Energy storage installations are poised for a 122-fold increase between now and 2040, as the uptake of renewable energy and electric vehicles (EVs) and falling costs of technology provide an ideal platform to drive demand for storage solutions.
The latest BloombergNEF’s (BNEF) new Energy Storage Outlook report predicts that the energy storage market will surge from 9GW of potential capacity and 17GWh of output to more than 1,090GW and 2,850GWh by 2040.
Facilitation of this demand will require $662 billion of investment, according to BNEF, but will be made possible by further declines in the cost of lithium-ion batteries, which have already fallen by 85% between 2010 and 2018.
The report has also changed its predictions from previous years, with more utility-scale installations set to be built, rather than smaller installations for households and businesses.
BNEF’s energy storage analyst Yayoi Sekine said: “Two big changes this year are that we have raised our estimate of the investment that will go into energy storage by 2040 by more than $40bn and that we now think the majority of new capacity will be utility-scale, rather than behind-the-meter at homes and businesses.”
The analysis predicts that the cost of lithium-ion batteries per kWh will halve by 2030, driven by demand in both stationary storage and EV markets. BNEF also predicts that EVs will penetrate the global bus, van, truck and passenger car markets faster than it envisioned in previous years.
With intermittent renewables such as wind and solar set to account for 40% of the world’s electricity by 2040 – up from 7% today – the role of storage is viewed as vital in improving grid stability and meeting fluctuating peak demand spikes.
Meanwhile, EVs could account for a third of all passenger vehicles by 2040, again accelerating the demand for batteries. In total, BNEF calculates that the total demand for batteries from the stationary storage and electric transport sectors will be 4,584GWh by 2040.
While South Korea is the lead market for the technology currently, BNEF predicts that 10 nations will represent three-quarters of the market by 2040. Both China and the US are set to overtake South Korea, with India, Germany, Latin America, Southeast Asia, France, Australia and the UK accounting for the rest.
In the UK, planning permission applications to install energy storage facilities have quadrupled since 2016, with a massive increase in capacity expected in the next few years.
Globally, the World Bank launched a first-of-its-kind $1bn funding programme to fast-track deployment of battery storage projects in developing countries in September, to ‘close the gap’ on efforts to transition to cleaner energy sources.