Energy Storage: Capacity Bottleneck Eased, Global Demand Expected to Continue Growing
We predict that the installed capacity of the global energy storage market will reach 331.7GWh by 2025, and the market space for new installed capacity will reach 330.27 billion yuan (previously 564.55 billion yuan). This is mainly due to the decrease in the selling price of energy storage systems due to the decline in raw material costs. Among them, energy storage in China, the United States, Europe and emerging markets is expected to achieve rapid development.
(1) China: We estimate that by 2025, the newly installed capacity of domestic energy storage before the meter is expected to reach 113.4GWh, and the installed capacity of industrial and commercial energy storage behind the meter is expected to reach 19.7GWh. Both major application markets are expected to achieve rapid development.
(2) Europe: We estimate that by 2025, Europe’s new installed capacity of large-scale storage before the table is expected to reach 27.8GWh, and household storage and industrial and commercial energy storage behind the table are expected to reach 26.9GWh. Affected by the previous high inventory accumulation, the growth rate of energy storage installed capacity after the balance sheet in 2023 will be reduced to a certain extent, but the development of large storage is expected to accelerate.
(3) United States: We estimate that by 2025, the installed capacity of large-scale storage in the United States is expected to reach 67.8GWh, and the installed capacity of household storage and industrial and commercial energy storage behind the table is expected to reach 10.5GWh. U.S. energy storage installations are expected to achieve rapid growth under the background of IRA policy stimulus and the increase in the proportion of local new energy installations.
(4) Emerging markets: We estimate that by 2025, the installed capacity of large-scale storage in front of the meter, including Australia, Middle East and Africa, is expected to reach 46.6GWh, and the installed capacity of the behind-the-meter energy storage market represented by South Africa, Southeast Asia and other places is expected to reach 19GWh.
Global Energy Storage Demand Expected to Continue Rapid Growth
Review of 2023: According to Infolink Consulting estimates, the global energy storage installed capacity is expected to reach 100 GWh in 2023, of which large-scale energy storage is about 78 GWh, and industrial, commercial and household storage is about 22 GWh; the total energy storage installed capacity in 2022 is 44GWh, and the year-on-year forecast in 2023 Super +120%.
(1) China: According to Infolink consulting estimates, China’s energy storage installed capacity is expected to reach 39GWh in 2023, +147% year-on-year. l United States: According to Infolink consulting estimates, the United States is optimistically estimated to have installed capacity of 25.5 GWh in 2023, +85% year-on-year, which is lower than market expectations. Among them, the installed capacity in 2022 is 13.8GWh, based on Wood Mackenzie statistics.
(2) Europe: According to Infolink consulting estimates, the overall installed capacity in Europe is expected to reach 17 GWh in 2023, of which household savings account for approximately 9 GWh. At this stage, the installed capacity of large storage capacity is still led by the United Kingdom and Ireland, as these two places have relatively complete market mechanisms, while France and Germany have also successively launched tenders.
(3) Demand expectations in the near and medium term: According to BNEF data, it is expected that the world’s new energy storage installed capacity will be 42GW/99 GWh in 2023, 110 GW/372 GWh in 2030, and the compound growth rate from 2023 to 2030 will be 14.7%/20.8% respectively. Among them, the installed capacity in 2024 and 2025 is expected to be approximately 57 GW and 69 GW respectively, +36% and +21% year-on-year.
U.S. Large-Scale Energy Storage Market: Neutral Growth Forecast of 58% in 2024
Agency forecast: According to Gaogong Lithium Information, due to the rigid demand for front-of-meter energy storage in the United States and the implementation of the IRA policy, the compound growth rate of the installed capacity of the U.S. energy storage market is expected to reach 88.5% from 2023 to 2025.
U.S. energy storage expectations: According to EIA data and our analysis, it is expected that the new operation volume in 2023 will be 6.1-7.3 GW, and the preliminary forecast is 14.6 GW in 2024, with a planned growth rate of +99%; we have a neutral expectation that U.S. energy storage will be put into operation in 2024 The capacity was 9.6 GW, +58% year-on-year.
