Global energy storage capacity is now expected to grow at a compound annual growth rate (CAGR) of 31 percent through 2030, according to Wood Mackenzie's new global storage outlook.
The market will hit 741 gigawatt-hours of cumulative capacity by 2030.
Front-of-the-meter storage will continue to dominate annual deployments and will account for up to 70 percent of annual total capacity additions to the end of the decade.
Coronavirus and the global storage market
A 17 percent decrease in deployments is expected in 2020, a decline of 2 gigawatt-hours from our pre-pandemic outlook. The global storage market will see wavering growth in the early 2020s, but growth will likely accelerate in the late 2020s, enabling increased renewables penetration and facilitating the power market transition.
Energy storage is still a nascent market globally, but WoodMac observes that stakeholders — whether end consumers or big equity investors — are interested in continuing to invest in the sector and do not appear to be hindered by the pandemic and economic recession impacts.
If anything, the report notes, the transition may be accelerated as governments around the world grapple with how to recover their economies more sustainably than in the past, with upside for the energy storage industry.
U.S. home to half of all global storage capacity in 2030
The U.S. maintains its leading position and will make up over 49 percent (365 gigawatt-hours) of global cumulative capacity by 2030.
Utility resource planning in the U.S. is set to drive deployments over the coming decade. In the past two years, utility approaches to renewables and particularly storage have shifted seismically, as detailed in WoodMac’s latest Energy Storage Monitor report.
A majority of U.S. utilities are shifting planned resources toward renewables and storage due to favorable costs and state-level clean energy policies. As a result, the U.S. front-of-the-meter storage market is set to surge through 2021 due to significant short-term resources planned before slowing slightly through 2025.
Beyond 2025, growth will become steadier as wholesale market revenue streams grow and utility investment is normalized. The market will reach a CAGR of 36 percent over the coming decade, with cumulative capacity installed approaching 300 gigawatt-hours.
The rest of the world
China, coming in second after the U.S., is also expected to see its cumulative storage capacity grow exponentially. WoodMac expects China to account for 21 percent of global cumulative capacity by 2030.
The ancillary services market is the primary revenue stream for the front-of-the-meter storage market and will continue to attract hybrid storage installations in China from 2020 to 2025. Firming renewables capacity to reduce curtailments is the second most important driver in Australia, China, South Korea and Japan.
China launched a policy that requires solar and wind developers to make up the costs for building stable and grid-friendly renewable generation assets.
Energy arbitrage will bring additional revenue for storage, as more Asia-Pacific power markets may be fully liberalized from 2025 to 2030.
Europe’s growth story, on the other hand, is expected to be slower than those of its global counterparts.
The U.K. and Germany will continue to dominate the front-of-the-meter storage market out to 2025. Frequency response auctions remain one of the key revenue streams. France and Italy are also becoming more active markets, with both capacity and ancillary service markets open or opening. Spain and the rest of continental Europe are expected to follow, with potential help from the European Commission and its green recovery plan.
Rory McCarthy and Le Xu are the authors of the Wood Mackenzie Global Energy Storage Outlook: H2 2020 report.