The ongoing revolution in energy development has had a profound impact on social production, with green energy emerging as a crucial industry in today’s world. As an increasing number of volatile new energy generation methods put pressure on the grid, maintaining grid balance has become a primary challenge in the realm of new energy development. In this context, the significance of energy storage in grid stabilization has come to the forefront, significantly enhancing the consumption of new energy and demonstrating vast market potential.
Background of Energy Storage Development: Addressing the Challenge of New Energy Consumption
According to data from the National Energy Administration, the annual installation capacity of renewable energy reached 152 million kilowatts in 2022, accounting for an impressive 76.2% of the country’s new power generation installations. Renewable energy has emerged as the primary source of China’s power generation installations, consolidating the country's leading position in the global renewable energy sector. China has become an active participant and a vital contributor to the global efforts to combat climate change.
The growth of installed capacity in the field of new energy storage has gained significant momentum. According to data reported by energy departments across different provinces, the operational installed capacity of new energy storage projects reached 8.7 million kilowatts by the end of 2022. Notably, the average storage hours stood at approximately 2.1, reflecting a remarkable increase of over 110% compared to the end of 2021. New energy storage offers flexible deployment options across the power generation, grid, and user sides, catering to diverse demands.
Graph: The role of new energy storage in the power system
In terms of power generation, energy storage technology supports the power system in enhancing capacity and peak shaving, thereby enabling power generation revenue and peak shaving subsidies for wind, solar, or traditional power plants. Concerning the grid, energy storage technology assists grid companies in peak shaving and frequency regulation, optimizing grid operations and stability. Moreover, for customers, this technology primarily serves commercial and industrial sectors or communities, providing them with emergency backup and uninterrupted power supply. Additionally, it plays a crucial role in improving the quality of power supply and unlocking economic benefits by maximizing self-generated electricity from PV systems.
Installed Energy Storage Capacity: Policy Support and Cost Decline Drive Robust Growth in PV Installations
The global electrochemical energy storage sector is experiencing significant growth in installed capacity, driven by a combination of favorable policy support and declining costs. Major regional markets are strengthening their policy frameworks, while the continuous cost reduction in energy storage systems is further propelling the rapid expansion of the global energy storage market.
Graph: Global Installed Capacity of Electrochemical Energy Storage, 2019-2023 (MW/MWh)
China, US, and Europe Leading the Energy Storage Market
Despite challenges such as disruptions in the supply chain and increasing raw material prices, the global energy storage market experienced significant growth in 2022. China, the United States, and Europe emerged as the primary driving forces behind this expansion.
Graph: Installed Energy Storage Capacity in China, the United States, and Europe, 2019-2023 (MW/MWh)
In China, the installed capacity of new energy storage reached approximately 7.33 GW and 15.47 GWh in 2022, representing a remarkable year-on-year increase of about 222.66% and 217.2%. Large-scale storage systems currently dominate China's energy storage market, and the implementation of mandatory installation policies is expected to further fuel the rapid growth of domestic energy storage. Moreover, with the contribution of wind and solar power projects, it is anticipated that the new energy storage installation capacity will reach approximately 14.59 GW and 31.90 GWh in 2023.
According to TrendForce data, the PV installation capacity in the United States is projected to reach approximately 4.80 GW and 12.18 GWh in 2022, reflecting year-on-year growth rates of 34.7% and 14.7% respectively. In 2023, the PV installation sector is poised for positive development, as the Investment Tax Credit (ITC) comes into effect and subsidies for independent energy storage installation are introduced. Consequently, the US energy storage installation capacity is expected to continue its upward trajectory. It is anticipated that approximately 11.98 GW/30.07 GWh of new energy storage capacity will be installed in 2023.
Based on the European installation capacity data, the new energy storage installation capacity in Europe is projected to reach approximately 6.23 GW and 10.04 GWh in 2022, representing a significant year-on-year increase of 121.8% and 140.0% respectively. The European energy crisis in 2022 has led to a surge in electricity prices, driving a sharp rise in energy storage demand. With the introduction of PV installation subsidies in European countries, the demand for household storage remains strong. It is expected that around 8.47 GW and 15.69 GWh of new energy storage capacity will be installed in 2023.
The global energy storage market is experiencing a phase of high growth. As the share of electrochemical energy storage continues to rise annually, it is set to become the primary contributor to incremental installation capacity in the future. China, the United States, and Europe still maintain their dominance in the global energy storage market.