EIA plans a growth rate of +99% in operation in 2024: According to data released by the U.S. official agency EIA at the end of December, it is expected that the planned new operation volume of battery energy storage of 1 MW and above in 2023 will be 7.3 GW, and the planned new investment in 2024 will be The transportation volume was 14.6 GW, +99% year-on-year.
It may be 6.1GW put into operation in 2023: Due to serious delay problems in EIA planning projects, we further estimate the implementation situation in 2023 based on EIA’s October project construction progress data. The actual operational volume from January to September 2023 is 4.4 GW; the planned operational volume from October to December is 4.2 GW, of which the construction progress exceeds 50% of the project scale 1.7 GW. This is used as the lower limit of the estimated operational volume in 2023, corresponding to 2023 The expected commissioning volume is 6.1 GW.
Neutral growth rate +58% in 2024: According to EIA’s October data, there will be 6.1 GW of projects in the construction phase in 2024, 1.1 GW of projects that have been approved but not yet started, 4.4 GW of which are awaiting approval, and 3.3 GW of which have not started. In addition, there are 2.4GW of projects with less than 50% construction progress in 2023. We estimate the commissioning volume in 2024 by conservative, neutral and optimistic estimates. The conservative estimate is that the construction progress in 2023 will be less than 50% and the projects that have started construction in 2024 will total 8.5GW, +40% year-on-year; the neutral estimate will increase the number of approved projects, totaling It is 9.6GW, +58% year-on-year; optimistic estimates increase the number of projects awaiting approval, totaling 14.1 GW, +130% year-on-year.
Expectations for large-scale energy storage in the United States: According to EIA data and our analysis, the new operational capacity in 2023 is 6.1-7.3 GW, and the preliminary forecast is 14.6 GW in 2024, with a planned growth rate of +99%; We have a neutral expectation that US energy storage will be put into operation in 2024 The capacity was 9.6 GW, +58% year-on-year.
Regional diffusion of energy storage development: The cumulative operation volume of battery energy storage of 1 MW and above in the United States is 9.1 GW, of which the top 3 are California 4.9 GW, Texas 2.1 GW, and Florida 0.5 GW. California accounts for 54.3%, significantly ahead of other regions. . The top two planned new operations in 2023 are California with 3.6 GW and Texas with 2.1 GW. California’s lead has weakened. The top two planned new operations in 2024 are Texas with 7.6 GW and California with 5.1 GW. Texas has overtaken California. , leading the nation. In addition, Nevada and Arizona have also begun to show relatively strong demand, and the power industry in these areas has a vertically integrated monopoly system.
European Large-Scale Energy Storage Market: Expected Demand to Approach the Size of the U.S. Market
European large storage demand: From 2023 to 2026, Europe’s new energy storage installed capacity will be 6.4GW, 7.0GW, 8.4GW, and 8.1GW respectively, which are +43%, +9%, +20%, and -4% year-on-year, and the scale is close to that of the United States. . We expect that the delay in large-scale energy storage in the UK will reduce the base in 2023 and increase demand and growth in 2024.
Regional distribution: According to LCP Delta data, Europe is estimated to deploy 1.9GW of grid-scale battery energy storage in 2022, 85% of which is distributed in the United Kingdom, Ireland, Germany and France. LCP Delta believes that the UK, Germany, Greece, Ireland and Italy remain the five most attractive battery storage markets in Europe.
British demand: According to the ESO plan, the United Kingdom aims to achieve a cumulative installed energy storage capacity of 12GW in 2026, and the new installed capacity from 2023 to 2026 will be 2.4 GW, 3.1 GW, 2.1 GW, and 2.4 GW respectively. Since the progress of energy storage construction in 2023 is less than expected, Modo Energy’s cumulative scale in 2023 will be 3.6GW, with an additional 1.7GW, which is lower than ESO planning expectations. Therefore, there is also a delay in demand expectations in the UK, which may lead to rapid growth in energy storage demand in 2024.
