The momentum of China’s market-driven energy sector is gaining pace, marked by a strengthening drive toward energy storage installations. In contrast, Europe and the United States stand as mature markets that have attracted a surge of manufacturers. However, the barriers encompassing product certification, grid connection expertise, capital availability, distribution channels, customer reach, and brand recognition have become increasingly formidable, potentially deterring smaller enterprises. In emerging markets, arriving later to the scene, the prospect of an unexpected contender in the energy storage arena is beginning to take shape. Reasons are as follows:
China’s Market: The first half of 2023 has borne witness to a robust surge in the domestic energy storage sector in China, surpassing initial projections. During this period, grid connection capacity reached an impressive 7.59GW/15.59GWh, approaching the levels achieved in 2022. Tender and bidding capacity soared to 35.28/28.7GWh, reflecting growth compared to the same time last year. On the cost side, the prices of battery-grade lithium carbonate have stabilized within 300,000 yuan per ton. Furthermore, the pricing landscape for energy storage systems and Engineering, Procurement, and Construction (EPC) services has followed suit, experiencing a decline. In the first half of 2023, the average prices of two-hour energy storage systems and EPC services dropped by nearly 27% and 11% respectively, in comparison to the figures recorded in 2022. Policies have played a significant role as well. A substantial increase in photovoltaic (PV) installed capacity has expanded the market scope for mandatory distributed storage, while subsidy policies provide a safeguard for project profitability. Concurrently, other policies are expediting the commercialization process and boosting enthusiasm for installations. It is projected that between 2023 and 2025, domestic energy storage capacity will reach 41.8GWh, 78.3GWh, and 127.4GWh, respectively.
U.S. Market: The market landscape for the first half of 2023 fell short of initial projections, yet the latter part of the year is poised to experience a surge in installation activity. In the first quarter of 2023, fresh energy storage installations amounted to 778MW/2145MWh, marking a year-on-year decline of 26% and 28% respectively. Specifically, during Q1 of 2023, the installed capacity of large-scale storage totaled around 2GWh, a figure below anticipated levels primarily due to queued grid connections. Anticipations are set for a peak in large-scale energy storage operations prior to the load peak in July and August, coinciding with the introduction of the IRA acts. These acts are expected to facilitate grid bottleneck solutions. It is further projected that between 2023 and 2025, the installed energy storage capacity in the United States will expand to 28.3GWh, 44.2GWh, and 68.2GWh respectively.
European Market: The appetite for household storage remains robust, and the capacity of large-scale energy storage will witness the expansion. In 2022, the newly installed capacity of European household storage surged to approximately 5.7GWh, representing a remarkable year-on-year upswing of 147.6%. Notably, Germany and Italy claimed a significant portion, contributing 1.54GWh and 1.1GWh respectively, constituting half of the total. Germany’s capacity surge is buoyed by elevated tariff structures and incentive policies, fostering a thriving household storage market that is poised to persist. Italy, on the other hand, benefits from tax incentives and credit support, and its burgeoning capacity is projected to surpass Germany.
In the realm of front-of-the-meter (FTM) energy storage, the landscape took initial shape as new installations reached a commendable 2GW in 2022, capturing 44% of the market share. Notably, the United Kingdom emerged as a front-runner, boasting an installed capacity that accounts for 42% of the overall European large storage market. July 2023 marked a pivotal moment as European electricity reforms were successfully enacted, and the establishment of capacity markets across several nations and a gradual refinement of revenue models can be seen. This collective shift provides substantial support for the impending growth in large-scale storage capacity. Projections indicate that the installed energy storage capacity in Europe is poised to ascend to 11.3GWh, 18.3GWh, and 26.4GWh from 2023 to 2025.
Emerging Countries: Set against the backdrop of burgeoning economic growth, there’s an escalating appetite for electricity, albeit amid a sluggish deployment of new energy sources. Driven by imperatives surrounding carbon peaking and neutrality, the gradual phase-out of traditional thermal power sources is inevitable. Furthermore, a prevalent asymmetry between electricity consumption and power generation in many nations underscores the pressing necessity for energy storage. This could become instrumental in optimizing power dispatch and mitigating grid fluctuations.
