KUALA LUMPUR (March 22): Energy storage hit another record year in 2022, adding 16 gigawatts/35 gigawatt-hours of capacity, up 68% from 2021, according to BloombergNEF (BNEF).
In its 1H2023 Energy Storage Market Outlook report released on Tuesday (March 21), BNEF said beyond record additions, several markets announced ambitious energy storage targets totalling more than 130GW by 2030, and that the firm remains cautious on its impact on forecast demand, given the lack of policy clarity and reforms that address fundamental deployment barriers.
BNEF said government entities have shelled out millions in subsidies which boost deployment but highlighted the underlying problem that batteries are not yet economically attractive in most parts of the world.
Meanwhile, the firm sees China overtaking the US as the largest energy storage market in megawatt terms by 2030.
“We increased our China forecast by 66% to account for new provincial energy storage targets, power market reforms and industry expectations supporting significant new capacity. In contrast, project delays continue to slow US deployments, with 7.2GW/18.4GWh of utility-scale storage projects delayed in 2022.
“Despite delays, utilities continue to procure more solar and storage to displace thermal assets and meet system capacity needs,” said BNEF.
The research firm said high energy storage system costs have incentivised companies to accelerate the move toward lower-cost chemistries such as lithium iron phosphate (LFP).
It said more Chinese battery makers are expanding LFP products overseas, and we expect its share to continue growing globally until 2026 due to its lower cost, longer cycle life, and manufacturing scale. After 2027, sodium-ion batteries may become more popular for energy storage system demand growth.
BNEF said Asia Pacific (Apac) maintains its lead in building on a power capacity (gigawatt) basis, representing 44% of additions in 2030.
China leads in deployments in the region, driven by local targets and compulsory renewable integration policies.
To keep up, other markets such as Japan, South Korea and India are also setting ambitious targets and allocating subsidies for energy storage.
BNEF said Japan’s federal and local governments announced annual subsidy programmes for utility-scale batteries, while South Korea set a 25GW/127GWh storage target by 2036. India is taking steps to promote energy storage by providing funding for 4GWh of grid-scale batteries in its 2023-2024 annual expenditure budget.
BNEF has increased its cumulative deployment for Apac by 42% in gigawatt terms to 39GW/105GWh in 2030.
The firm said the Americas region represents 21% of annual energy storage capacity on a gigawatt basis by 2030.
It said the US is by far the largest market, led by a pipeline of large-scale projects in California, the Southwest and Texas.
BNEF said the US has seen a wave of project delays due to rising battery costs.
Despite this, it said US utilities continue to procure energy storage paired with solar for system reliability.
“Meanwhile, a handful of long duration storage projects gain traction.
“Market reforms in Chile could pave the way for larger energy storage additions in Latin America’s nascent energy storage market. Rapidly increasing volumes of solar and wind across Chile and Brazil and underinvestment in the grid in Mexico could provide opportunities for storage,” BNEF said.