Energy Storage Systems Market

Market Overview

The global energy storage systems market size was valued at USD 319.48 billion in 2022. It is estimated to reach USD 705.41 billion by 2031, growing at a CAGR of 9.2% during the forecast period (2023–2031). The rising need to curtail the exponentially growing pollution and provide citizens with a healthy living atmosphere, clean drinking water, a green environment, and fresh air to achieve a sustainable future will likely drive the market over the anticipated period.

Energy Storage Systems (ESS) are crucial technologies or devices in modern energy systems. These systems are made to collect and store energy for usage in the future, helping to balance energy supply and demand, enhance grid stability, and enable a more efficient and reliable energy infrastructure. One of the main drivers for adopting energy storage systems is the integration of renewable energy sources into the grid. Renewable energy, like solar and wind, is inherently intermittent and dependent on weather conditions. Energy storage systems allow excess energy generated during high renewable energy production periods to be stored and used during low production or high demand. This helps address renewables' intermittency challenge and provides a more consistent and reliable energy supply.

Energy storage systems also support shifting towards a cleaner, more sustainable future. By storing excess renewable energy and utilizing it when needed, these systems can reduce reliance on fossil fuel-based power generation, decreasing greenhouse gas emissions and creating a more environmentally friendly energy mix. Furthermore, energy storage systems provide valuable services to the grid and utility companies. They can help regulate and stabilize the grid by providing frequency regulation, voltage support, and grid balancing capabilities. Energy storage systems can respond rapidly to fluctuations in supply and demand, smoothing out the variability and improving the overall efficiency of the grid. Beyond utility-scale applications, energy storage systems are becoming more common in home and business settings. Homeowners and businesses can install battery storage systems to save extra solar power produced throughout the day for use during the evening or power outages. This promotes self-consumption of renewable energy, reduces reliance on the grid, and provides backup power capabilities.

Market Dynamics

Market Drivers

Growing Demand for Efficient and Competitive Energy Resources

Electricity derived from fossil fuels may be replaced reasonably with clean and renewable energy. Its usage may lessen our reliance on fossil fuels, cut greenhouse gas emissions, reduce air pollution, and diversify our energy sources. Various countries in Europe and North America have undertaken initiatives for enhancing renewable power generation by 2050 to achieve a sustainable future with the help of clean energy. Pollution is a rising concern for governments in various countries across the globe as it affects human beings and animals.

China was the only country in this context since the air quality has drastically reduced. In Bangladesh, smoldering waste is dumped in the open, which causes the surrounding air to become toxic and harming humans and animals. The city of New Delhi in India is regarded as one of the most polluted cities in the world. In April 2017, the government of India enforced Bharat Stage IV norms to regulate air pollution and automobile emissions. The government of India has also adopted initiatives for promoting incentives in the energy storage sector.

Increasing Development of Variable Energy Sources

Governments across the globe are taking steps to invest actively in renewable energy technologies (RET). Efforts are being made to use thermal energy for transportation purposes. Companies, including Tesla, manufacture automobiles such as Tesla Roadster, Model S, Model X, and Model 3 based on sustainable energy. These vehicles run on electricity generated using batteries and have been widely accepted across the globe. Variable energy fluctuates by nature due to frequent climate changes. Wind and solar power generation like geothermal, biomass, and hydroelectricity cannot be controlled. However, wind and solar are sources of clean energy and release no emissions into the atmosphere, as a result of which governments across North America, the European Union, and the Asia Pacific are taking initiatives to utilize them efficiently.

Thermal energy storage has been the most prominent sector for government investments in the Americas. The government of Chile extended the tax credits required for installing solar thermal systems in buildings until 2020. The rising need to curtail the exponentially growing pollution and provide citizens with a healthy living atmosphere, clean drinking water, a green environment, and fresh air to achieve a sustainable future will likely drive the market over the anticipated period.

Market Restraints:

Lack of Long-Term Energy Storage

Several energy technologies rely on the efficiency of thermal energy storage. Surplus electricity generated via solar and wind needs to be stored using batteries. This stored energy is later used to meet residential and commercial buildings' heating and cooling requirements and industrial processes. The primary flaw in renewable energy systems is the gap between resource demand and availability.

Thermal storage systems allow the bridging of this gap by stocking up energy. However, it cannot be stored for long owing to the inability of these systems to hold the energy for over a half-year cycle. The stored heat then gets dissipated due to the inefficiency of the technology. The stored energy in advanced energy storage systems reduces with time owing to heat loss as the systems used presently are still developing. Several emerging economies cannot afford compressed air energy storage (CAES) and thermal storage solutions as their installation and maintenance require extensive capital expenditure.

Market Opportunities

Integration of Renewable Energy

Integrating sustainable energy sources, like solar and wind power, into the global energy mix is a key driver for adopting energy storage systems. Renewable energy generation is characterized by its intermittent nature, depending on weather conditions and time of day. This intermittency challenges grid operators to maintain a stable and reliable electricity supply. Energy storage systems offer a solution to address this challenge by capturing and storing excess energy generated during high renewable energy production periods. This stored energy can then be released during high demand or low renewable energy generation. By effectively time-shifting energy, energy storage systems enable a more balanced and reliable integration of renewable energy into the grid.

