The battery energy storage system (BESS) is a super-high growth market. The ongoing clean energy transition driving intermittent wind and solar capacity and the retirement of fossil-fuel-based generation plants requires critical services to balance the electricity system. BESSs have emerged as the most effective solution for this purpose. Estimated at $21.3 billion in 2023, the BESS market is set to more than triple to $72.0 billion by 2030, scaling from a global annual capacity of 22.4 GW/51.3 GWh to reach 104.2 GW/301.0 GWh at the end of the decade. The fast growth in related clean energy industries, especially electric mobility and renewable energy (RE), and geopolitical chaos have brought considerable challenges for BESS projects and their supply chains. Constraints around providing critical minerals and materials, higher inflation rates, and delayed siting and permitting processes pressure battery system prices and schedules. However, the market is resilient, accelerated by unprecedentedly supportive policies and regulations, and continues to surpass growth expectations year after year. Geographically speaking, BESS opportunities are forecast to remain uneven and highly concentrated in countries with supportive policies and advanced market designs. Batteries can participate in 3 domains: wholesale markets, capacity markets, and ancillary services, in what the industry calls value stacking. Almost 80% of power capacity additions deployed until 2030 will mainly concentrate in China, the United States, Australia, Germany, India, and the United Kingdom. The fast-growing market expansion brings higher technology sophistication and specialization through the value chain, as well as diversification of business models and opportunities around BESS.

Author: Maria Benintende