October 1, 2020: Global energy storage capacity could grow at a compound annual growth rate of 31% in the decade ahead, according to a Wood Mackenzie report released on September 30. Of this some 70% will come from front of the meter deployments.
Wood Mackenzie reckons that the world will have 741GWh of cumulative capacity by 2030.
CAGR, admittedly from a very small base, climbed at 66% from 2013 to date though deployments fell this year due to the impact of the coronavirus pandemic.
The report said the US, the largest adopter, will make up more than 49%, or 365 GWh, of this global capacity by 2030. Utility resource planning in the US is set to be a huge driver for deployments over the coming decade.
China’s cumulative storage capacity, coming in second after the US, will account for 21% or 153 GWh of global cumulative capacity by 2030. The growth will be exponential.
“The ancillary service market is the primary revenue stream for the FTM market and continues to attract hybrid storage installations in China from 2020 to 2025,” says the report. “Firming renewables capacity to reduce curtailments is the second most important driver in Australia, China, South Korea and Japan. China launched a policy that requires solar and wind developers to make up the costs for building stable and grid-friendly renewable generation assets.
“Europe’s growth story is expected to be slower than its global counterparts. The UK and Germany will continue to dominate the FTM market out to 2025. Frequency response auctions remain one of the key revenue streams. France and Italy are also opening up with both capacity and ancillary service markets open or opening. Spain and the rest of continental Europe are expected to follow, with potential help from the European Commission and its green recovery deal.”
In the past two years, utility approaches to renewables and particularly storage have shifted seismically, with the majority of utilities dramatically shifting planned resources towards renewables and storage due to cost and state-driven clean-energy goals, according to Wood Mackenzie principal analyst Rory McCarthy.
He said: “We expect wavering growth in the early 2020s, but growth will likely accelerate in the late 2020s, to enable increased variable renewable penetration and the power market transition.
“Investment decisions are likely to be pushed back in some cases, but the general trajectory of the power market transition and the need for energy storage to enable this has not changed.
“If anything, the transition may be accelerated as governments around the world grapple with how to recover their economies more sustainably than in the past with upside for the energy storage industry.”
