New research from global natural resources consultancy Wood Mackenzie shows annual global storage deployments are on pace to nearly triple year-on-year, reaching 12 GW/28 GWh in 2021. Despite disruptions from the Covid-19 pandemic, Wood Mackenzie’s Global Energy Storage Outlook forecasts nearly 1 TWh of total demand from 2021-2030. Deployments in the front-of-the-meter (FTM) segment will crest 700 GWh – or 73% of total global deployment – by 2030.
“The US and China will dominate the global storage market, together commanding over 70% of total global installed capacity through 2030,” said Xu Le, senior research analyst. “Moves to accelerate the decarbonization of the US and Chinese power sectors are gaining pace and provide the foundation of our global market forecast. China is driving our H2 outlook market upgrade, doubling our previous forecast. China’s newly instituted 30 GW of energy storage by 2025 target has an outsized impact on the regional FTM market.”
In North America, specifically the current U.S. investment tax credit (ITC) for storage plus solar applications has supercharged demand, with a 4.5x increase in annual FTM deployments on tap for 2021. Budget reconciliation and energy tax reform resulting in a new ITC for standalone storage applications would provide upside to the current 10-year market outlook.
China FTM storage annual installations will more than triple in 2021 and deliver 260 GWh of new capacity for 2021-2030. Wood Mackenzie sees the Asia Pacific market growing 20-fold, reaching 400 GWh of total storage capacity by 2030, with the FTM sector accounting for 82% of that demand.
Europe’s storage market is also set to surge, with Wood Mackenzie expecting cumulative installs to exceed 100 GWh by 2030, led by Germany and Italy. High power prices will push the European non-residential segment from 11% in 2020 to 19% in 2030, while the residential market will exceed 27 GWh by 2030.
Behind-the-meter (BTM) markets are expanding worldwide, with 57 GWh of new deployments forecast through to 2030. The residential sector is being driven by cost reductions and consumer awareness, coupled with solar hybridization and electric vehicle adoption.
While annual deployments in the non-residential market will also expand, the sector will experience a sluggish start as public policy support cannot overcome challenging project economics in most markets.
Australia will lead the non-residential sector this year, driven by higher project IRRs through revenue stacking, while Japan tops the residential market in 2021 due to availability of customer PPA contracts.
In Latin America, non-residential storage will reach 9.7 GWh by 2030 with storage supporting grid resilience amidst continued variable renewable energy expansion. Storage auctions began this year and will support increases in regional capacity. Corporate PPAs further regional drive BTM market growth, with two already-contracted projects under development in Chile.
South African investments for both FTM and BTM storage are driving regional forecast upgrades. The recent tenders in South Africa will bring 873 MW of energy storage into the market. On top of this, a traceable non-residential storage project pipeline is forming in South Africa, Kenya and Nigeria, increasing our confidence level in the future growth.
In support of global demand expansion, the report notes that global lithium-ion battery capacity will double in the next two years, with NMC and LFP demand forecast to reach 2.30 TWh in 2030, accounting for 89% of global battery cell capacity.
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