Fueled by factors such as a significant uptick in wind and solar installations, an expedited process of power market reform, fluctuations in ESS prices, and clearer policies, the global energy storage market is experiencing a period of rapid expansion.
According to Trendforce projections, new installations of global energy storage are poised to reach 74GW/173GWh in 2024, marking a year-on-year growth of 33% and 41%, respectively. While maintaining a notable increase, the growth rate is expected to slow down slightly. Regionally, Europe and the Middle East Africa region are experiencing faster growth, whereas Asia-Pacific and the Americas are showing signs of deceleration.
Regarding ESS types, commercial and industrial (C&I) energy storage systems are entering a phase of swift development, surpassing the incremental growth of utility-scale installations and other ESS types by a significant margin.
In 2024, global installations of ESS are poised to hit 74GW/173GWh, with China, the United States, and Europe contributing a whopping 85% to the total installations.
Thanks to an oversupply of lithium carbonate and energy storage battery cells, the prices of energy storage battery cells have plummeted from RMB 0.9/Wh at the beginning of 2023 to below RMB 0.4/Wh, and they are expected to remain at this low level for the foreseeable future. This significant reduction in the cost of energy storage system installations has led to a steady increase in project IRR (Internal Rate of Return), effectively bolstering the growth of global energy storage installations.
Based on Trendforce's global ESS installation database, the forecast indicates that global energy storage new installations will surge to 74GW/173GWh in 2024, marking a significant 33% and 41% year-on-year increase. Notably, the primary regional market landscape remains consistent, with China, the US, and Europe collectively representing 85% of the global total installations.
Projections for Global ESS Installations in 2024( Unit: GW)
Despite the sustained high growth in global demand for energy storage installations, several risks persist that could impede progress:
Commercial and industrial (C&I) ESS is experiencing a surge in growth, entering a phase of rapid development.
The increase in installations for utility-scale ESS far outpaces that of other types.
In the realm of residential energy storage, projections for new installations in 2024 stand at 11GW/20.9GWh, reflecting a modest 5% and 11% increase. With the decline in both power and natural gas prices, observations from 2023 installations suggest a diminishing sense of urgency for residential installations. Consequently, it's anticipated that the growth rate will significantly decelerate in 2024.
Commercial and Industrial (C&I) Energy Storage: Anticipated for 2024, new installations are projected to soar to 8GW / 19GWh, marking a staggering 128% and 153% year-on-year increase. With the gap between peak and off-peak electricity prices widening, the project's economic viability has substantially improved, fueling a sustained period of accelerated growth.
Utility-scale Energy Storage: Forecasted for 2024, new installations are set to reach 55GW / 133.7GWh, reflecting a solid 33% and 38% increase. The decline in lithium prices has led to a corresponding reduction in the cost of energy storage systems, bolstering the economic feasibility of utility-scale energy storage and revitalizing tender markets. Furthermore, as countries enhance their revenue mechanisms for energy storage systems, grid-level ESS installations are poised for explosive growth.
Projections for Global ESS Installations By Types in 2024(Unit: GW)
Overview of Four Major Regional Markets:
Asia: Expected to reach 82 GWh in new installations in 2024, marking a 41% year-on-year increase.
The region has been impacted by a substantial rise in wind and solar PV installations in recent years, placing greater strain on the grid. In response, Asian countries have initiated an adjustment period for energy transition in 2024, leading to a slowdown in the growth rate of wind and solar installations. Concurrently, there’s a concerted effort to expand and construct grids vigorously, with the promotion of utility-scale storage through government bidding or subsidies. Notably, China surpasses other Asian countries significantly in terms of installation rates.
Projections for ESS Installations in Asia in 2024(Unit: GW)
Europe: Expected to achieve 32 GWh in new installations in 2024, representing a substantial 55% year-on-year increase.
By the end of 2023, Europe boasted ample gas reserves, leading to a moderation in electricity supply and demand, and a subsequent return of electricity prices to normal levels across most regions. Consequently, the impact of high electricity prices on European installations has waned. Following a surge in installed renewable energy capacity during the energy crisis, European countries now grapple with a growing issue of elevated wind and solar power abandonment rates. As a result, certain segments of the European energy storage market have yet to develop a market-based profit model. Nonetheless, leveraging direct government subsidies and other measures, they continue to drive high demand for utility-scale storage installations, aimed at mitigating wind and solar power abandonment rates.
Projections for ESS Installations in Europe in 2024(Unit: GW)
Americas: Anticipated to achieve 49 GWh in new installations in 2024, marking a robust 31% year-on-year increase.
In North America, the imperative for ESS development and the economic viability of ESS projects outstrip those in Latin America. The United States is projected to contribute 88% of the total installations in the Americas in 2024. The implementation of the new FERC grid connection policy has resulted in a gradual easing of the ISO interconnection queue application backlog. Consequently, the process of bringing utility-scale ESS online is expected to be smoother in 2024. Additionally, Canada and Chile's energy storage markets are poised to maintain significant growth increments throughout the year.
Projections for ESS Installations in the Americas in 2024(Unit: GW)
MEA (Middle East and Africa): Projections indicate new installations reaching 10 GWh in 2024, showcasing a robust 54% year-on-year increase.
The growth trajectory of the energy storage market in the Middle East and Africa for 2024 is notably concentrated, with South Africa and Israel emerging as dominant players. Both markets have unveiled clear plans for energy storage installations and have implemented subsidy programs to fuel installation growth.
Projections for ESS Installations in the MEA in 2024(Unit: GW)
Overall, ESS regulations are becoming more robust and established, subsidy policies are regularly issued, and the business model for ESS is maturing steadily. Furthermore, the initial investment costs for ESS continue to decline. Despite the explosive growth witnessed in global ESS installations from 2022 to 2023, the installations in MEA are poised to sustain a high growth rate. However, the rate of growth is expected to moderate, returning to a more rational pace.