The global grid-connected energy storage market is expected to grow by more than 5GW in 2020 despite the disruption caused by the global Covid-19 pandemic, according to IHS Markit.
IHS Markit has increased its forecasts and now expects a fivefold rise in annual installations from 2019 to 2025, reaching 15.1GW.
Annual grid-connected energy storage hardware revenues are projected to more than double, from $4.2bn in 2020 to $9.5bn in 2025, despite reductions in battery module prices, which are expected to fall 32% during this timeframe.
“The fact that the energy storage industry is proving resilient and has resumed a growth trajectory during the pandemic and subsequent economic shock proves that the 2019 market retraction was an aberration.
“The 2020 rebound highlights the importance of the technology and the strength of the underlying market fundamentals,” said Julian Jansen, research manager at IHS Markit.
Jansen added: “The increasing competitiveness and critical role of battery energy storage assets in supporting the decarbonisation and resilience of the electricity system means that opportunities for energy storage continue to develop despite the turmoil caused by the Covid-19 pandemic.”
The US will remain the largest market with growth driven by an “ambitious” round of state-level targets, a strong pipeline of solar-plus-storage projects capitalising on the Investment Tax Credit and increasing competitiveness of batteries as a source of firm capacity.
The analyst outfit said China will see a “resurgence in energy storage uptake” as provinces begin to look to storage co-located with solar PV as a means of firming up increasingly high penetrations of renewable assets on the grid.
China is forecast to install 6.5GW through 2025 and be the second largest market throughout the forecast period.
The outlook in Europe has strengthened as new opportunities develop in a wide range of countries. For example, a capacity auction in France will support 253 MW of energy storage by 2023.
Wholesale arbitrage is becoming a “major driver” for front-of-the-meter energy storage in Australia and the UK, IHS Markit found.