Research company ResearchAndMarkets’ 2022 report shows that the global battery energy storage system (BESS) market is expected to grow from $4.4-billion in 2022 to $15.1-billion by 2027, at a compound annual growth rate (CAGR) of 27.9%.
The growth of this market is mainly driven by the increasing demand for grid energy storage systems owing to ongoing grid modernisation, growing penetration of lithium-ion batteries in the renewable energy sector, and the rising trend of low-carbon and less fossil fuel-based economies and the ongoing renewable-energy revolution.
However, the high capital expenditure required for installing BESS solutions is restraining market growth.
The market for lithium-ion batteries held the largest share in 2021 and is estimated to remain the same during the forecast period.
The growth of this segment is attributed to the advantages of the battery such as high energy and power density, which leads to low standby losses and a high life expectancy of about five to 15 years with 98% efficiency. Also, lithium-ion-sulfur BESSes support frequency regulation, demand charge reduction, grid-buffering, and renewable integration, which is suitable for on-grid connections.
The on-grid segment of the market holds the largest share of the BESS market in 2021 and is expected to boast significant CAGR during the forecast period.
The on-grid connections exhibit lower upfront costs than the off-grid system, as the surplus energy is sent to the grid, which can be used later on a metered basis.
The reduction in energy bills for customers relying on the utility grid for electricity is expected to drive the growth of the segment. The demand for grid modernisation from renewable energy suppliers and new regulatory policies for the energy sector are also driving the growth of the on-grid BESS market for utilities.
The market for utilities applications is dominant in 2021. The need to fulfil the requirement of peak electricity demands is the major factor contributing to the growth of the market for utility.
The utility BESS provides power quality, frequency and voltage control services in case of sudden fluctuation in the energy supply. The BESSes enable grid operators to save electricity when there is a surplus of renewable energy.
The increasing demand for a reliable and efficient supply of electricity in most regions and the growing need for renewable energy are responsible for the high demand for BESSes in the utility sector.
The market in the Asia-Pacific region, or APAC, is expected to grow at the highest CAGR from 2022 to 2027. The region holds the largest share of the BESS market in 2021.
APACis a hub for the BESS industry and is expected to witness plans for electrification in remote areas, which are mostly off-grid in several countries. The use of residential energy storage technology will enable increased access to electricity for remote and island communities in the region.