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The global grid-scale battery market size was valued at USD 5.77 billion in 2021 and is projected to grow from USD 7.72 billion in 2022 to USD 30.95 billion by 2029, exhibiting a CAGR of 21.9% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with grid-scale battery experiencing higher-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global grid-scale battery market exhibited a growth of 98.7% in 2020 as compared to 2019.
Grid-scale battery is a technology that enables grid operators and utilities to reserve energy for later utilization. A Battery Energy Storage System (BESS) is an electrochemical device that charges (or collects) energy from the power plant or a grid. Then, it discharges that energy to provide electricity or other grid services when needed. The rising trend of renewables is driving the grid-scale battery market growth.
COVID-19 Created Challenges for the Grid-Scale Battery Market
The COVID-19 pandemic created challenges in the market in 2020; according to the International Energy Agency, the annual grid-scale battery storage increased in 2020 and 2021. This increase implies that the market witnessed growth despite the challenges of COVID-19. The outbreak of COVID-19 has restricted battery supply. The key battery component is primarily available in Asia Pacific, but the pandemic has highlighted the region's dependence on raw materials. Lithium and cobalt perform key functions in battery cathodes and electrolytes. China dominates the production of elements and controls about 80% of the global supply chain of these materials. Many countries worldwide have imposed travel restrictions that have affected the flow of commodities. In addition, procurement costs for an Energy Storage System (ESS) have both direct and indirect cost elements. This collapse results from global supply and demand fluctuations caused by the COVID-19 pandemic, which will continue for another year or two.
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Increasing Trend of Molten Salt Batteries to Create Lucrative Opportunities for the Market
Thermal storage hasn't caught the industry's attention lately, like battery storage, which is witnessing increasing deployments. Lithium-ion batteries are dominantly used in grid-scale battery, but in recent times, molten salt batteries have gained significant traction. This attention gained is attributed to its advantages compared to other types of batteries. Some of the benefits of sodium batteries are sustainability and reduced use of critical materials and frequency, sodium's larger radius, and its lower redox potential result in lower energy density than lithium-ion batteries.
Advantages of Grid-Scale Battery to Propel Market Growth
Energy storage offers numerous advantages such as integrating diverse resources and improving reliability and resilience. In addition, grid-scale batteries provide the advantage of arbitrage. Arbitrage comprises charging the battery when energy prices are low and discharging it during the more expensive peak times. For the Battery Energy Storage Systems (BESS) operator, this practice can provide a revenue stream by taking advantage of electricity prices that vary throughout the day. An extension of the energy arbitrage service is the reduction of renewable energy curtailment.
Plant operators and project developers are interested in using as much cost-effective and emission-free renewable energy generation as possible. However, in systems with an increasing share of Variable Renewable Energy (VRE), the limited flexibility of conventional generators and timing discrepancies between renewable energy supply and electricity demand can cause renewable generators to throttle their output. By charging the battery with low-cost energy during excess renewable generation and discharging it during times of high demand turns out to be profitable for plant operators.
BESS can reduce the renewable energy constraint and maximize the value developers can sell to the market. Another extension of arbitrage in energy systems without electricity markets is load leveling. With load balancing, system operators charge batteries during periods of surplus generation and release energy during excess demand to more efficiently coordinate the use of generation resources.
Increased Integration of Renewable Energy with Battery Storage to Boost the Adoption of Batteries
Grid-scale battery storage can also contribute to clean energy. Battery storage is one of several technology options that can improve power system flexibility and enable a high level of renewable energy integration. Studies and real-world experience have shown that interconnected energy systems can safely and reliably integrate large amounts of renewable energy from Variable Renewable Energy (VRE) sources without new energy storage resources.
The batteries are beginning to reach a size that allows renewables to replace mid-size natural gas generators. At around 200 megawatts, batteries even reach a size that makes it possible to replace small to medium-sized natural gas generators with renewable energies. According to Wesley Cole, an energy analyst at the National Renewable Energy Laboratory, adding storage also makes renewable energy more viable. In addition, the more one puts on the grid in renewable energies, the more the value goes down. Storage helps by capturing excess energy that would have been lost in the middle of the day when power demand is lower and shifting it to a time when it is more valuable.
The electricity produced from renewable sources is supplied directly into the grid for the access of consumers, but demand from the network fluctuates. Today, battery storage systems provide a cheap and genuine solution for medium-sized renewable energy producers to capture the electricity produced. Connected to the National Grid, this allows involvement in demand-response programs and uses that deposited energy to produce the maximum rate of return.
High Installation and Maintenance Costs to Hinder Market Expansion
Lithium-ion batteries ignite due to anomalies in their energy components - electrolytes composed of organic solvents, oxygen-rich cathode, and combustible gases. In addition, lithium-ion batteries are exceptionally sensitive to high temperatures and are essentially flammable. These battery packs damage much faster than they usually would due to heat. When a lithium-ion battery pack miscarries, it bursts into flames and can cause extensive harm.