Demand in other regions: Greece plans to achieve 6GW battery energy storage by 2030; Italy has also launched a rapid reserve auction and capacity auction, which is expected to form a GW-level market. In addition, Hungary is considering installing at least 0.8GW/1.6GWh of new energy storage projects through the scheme.
Home Energy Storage: Global New Installations Expected to Reach 13.3 GWh in 2024
Demand analysis: It is expected that the new installed capacity of the global household energy storage market will reach 13.3GWh in 2023.
Europe: Mainly looking at Germany and Italy, the new installed capacity in the European household market will reach 9.57GWh in 2024, and the new household energy storage market in Europe will account for 71% of the world.
North America: Mainly looking at the United States. It is expected that the number of household energy storage in the United States will increase by 1.4GWh in 2024.
APEC region: Mainly looking at Australia and Japan. It is expected that Australian household energy storage will add 0.7GWh in 2023, and Japan will add 0.85GWh.
Other regions: South Africa, the Middle East and Southeast Asia have all seen a certain amount of growth in the household energy storage market. Especially in South Africa, the shipments of micro-inverter and 3kWh household storage products have grown rapidly. North Africa and the Middle East have seen rapid demand for replacement of diesel power generation. Coupled with geopolitical factors, energy storage and backup power have gradually become a necessity. As of 2023H1, the installed capacity of the household energy storage market in the Middle East and North Africa has increased by approximately 0.03GWh, and is expected to reach 0.07GWh throughout the year.
European Home Energy Storage: New Installations in Europe Expected to Reach 9.57 GWh in 2024
Europe: Germany is expected to be the main growth pole in Europe, with installed capacity reaching 4.5GW in 2023, +140% year-on-year.
Germany: The German household energy storage market has long been the largest market segment in Europe. According to EESA, the total installed capacity in 2023H1 was 2.41GWh. The third quarter was the off-season for the German market, with a quarter-on-quarter decrease of 4.7%. The cumulative installed capacity from January to September 2023 was 3.51GWh, reaching 4.5GWh by the end of the year.
Italy: With the reduction of household energy storage market subsidies, the Italian energy storage market has shrunk in the second quarter. However, the renovation ratio of Italy’s existing housing stock has been completed at 16.5%, which is close to the country’s target of 19% in 2030. Subsequent market demand will continue If it weakens, it will be difficult to maintain the growth rate in 2022.
Other European countries: Thanks to the development of the electric vehicle market, the household photovoltaic market and the further popularization of smart meters, the new installed capacity of the UK household energy storage market in 2023H1 has exceeded the total in 2022 by 0.28GWh, reaching 0.38GWh, and is expected to be added in 2024 The scale will reach 0.62GWh. Austria’s H1 new installed capacity will be slightly lower than that of the UK, but exceed that of Spain, reaching 0.3GWh; at the same time, Switzerland and the Benelux region are expected to add 0.32GWh.
U.S. Home Energy Storage: New Installations in the U.S. Expected to Reach 1.4 GWh in 2024
United States: According to EESA data, it is expected that the installed capacity of household storage in the United States will increase by 1.4GWh in 2023. l
U.S. household storage installed capacity: According to Wood Mackenzie data, from January to June 2023, the cumulative new household storage installed capacity in the United States reached 293.2MW/769.4MVh, -1.9%/+8.5% year-on-year. Since 2022Q4, U.S. household storage system shipments have declined month-on-month, mainly restricted by the high interest rates for energy storage system financing. In terms of policy, the backlog of solar energy projects that are not suitable for storage under the old NEM 2.0 policy in California, as well as the decline in electricity prices in the central United States, have led to residents delaying the installation of household storage systems. EESA predicts that under California’s new NEM3.0 policy, demand for solar energy and supporting energy storage will gradually improve by the end of 2023, which is expected to slightly alleviate the inventory problem caused by oversupply.