Additionally, energy storage systems enhance the flexibility and reliability of renewable energy sources. They can smooth out the variability of renewable energy output, addressing the intermittent nature of these sources. This stability is crucial for grid operators to maintain a consistent power supply and balance the grid's overall generation and demand.

Regional Analysis

Based on region, the global energy storage systems market is bifurcated into North America, Europe, Asia Pacific, Central and South America, the Middle East and Africa.

North America Dominates the Global Market

North America is the most significant global energy storage systems market shareholder and is estimated to grow at a CAGR of 10.7% over the forecast period. North America indeed holds a significant position as the most powerful global market shareholder. The region's business power can be explained by attributed to several factors. Firstly, North America has a well-developed energy infrastructure and a strong emphasis on technological advancements in the energy sector. The region has been at the forefront of energy storage deployment, with various initiatives and projects aimed at integrating renewable energy sources and improving grid stability. This has produced a favorable climate for the market's growth.

Secondly, North America has a diverse energy mix and a high electricity demand. The region's energy landscape includes a significant share of Sources of energy that don't run out, like solar and wind power, and conventional sources, like natural gas and coal. The integration of renewable energy sources and the need for grid flexibility and reliability have driven North America's demand for energy storage systems.

Europe is anticipated to exhibit a CAGR of 8.2% over the forecast period. Several factors contribute to the anticipated growth in the European energy storage systems market. Firstly, Europe has set ambitious renewable energy targets and is committed to transitioning to a low-carbon and sustainable energy system. Using sun and wind power, among other sustainable energy sources, into the grid requires efficient energy storage systems to manage the intermittency and variability of these sources. Energy storage technologies are essential in balancing energy supply and demand, optimizing the utilization of renewable energy, and ensuring grid stability.

Additionally, Europe has a well-developed energy infrastructure and a strong focus on energy system modernization. The region's aging grid infrastructure, increasing electrification of sectors like transportation, and the need for greater energy flexibility have driven the demand for energy storage solutions. Energy storage systems can enhance grid stability, provide frequency regulation services, enable load management, and support the integration of distributed energy resources.

Asia-Pacific economies will likely grow at a high rate in the global market over the forecast period. The region offers substantial opportunities for adopting and deploying energy storage technologies driven by various factors. One of the key drivers of growth in the Asia-Pacific region is the rapid economic development and increasing energy demand. Nations such as China, India, South Korea, and Australia are witnessing significant industrialization, urbanization, and infrastructure development, resulting in a surge in energy consumption. Energy storage systems are crucial in meeting this growing energy demand, managing peak loads, and ensuring a reliable and stable electricity supply.

The Middle East and Africa (MEA) region presents interesting global market opportunities. While the market in this region is still emerging, it holds significant potential for growth and adoption of energy storage technologies. One of the key drivers for energy storage systems in the MEA region is the increasing focus on renewable energy deployment. Several countries in the region, such as the United Arab Emirates, Saudi Arabia, and Morocco, have set ambitious renewable energy targets and are actively investing in renewable energy projects.

Energy storage systems are vital in managing intermittent renewable energy sources such as solar and wind power, ensuring a stable and reliable electricity supply. By storing excess renewable energy during periods of high generation and releasing it during peak or low generation periods, energy storage systems help balance supply and demand, optimize grid operations, and integrate renewable energy effectively.

Segmental Analysis

The global energy storage systems market is bifurcated into technology.

Based on technology, the global market is bifurcated into pumped hydro storage, electrochemical, electromechanical, and thermal. 

The pumped hydro storage segment dominates the global market and is projected to exhibit a CAGR of 9.8% over the forecast period. Pumped hydro storage is a well-established and widely adopted technology for energy storage. It involves using two water reservoirs at different elevations. During periods of excess electricity generation or low demand, energy is used to pump water from a lower reservoir to a higher reservoir. When electricity demand increases or renewable energy generation is low, the stored water is released from the upper reservoir, flowing downhill through turbines to generate electricity. The dominance of pumped hydro storage can be attributed to several factors. Firstly, it offers high energy storage capacity and long-duration storage capabilities. The size of the reservoirs determines the storage capacity, and pumped hydro storage systems can provide large-scale energy storage, allowing for the smooth balancing of supply and demand fluctuations. Secondly, pumped hydro storage has a long lifespan and low self-discharge rates, making it a reliable and durable technology for energy storage. The components used in pumped hydro storage systems have been well-developed and proven over time, contributing to their widespread adoption.

Recent Developments

• March 2023-Tesla announced the launch of its new Megapack battery system. The Megapack is designed for utility-scale applications and can store up to 3 megawatt-hours of energy.
• February 2023-LG Energy Solution announced the launch of its new RESU10H home battery system. The RESU10H is designed to store up to 10 kilowatt-hours of energy and can power a home for up to 24 hours.