With the annual increase in global renewable energy generation and against the backdrop of energy transition, energy storage has experienced rapid development in recent years. Currently, renewable energy (such as photovoltaic and wind power) accounts for only 31% of the total, but to achieve the goal of "carbon neutrality", it is expected that the proportion of renewable energy will rise to 42% by 2030 and reach 53% by 2050.
To achieve the "dual-carbon" goal, renewable energy will undergo large-scale development. However, the fluctuating and random characteristics of wind and solar power generation increase the pressure on peak shaving and frequency regulation, leading to issues such as the decline in grid voltage quality.
In this context, energy storage is an effective technical means to alleviate the pressure of large-scale renewable energy grid connection, significantly improve the integration level of renewable energy such as wind and solar, support distributed power and microgrids, and is a key technology to promote the transition from fossil energy to renewable energy.
Therefore, with the continuous promotion of global carbon reduction and carbon neutrality actions, the transformation of the energy structure from fossil fuel dominance to clean and low-carbon energy dominance has become a clear trend, and the development of energy storage has entered a fast track.
Currently, the global energy storage market mainly revolves around China, North America, and Europe as the three major markets. In 2022, the cumulative new installed capacity of new energy storage in China, the United States, and Europe accounted for 86% of the global market, an increase of 6 percentage points from the same period in 2021, continuing to lead the development of the global energy storage market.
However, in 2023, the demand for energy storage did not meet everyone's expectations. The growth rate has slowed down. The most significant impact comes from the North American and European markets. The North American market has faced many disturbances, such as the continuous interest rate hikes throughout 2023, the increase in federal interest rates leading to higher capital costs and lower project returns, weakening corporate investment intentions. Additionally, in the supply chain, there has been a tight supply of main components of energy storage systems such as transformers, leading to doubled delivery times. At the same time, under the comprehensive impact of other factors, the demand growth rate of energy storage in North America slowed down in 2023, with some projects being canceled or postponed until next year.
In the third-largest market, Europe, the keyword for energy storage in 2023 is "destocking." Under the influence of the energy crisis, the demand for household storage in Europe surged at the end of the previous year. With the expectation of improvement, a large number of energy storage devices flooded into the European market at the beginning of 2023. However, in 2023, due to poor economic conditions and a decline in electricity prices in Europe, as well as the weakening of rigid demand, the growth rate slowed down. Currently, destocking in Europe is still ongoing.
Although there are short-term disturbances, the long-term development trend of energy storage remains positive.
Current situation and outlook of the three major energy storage markets in China, the United States, and Europe
The development of energy storage in China cannot be separated from policy promotion.
Energy storage was first mentioned in the "Twelfth Five-Year Plan" and set as a development goal. During the "Thirteenth Five-Year Plan" period, energy storage was a strategically emerging industry focused on by our country. During the "Fourteenth Five-Year Plan" period, various provinces nationwide successively issued policies and goals for "new energy + energy storage", specifying the proportion and duration of photovoltaic and wind power installation matching energy storage. Under the mandatory policy of energy storage matching, power generation-side energy storage has experienced rapid development in the past two years. From the demand perspective of 2023, the proportion of demand from generation-side and grid-side energy storage reached 78%, contributing the main increment.
Regarding user-side energy storage, China achieved a breakthrough from 0 to 1 in the industrial and commercial energy storage field last year and this year. It is expected to continue to grow in the future.
In the long run, as the annual increase in photovoltaic and wind power generation, the demand for unstable electricity to be absorbed will also increase.
Therefore, it is expected that the proportion of long-term energy storage demand (over 4 hours) will increase.
In the emerging growth areas, with the deepening of electricity market reform, industrial and commercial enterprises, in addition to meeting their own production and electricity needs through configuring energy storage, diversified business models will promote the rapid growth of user-side industrial and commercial energy storage demand.
The U.S. energy storage market under multiple disturbing factors
As the world's second-largest market, the United States. As its electricity market is relatively mature, energy storage installations are mainly driven by the market.
Although the growth rate of North American energy storage slowed down in 2023 due to factors such as the Federal Reserve's interest rate hikes and the prolonged delivery cycle of some energy storage components such as transformers.
However, in the long run, under the stimulus of ITC subsidies, energy transition, and market-driven factors, the North American energy storage market will still maintain rapid growth. It is estimated that by 2030, market demand will exceed 230GWh, remaining the second-largest energy storage market in the world.
Europe's energy storage market, dominated by user-side and with emerging generation and grid-side markets
Europe is the world's largest residential energy storage market. In 2022, the outbreak of the Russia-Ukraine conflict caused Europe to impose substantial sanctions on Russian natural gas, which temporarily pushed up electricity prices and led to power outages due to energy shortages. Under the dual effects of high electricity prices and electricity instability, the European residential energy storage market has developed rapidly. In addition, as another growth point, large-scale storage has also developed rapidly.
With the cost reduction of photovoltaic and storage in 2023, centralized photovoltaic and large-scale storage in Europe will gradually open up the market, and the scale of energy storage projects will continue to increase. In terms of wind and storage, the United Kingdom, as an island nation with abundant wind resources, has the world's largest installed capacity of offshore wind power, leading the "wind power + energy storage" market. The large-scale storage market in Europe has initially taken shape.
In the long run, Europe has realized the need to break away from its heavy reliance on Russian fossil energy during the Russia-Ukraine conflict, and has accelerated its layout of solar photovoltaic power generation. Therefore, under the determination of energy transition, although the demand for new energy construction and energy storage facilities has slowed down this year, it will continue in the long term.
