Australia Leads Global Battery Energy Storage Market with 40 GW Pipeline, Wood Mackenzie Report Reveals


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Australia has emerged as the frontrunner in the battery energy storage systems (BESS) market, with over 40 gigawatts (GW) of announced projects, outpacing other nations, according to a recent analysis by Wood Mackenzie unveiled at the Australian Clean Energy Summit in Sydney.

The surge in renewable energy adoption and competitive market design has made Australia an attractive destination for grid-scale energy storage. This appeal is bolstered by competitive wholesale and frequency control markets that offer diverse revenue opportunities for battery storage. Additionally, significant funding from the Australian government ensures revenue certainty for storage projects, contributing to a projected 28% increase in the country’s battery storage capacity by 2032.

Source: Wood Mackenzie

The prevailing technology in Australia for grid-scale batteries is the two-hour battery, with project owners targeting the lucrative frequency control and ancillary services (FCAS) market. Forecasts indicate that battery module prices will witness a decline of over 40% by 2032 for both LFP and NMC chemistries in Australia and South Korea, consequently reducing overall system costs by 18% to 21% on a US$ per kilowatt-hour (KWh) basis over the next decade.

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Source: Wood Mackenzie

However, Australia faces certain challenges, as its battery system costs are 30-40% higher than China, the global leader in cost-competitive battery storage. China’s advantage stems from its robust domestic supply chain and intense competition among market participants, enabling a projected 50% cost reduction in China by 2032.

Despite the hurdles, Wood Mackenzie predicts that standalone grid-scale energy storage in Australia will undercut gas-fired power generation by 2032, and renewables plus storage will outcompete coal and gas by 2028. Nonetheless, obstacles like grid connection delays and costs, including the expense of building substations, are likely to remain ongoing challenges for Australia compared to other Asia-Pacific regions.

Kashish Shah, a senior research analyst at Wood Mackenzie, emphasized the need to address these challenges to sustain Australia’s position as a leader in the rapidly expanding battery energy storage sector.

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