US household storage installed capacity forecast: US household storage installed capacity is expected to increase by 1.4GWh in 2024. In addition, Wood Mackenzie believes that the year-on-year decline in new household energy storage installed capacity in 2023Q2 will not affect the strong growth trend in the future. Taking into account recent allocation rate trends and installation delays in California, annual installations in 2027 are expected to be 3.5 times those in 2023, with total installations reaching 8.0GW within five years.
U.S. Commercial and Industrial Energy Storage: Expected to Add 0.2 GW in 2024, 3 GW from 2023 to 2027
United States: In 2023H1, the newly installed industrial and commercial energy storage capacity in the United States reached 101.6MW/310.3MWh. It is expected that the newly installed capacity will be 0.2GW in 2024 and 0.98GW in 2025.
Current status of industrial and commercial energy storage in the United States: In 2023H1, the cumulative number of new industrial and commercial storage installations in the United States reached 101.6MW/310.3MWh, +14.3%/+53.7% year-on-year. According to the agency’s prediction, subsequent supply chain challenges and the lack of relevant policies in various states will have an impact on industrial and commercial storage installations.
USA industrial and commercial energy storage forecast: As industrial and commercial storage installations experienced lower than expected conditions in 2020 and 2022, the five-year cumulative installation forecast for U.S. industrial and commercial storage from 2023 to 2027 has also been reduced by 28%, from 4.1GW Downgraded to 3.0GW. According to Wood Mackenzie’s estimates, the United States will add about 0.2GW of industrial and commercial energy storage capacity in 2024, and about 0.98GW in 2025.
European Commercial and Industrial Energy Storage: Expected to Add 0.62 GW in 2024
Installation status: The newly installed capacity of industrial and commercial energy storage in 2023 will be 0.50GWh, accounting for 6% of the total newly installed energy storage capacity.
Installation forecast: It is expected that the newly installed capacity of industrial and commercial energy storage in 2024 will be 0.62GWh, of which Germany and the United Kingdom are the main markets for industrial and commercial energy storage.
Commercial and Industrial Energy Storage in Asia, Africa, and Latin America: Backup Power with High Utilization Hours Can Replace 126 GW
Substitutable scale: Small diesel generators with high utilization hours are the priority for industrial and commercial storage in Asia, Africa and Latin America. It is estimated that the diesel generator stock size is about 126GW; followed by small steam generators, especially those with larger unit sizes. ; Medium and large diesel generators in low- and middle-income countries also have the potential to replace them, with an existing diesel generator stock of 170GW.
In 2016, the average annual utilization hours of existing small diesel engines exceeded 400 hours, and that of small gasoline engines was nearly 400 hours. We estimate based on the IFC chart that the installed capacity of small steam generators, small diesel generators, medium diesel generators, and large diesel generators are 42GW, 126GW, 41GW, and 227GW respectively. The corresponding power generation capacities are 16TWh, 53TWh, 10TWh, and 53TWh, and the corresponding annual utilization hours The numbers are 378h, 421h, 249h, 231h. Since the higher the annual utilization hours, the better the economics of distributed energy storage, we expect that replacing existing small diesel generators will be the focus in the near to medium term. Secondly, the annual utilization hours of small steam generators are also high. We expect that larger single-scale steam generators with better consumption power also have substitution potential.
Medium and large diesel generators in low- and middle-income countries have the potential to replace them, with a scale of about 170GW. The scale of backup power in Middle Eastern countries is about 100GW, mainly large-scale diesel generators, with annual power generation capacity of only 10TWh and annual utilization hours of about 100h. Excluding large diesel generators in Middle Eastern countries, the utilization hours of medium and large diesel generators in low- and middle-income countries are about 314 hours, which has good substitution potential.
