy storage system market. Increasing renewable power source energy collection will aid the market’s expansion as well.
Energy storage systems (ESS) offer many benefits to both consumers and utilities. They provide consumers with a buffer, reducing electricity consumption in peak periods. They also reduce fossil fuel use and wear on infrastructure. They can help utilities control peaks and reduce ancillary services costs.
In addition, ESS can support the integration of RES by suppressing the ripple effects from PV and wind on the grid. However, high initial investment and the high cost of batteries can hamper the growth of the energy storage system market.
Lithium is a key material used for batteries, and its prices have surged as demand has risen. Additionally, Russia’s invasion of Ukraine and the surging distributed energy storage system electric vehicle industry have increased price pressures on lithium. These factors have pushed up the levelized cost of storage, which is shown in the Figure below.
4. Security
Incorporating energy storage systems improves reliability and flexibility in the distribution, transmission and generation of electricity. These systems also mitigate the fluctuation of renewable energy sources such as solar and wind energy. Hence, the adoption of distributed energy storage systems is growing, which in turn fuels the growth of the global market.
Behind-the-meter (BTM) energy storage and Electric Vehicles (EV) are rapidly expanding across the globe, transforming the way power is generated, traded and delivered to consumers. This creates new opportunities for a network of distributed stationary and mobile energy storage units to enhance grid resilience, especially for critical infrastructures such as hospitals, data centers, and water treatment plants.
The high initial set-up cost of distributed energy storage systems and the rising price of lithium, a key mineral for battery production, can limit the market’s expansion. However, increasing environmental awareness among the general public and favorable government policies are driving demand for this technology in many countries. Furthermore, the growing penetration of EVs and BTM energy storage reduces fossil fuel consumption, which in turn lowers greenhouse gas emissions and air pollution.
5. Efficiency
The round trip efficiency (RTE) of energy storage systems varies depending on the type of technology used. Nonetheless, the efficiency of these systems is higher than that of traditional generation plants and is lower than the losses associated with transmission and distribution lines.
Energy storage helps power plants and grids operate more efficiently. It reduces the load on utility grid equipment during periods of peak demand, which typically occur diurnally. This helps utilities avoid or delay expensive system upgrades and improves the overall efficiency of the grid.
In addition, energy storage can be integrated with renewable energy sources to increase the capacity of clean power generation and help reduce greenhouse gas emissions. It can also serve as backup power for commercial and residential customers, particularly after heavy storms or days with high electricity demands.
In the short term, increasing smart grid market growth is expected to boost distributed energy storage system sales. However, challenges related to integrating ESS into energy dispatch and optimal resource allocation need further research. Furthermore, the cost of implementing this technology is another factor that could stifle market growth in the long term.
