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The Energy Storage Boom

Continuously falling battery costs, and rising capacity and usage of clean energy are set to result in booming global stationary energy storage over the next two decades, which will require total investments of as much as US$662 billion.  

That’s one the key findings of the latest report on new energies by research company BloombergNEF (BNEF) published this week.

Energy storage installations across the world are expected to soar to 1,095GW, or 2,850GWh, by 2040, compared to a modest current deployment of just 9GW/17GWh as of 2018, according to BNEF’s latest forecasts.    

Unsurprisingly, the key driver of the energy storage installation boom will be additionally plunging costs of lithium-ion batteries, which will give financial rationale to additional uses of storage and surging installations of stationary energy storage.

Costs of lithium-ion batteries dropped by a whopping 85 percent between 2010 and 2018, BNEF says, as it expects battery costs to further halve per kilowatt-hour by 2030, thanks to rising demand in two markets—stationary storage and electric vehicles (EVs).

In the energy storage report this year, BNEF has raised its estimates of global investments in storage by more than US$40 billion, said Yayoi Sekine, energy storage analyst for BNEF and co-author of the report. The other major change in BNEF’s predictions this year is that the analysts now think that most of the energy storage capacity will be “utility-scale, rather than behind-the-meter at homes and businesses.”

Geographically, South Korea is the current market leader, but it will soon cede the crown to China and the United States which will be the two major energy storage markets two decades from now. India, Germany, Latin America, Southeast Asia, France, Australia, and the UK will be the other major energy storage installation hotspots, according to BNEF.

Source: BloombergNEF

Cheaper batteries will also lead to more battery applications within the world’s energy systems, including dispatching renewable electricity to the grid and peaking in the bulk power system to deal with demand spikes, BNEF’s analysis suggests.

“In the near term, renewables-plus-storage, especially solar-plus-storage, has become a major driver for battery build. This is a new era of dispatchable renewables, based on new contract structures between developer and grid,” Logan Goldie-Scot, head of energy storage at BNEF, said, commenting on the report.

Earlier this year, MIT professor John Deutch suggested that a hybrid renewable electricity generation system that combines wind, solar, and storage could become competitive with the cheapest fossil fuel electricity in the United States—combined-cycle natural gas generation.

Over the past year, several companies have outlined plans to build solar-and-storage systems around the world—from Australia to Arizona and to the heart of the Permian oil patch in West Texas.

As battery and renewable power generation costs continue to fall, utilities aim to combine solar farms with battery storage as a way to boost predictability of renewable energy generation. So power generation firms have launched an unofficial global competition for who will build the world’s biggest solar-and-storage facility.

According to BNEF’s report, the exponential rise in renewable-sourced electricity and EV use will transform the global power systems and the transportation sector, driving demand for energy storage.

Wind and solar power is set to account for nearly 40 percent of the world’s electricity generation in 2040, compared to just 7 percent today. At the same time, EVs could represent a third of the global passenger vehicle fleet by 2040, up from less than 0.5 percent at present, BNEF reckons.

“The report finds that energy storage will become a practical alternative to new-build electricity generation or network reinforcement,” according to the analysts.  

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