The US, China and the UK are the most attractive investment markets, according to a new EY battery storage ranking.
Energy storage, including battery energy storage systems (BESS), can play a vital role in overcoming the network gridlock challenge, which has now reached acute proportions in many mature markets, highlighted the latest EY Renewable Energy Country Attractiveness Index (RECAI 63).
This edition of RECAI takes a close look at BESS, “exploring how it can offer lucrative opportunities for sophisticated investors”.
The US, bolstered by a 30% tax credit under the Inflation Reduction Act, takes the top spot in the new EY ranking of the world’s most attractive markets for BESS investment.
China with strong government support, subsidies and plans to reduce BESS costs by 30% by 2025, is a close second.
The UK, with its sophisticated energy market design and a new energy bill that classifies BESS as a generation asset, rounds out the top three.
A fourfold increase in global BESS deployment is forecast from 2023 to 2030, reaching 572GW.
EY global renewables leader Arnaud de Giovanni said: “Scaling up battery energy storage systems can help solve multiple problems holding up clean energy progress, including stabilising and strengthening network infrastructure and enabling more distributed energy resources to connect to the grid.
“Focusing on four factors can help investors navigate this complex, highly regionalised and fast-changing market.
“These include building a resilient investment case; taking steps to maintain technology competitiveness; establishing the optimal business model or financing structure and mitigating supply chain risks.”
As renewables proliferate and electrification grows, BESS will play a key role in a dynamic energy system by smoothing supply and demand peaks and helping defer the cost of grid expansion and upgrades.
EY RECAI chief editor Ben Warren added: “Investor interest in BESS is on the rise.
“To help cut through the complexity, EY has identified and ranked the attractiveness of the world’s top global battery investment markets.
“But this isn’t an easy market to master.
“BESS investments are a long-term commitment; they are also highly localised and carry more risk than some other clean energy investments.
“Success requires understanding the dynamic interaction of regional variations, electricity market design, technology and financing – as well as an acceptance of volatility.”