In spite of its over-all benefits, lithium-ion has its drawbacks. It is fragile and needs protection circuitry to uphold safe operation. Safety circuitry built into each pack limits the topmost voltage of each cell throughout charging and inhibits the cell voltage from dropping too low during discharge.
Aging is an issue with most lithium-ion batteries, and many manufacturers remain silent. After a year, some degradation in capacity is noticeable regardless of whether the battery is used. The battery often fails after two or three years. It should be noted that other chemicals also have age-related degenerative effects. This is especially true for nickel-metal hydride when exposed to high ambient temperatures.
Furthermore, all-vanadium RFB is the most researched and developed RFB chemistry. However, the market acceptance of this system has been hindered by expensive chemicals. However, water-soluble organic redox species offer a potential option for low-cost materials. The synthetic processes required to tailor the molecular structure for high solubility and optimal potential, in turn, increase the material cost and limit the availability of porous membranes to reduce cross-over, further increasing capital and maintenance costs.
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Lithium-Ion Segment to Dominate the Market Due to Established Supply Chain
Based on battery chemistry, the market is segmented into lithium-ion, lead-acid, redox-flow, sodium-based, and others. The lithium-ion segment held the largest share in 2021 in the market. These batteries are used in various applications due to technological innovations and improved manufacturing capabilities. Lithium-ion technology accounted for more than 90% of the installed power and energy capacity of large battery storage systems operating in North America (losing much energy between charge and discharge) and fast response times.
Utility Owned Segment to Lead Owing to Increased Investment
Based on ownership, the market is categorized into third-party owned and utility owned. The utility owned segment holds the grid-scale battery market share in 2021 owing to increase in investment from government and non-government utilities. The segment is driven by the positive political framework of regional organizations such as the U.S. Energy Storage Association (ESA) supported. Utilities have better insight into the demands of the grid and can better locate and provision storage to meet their demands but pass all costs on to customers.
Renewables Segment to Dominate Backed by Rising Trend of Renewable Integration with Grid-Scale Battery
By application, the market is categorized into renewables, peak shifting, ancillary services, backup power, and others. The renewables segment will dominate the market during the forecast period. A combined decrease in the cost of utility-scale batteries and electricity from renewable energy sources is likely to expand the role of battery-based energy storage systems in the transition to a decarbonized world.
Lower-emission electricity generation from sources such as solar and wind power are the key building blocks of the future energy mix deemed necessary to reduce countries' carbon footprints. As their generation share grows, there is a growing opportunity and need for battery storage to balance demand and supply fluctuations and better integrate large amounts of variable renewable energy.
North America Grid-Scale Battery Market Size, 2021 (USD Billion)
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The North American region dominated the market. The availability of favorable government policies, tax breaks for renewable energy deployment, and increasing investments from public and private companies are some of the key features driving the expansion of the regional market size.
Asia Pacific is expected to witness the highest CAGR during the forecast period. China accounted for the largest share of sales in the region due to ongoing government initiatives and investments to boost the market growth.
Europe is also trying to boost local battery manufacturing. The Just Transition Fund supports the development of energy storage facilities in fossil fuel-dependent regions. In addition, the Recovery and Resilience Facility dedicates 37% of its funds to sustainable climate spending for COVID-19 recovery. The development of energy storage should benefit from this.
Rest of the world is also expected to grow at an exceptional rate. Among various forms of energy storage, electrochemical batteries are the main candidates for use in the Latin American energy sector. On the other hand, battery deployment is facing financial challenges such as the high cost of importing them. This factor is hindering the market expansion of grid-scale battery in the rest of the world.
General Electric to Dominate Backed by its Wide Product Offerings and a Reputed Brand Name
General Electric addresses key aspects of its business that gives it a competitive advantage in the marketplace. Some important factors are its financial position, experienced employees, uniqueness of products, and others. In addition, extensive research & development abilities and a solid workforce are the strengths of General Electric. For instance,
An Infographic Representation of Grid-Scale Battery Market
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The research report highlights leading regions worldwide to offer a better understanding of the competitive landscape. Furthermore, the report provides insights into the latest industry trends and analyzes technologies that are being deployed at a rapid pace at a global level. It further highlights some of the growth-stimulating factors and restraints, helping the reader to gain in-depth knowledge about the industry.
Value (USD Billion)
By Battery Chemistry, Ownership, Application, and Region
By Battery Chemistry
Fortune Business Insights says that the global market size was USD 5.77 billion in 2021 and is projected to reach USD 30.95 billion by 2029.
In 2021, the North America market stood at USD 2.61 billion.
The market will likely grow at a CAGR of 21.9%, exhibiting substantial growth during the forecast period (2022-2029).
General Electric and Samsung SDI are some of the major participants in this market.
North America dominated the market in terms of share in 2021.
The lithium-ion segment is anticipated to dominate the market during the forecast period.
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