SMM: Global ESS market demand may reach around 470 Gwh by 2030. How will each market perform?

At the 2025 SMM Zero Carbon Path - PV and ESS Summit hosted by SMM, SMM ESS analyst Weijun Li shared insights on the topic of "Opportunities and Challenges in the Global ESS Market." He stated that, according to SMM's conservative estimates, from 2025 to 2030, as global ESS planning is completed, the ESS market will shift from an incremental market to a stock market. The global ESS market growth rate from 2025 to 2030 is expected to be approximately 10%, with global ESS demand potentially reaching around 477 GWh by 2030.

Global ESS Demand Forecast

Differences in Energy Transition Needs and Policies Across Countries

From 2024 to 2025, due to policy adjustments, the US global ESS market shipments are expected to decline, while other markets will maintain high growth rates.

In China, the government has canceled the "mandatory energy storage allocation on the power generation side" policy, leading to a transformation in ESS demand and a short-term decline in demand.

In the US, multiple tariff hikes have increased the cost of ESS equipment, undermining project profitability, with many ESS projects potentially delayed or canceled.

Other regions continue to maintain high growth rates to absorb new energy generation and support the power grid.

From 2025 to 2030, as global ESS planning is completed, the ESS market will shift from an incremental market to a stock market. SMM conservatively estimates that the global ESS market growth rate from 2025 to 2030 will be approximately 10%, with global ESS demand potentially reaching around 477 GWh by 2030.

From 2025 to 2030, the global ESS market will transition to a stock phase, with most regions completing ESS planning. Policy subsidies will gradually decrease, but the continued decline in PV and BESS costs will sustain high ESS economic viability, driving growth.

China's power market upgrade is expected to succeed, with demand maintaining high growth. The US market will still have ESS demand, and ESS is expected to maintain high growth rates once policies stabilize.

China's ESS Market Affected by Policy Volatility

China's ESS Battery Demand Forecast (2024–2030 Expected/Conservative Estimate)

From 2024 to 2025, SMM expects that the National Development and Reform Commission's Policy No. 136, which cancels "mandatory energy storage on the power generation side," will lead to ESS demand being primarily driven by the power market in the short term, with ESS demand potentially pulling back.

From 2025 to 2028, the penetration rate of ESS in multiple application scenarios is expected to gradually increase. Combined with the improvement of the new energy power trading market mechanism, China's BESS demand is expected to grow by 8% annually over the next three years.

Outlook for the Key Period from 2028 to 2030: Driven by the carbon peak target, China's ESS industry is expected to enter a significant growth cycle, with an average annual compound growth rate likely to reach 11%. With the accelerated large-scale development of PV, cumulative installed capacity is expected to exceed 1,200 GW by 2030, simultaneously generating over 80 GW/160 GWh of new-type ESS demand, opening up a trillion-yuan market space.

China's ESS Market Comments and Outlook

Under SMM's conservative estimates, from 2024 to 2025, China's power generation and grid-side ESS annual shipments may decline by about 15%, industrial and commercial ESS annual shipment growth may reach about 50%, and household ESS shipment growth may be around 7%.

China's Power Grid ESS Demand Fluctuates with Policy Changes

Policy No. 136 cancels "mandatory energy storage on the power generation side."

Each province has formulated policies based on Policy No. 136 and their local conditions. Some provinces continue to implement mandatory energy storage allocation, while others have stopped, and most provinces and municipalities are still in the process of policy formulation, with demand not yet fully clarified.

By Province:

Yunnan Province: New projects and continued implementation of mandatory storage allocation policies require 10%.

Guizhou: Wind and solar projects must allocate at least 10% of installed capacity for storage lasting two hours, while projects with delayed grid connection may face even higher storage allocation ratios (up to 30%).

Inner Mongolia: Power stations in this region are uniformly classified as standalone ESS power stations. A capacity subsidy of $0.35 per kWh is provided, with a compensation period of up to 10 years.

Industrial and Commercial ESS Will Become the Main Source of ESS Demand Growth in China

As the peak-valley electricity price spread continues to widen, the economic benefits of industrial and commercial ESS are becoming increasingly evident. According to the 2024 electricity price adjustment data released by various provinces, the peak-valley electricity price spread in multiple provinces and cities continues to widen, with 16 provinces and cities already reaching over 0.7 yuan per kWh.

Under SMM's conservative estimates, by 2030, industrial and commercial ESS demand is expected to reach around 30 GWh.

US ESS Market Demand Affected by Multiple Factors

North America ESS Battery Demand Forecast (2024–2030 Expected/Conservative Estimate)

From 2024 to 2025, the US faces difficulties in interstate power dispatch and high pressure on intra-state new energy generation consumption, with a high proportion of long duration energy storage demand. To maintain its new energy manufacturing advantage, the US has imposed multiple tariff hikes in the short term, compressing and delaying ESS demand.

From 2025 to 2028, the IRA and ITC tax credit policies significantly stimulated demand from 2022 to 2025. However, as the market gradually digests policy dividends and tariff hikes take effect, growth rates are slowing.

From 2028 to 2030, state-level phased ESS capacity installation targets, combined with increased grid upgrade investments, will support larger-scale ESS integration, with the ESS market growing at a high rate of 15% during the recovery period.

