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The era of battery energy storage systems (BESS) is just beginning, and it is projected that annual capacity additions will increase significantly in the coming years, reaching over 400 gigawatt-hours (GWh) by 2030. BESS, which are interconnected batteries designed to store excess electrical energy and release it when needed, offer practical solutions for addressing the challenges of power intermittency. As the world transitions to greener sources of power generation like solar PV and wind, the development of battery energy storage systems will be crucial in meeting future energy demand.
In 2022, global BESS capacity additions increased by 60% compared to the previous year, with total new installations surpassing 43 GWh. This year, an additional 74 GWh will be added, primarily driven by cost reductions in BESS systems, incentives in North America, governmental funding programs in Europe, and robust renewable capacity expansion in China.
Assuming a status-quo policy scenario, it is projected that annual BESS installations will exceed 400 GWh by 2030, corresponding to capacity additions of about 110 gigawatts (GW) on a power basis. This projection aligns with climate change goals compliant with a 1.9-degree Celsius carbon budget. Battery energy storage will play a fundamental role in the future of energy production and power demand by solving the intermittency problem of renewable energy generation.
Government policies are incentivizing investments and capacity expansion in the BESS sector. For example, the US Inflation Reduction Act has catalyzed renewable and clean tech expansion, leading to an expected increase in solar and onshore wind capacity by 40% and over 20 GW of additional battery capacity by 2030. Similarly, the European Green Deal Industrial Plan supports the development of BESS in Europe, and countries like China are committed to peaking their emissions by 2030 and see battery developments as crucial to achieving that goal.
By 2030, the annual BESS market installation is expected to reach 110 GW, with Asia accounting for 58% of the installations, North America for about 20 GW, Europe for 18 GW, and the remaining 8 GW from the rest of the world. Utility scale battery storage will address power security concerns, while residential developments will also play a critical role. The residential market is expected to grow significantly, driven by consumer power prices and the adoption of rooftop solar PV. European countries, in particular, have been pioneers in utilizing BESS in homes, motivated by tax credits and high power prices during peak periods.
Overall, battery energy storage systems are poised to become essential components of the world’s energy landscape, enabling the integration of renewable energy sources and ensuring a reliable and sustainable power supply.
