According to the EnergyTrend research division of TrendForce, the integration between centralized generation and distributed smart grid is an inevitable trend in smart city initiatives.
Global Battery Energy Storage Systems (BESS) installation capacity is expected to reach 3.2GWh in 2020, with a 22% CAGR from 2019 to 2024.
Duff Lu, senior research manager at TrendForce, indicates that the global development of large-scale centralized electricity generation systems has lasted over a century.
However, the call for energy conservation and carbon reduction, combined with the continued cost reduction of renewable energy, means power plants and EVs alike are seeing a need to raise their energy efficiency through BESS adoption.
The Past Development of BESS
As battery prices fell in 2018, the installation capacity of the BESS market began to rapidly increase.
In particular, the Korean government began subsidizing ESS for power generators in 2018, spurring the growth of the Asian BESS market.
During the early stages of ESS commercialization, most companies’ safety standards were incomplete.
After the 2018 rush to purchase ESS equipment, a string of safety-related incidents occurred, slowing down demand growth in the Korean ESS market.
In comparison, the North American BESS market has had more time to develop and mature;
The Way Forward for BESS
Due to the factors listed above, the demand for BESS is expected to slow down after 2020 following the first wave of smart grid construction.
As component prices drop rapidly, national governments in the emerging markets will start promoting ESS applications.
The battery remains the most important aspect in terms of ESS component
Owing to the development of EVs, the production capacity of lithium-ion batteries is continuing to expand, subsequently driving more competitive battery prices and stimulating the energy storage market.
Increased Demand in BESS Means Fierce Competition
Major global battery suppliers currently includes LG Chem, SDI, Tesla, Toshiba, and BYD.
In addition to its long-term partnership with GM, LG has actively expanded its production in Europe in recent years, across EV and ESS industries.
As well, SDI has been focusing on the European market and forming partnerships with European automakers.
SDI’s development of cylindrical and prismatic batteries is wide-ranging and mature. Its cylindrical battery development is second only to that of Panasonic.
SDI serves as the main battery supplier of many system-end clients.
Tesla acquired some much-needed experience in automotive battery production from its early partnership with Panasonic.
With the recent construction of U.S.-based Gigafactory, Tesla was able to
- Integrate more of its own proprietary battery technologies
- Confer both safety and cost advantages to its battery products.
At the moment, Tesla is also actively developing ESS sites.
Tesla is expected to derive competitive advantages from its minimal ESS construction time.
Toshiba’s high quality products are used in many demonstration zones in Japan, Europe, and North America.
The company offers a comprehensive lineup of SCiB Rechargeable Batteries.
As one of the early ESS developers, BYD is able to maximize its presence in the EV and ESS markets owing to the superior stability of its LFP batteries.
BESS Applications and EV: The Two Major Applications for Li-ion Battery Industry
TrendForce believes that, as the production capacity of the abovementioned five battery manufacturers continues to expand, BESS applications and EVs will become two pillars supporting the lithium-ion battery industry.
Continued technical development means lithium-ion batteries will contain less and less amounts of rare materials, such as cobalt, and uncertainties in lithium-ion battery components will clear up in the future as well.
Unlike the increasingly popular EV, BESS is integrated into various electrical grid systems, such as smart grids, with a high level of product mix but low volumes.
Therefore, TrendForce expects the BESS industry to yield higher margins than the EV industry in the next five years.