North America ESS Market Review and Outlook (Grid/Industrial and Commercial/Residential)

Under SMM's conservative estimates, from 2024 to 2028, North America's grid ESS demand growth rate may decline by about 5%, industrial and commercial ESS demand growth may reach approximately 130%, and household ESS growth may remain around 8%.

Excessive tariffs will increase investment costs for US owners, reduce profitability for Chinese suppliers, and lead to a decline in US ESS demand.

Note: As of April 16, Tariff Situation

2025 Tariffs:

- In February, the first 10% tariff hike on Chinese products affected the delivery of ESS batteries and BESS, as well as signed orders.

- In March, a second 10% tariff hike on Chinese products brought the cumulative tariff increase to 20%, further impacting the delivery of ESS batteries and BESS and future orders, slowing overall shipment speed. It is expected that US owners and Chinese suppliers will each bear half of the additional tariffs as the mainstream scenario.

- In April, reciprocal tariffs (34%) and a third tariff hike (50%) were signed. The tariff increase policy has created extremely high trade barriers for US ESS imports, severely compressing US BESS demand.

2026 Tariffs:

- The "Section 301" Act is expected to be implemented as planned in early 2026, with Section 301 tariffs increasing to 25% upon implementation.

ITC Subsidy Policy Extended to Promote Residential ESS Demand

The ITC residential subsidy has been extended to 2034, enhancing the economic viability of residential ESS, with user-side ESS expected to maintain a stable growth rate.

• Residential Electricity Prices: In recent years, US residential electricity prices have remained high, increasing from 12.55¢ per kWh in 2016 to 15.96¢ per kWh in 2024, a 27.2% increase. High electricity prices have driven demand for residential "PV + ESS."

• ITC Policy: The ITC subsidy policy increased the subsidy ratio for residential ESS in 2023 and extended it to 2034. This policy has enhanced the economic benefits of residential ESS.

• Outage Risks: Aging US grid equipment makes outages highly likely during peak usage periods. When summer temperatures soar, two-thirds of North America faces energy shortages. Therefore, as new energy penetration increases, residential ESS, as a rigid demand, will also increase.

Changes in European ESS Market Demand

European ESS Battery Demand Forecast (2024–2030 Expected/Conservative Estimate)

From 2024 to 2025, led by the UK and Italy, the European grid ESS market is expected to achieve a breakthrough in scale by 2025, with new demand reaching 28.5 GWh.

From 2025 to 2028, EU member states will accelerate the phase-out of coal power. Emerging countries such as Belgium and Spain are gradually implementing large-scale grid ESS projects, enhancing economic benefits through capacity market transactions and ancillary services arbitrage, with ESS maintaining high growth.

From 2028 to 2030, to achieve the 2030 target of 45% renewable energy, ESS has become a core tool for balancing the volatility of wind and solar energy. Additionally, the EU carbon tariff policy forces the industry chain to transition to green practices, requiring enterprises to adapt to carbon footprint accounting standards, with ESS demand maintaining rapid growth.

European ESS Market Review and Outlook (Grid/Industrial and Commercial/Residential)

Under conservative estimates, SMM expects that from 2024 to 2028, European power generation and grid-side ESS demand growth may reach about 29%, industrial and commercial ESS demand growth may reach about 100%, and household ESS demand growth may be around 15%.

European Grid ESS Systems Taking Shape, Multi-Country Planning to Drive Future Incremental Growth

According to SMM analysis, energy transition, volatile electricity prices, and policy incentives are driving European large-scale grid ESS into the fast lane.

Energy Structure: Over the past five years, the proportion of renewable energy in Europe has increased from 20% to 47%. While new energy generation has brought electricity, it has also burdened the grid, increasing the demand for grid ESS to ensure stable power generation and transmission.

Energy Imports: Benefiting from Europe's new energy policies, the rapid growth of new energy generation and storage has reduced Europe's reliance on energy imports. Compared to 2021, energy imports in 2024 are expected to decrease by 9.2%.

Policy Incentives: Led by the UK, Germany, Spain, and Poland, countries have introduced incentive policies to promote the development of the ESS industry, including government subsidies, peak compensation, and frequency regulation compensation.

Policy Incentives for ESS Demand in the Middle East

Middle East ESS Battery Demand Forecast (2024–2030 Expected/Conservative Estimate)

From 2024 to 2025, Saudi Arabia and the UAE have set ambitious energy targets. Combined with weak grid infrastructure, ESS demand is surging.

From 2025 to 2028, after the concentrated delivery of large-scale grid ESS projects in Saudi Arabia, demand growth will naturally decline, and the market will enter a digestion phase, with ESS demand maintaining a compound annual growth rate of 9%.

From 2028 to 2030, new ESS demand in major Middle Eastern countries will shift to inventory optimization and upgrades, with incremental space shrinking. Grid ESS installations will account for over 70%, and the market will approach saturation, with growth relying on small- and medium-sized projects or user-side penetration.

Middle East ESS Market Review and Outlook (Grid/Industrial and Commercial/Residential)

SMM conservatively estimates that from 2024 to 2028, the growth rate of power generation and grid-side ESS demand in the Middle East may reach about 90%, while industrial and commercial ESS and household ESS demand growth may be around 3%.

Click to View the 2025 SMM Zero Carbon Path - PV and ESS Summit Special Report