Energy Storage Industry: The energy policies and Development Status of Energy Storage in Major Global Economics

The demand of develop energy storage industry is booming due to energy policies guidance, while policies are giving the green light.

Under the guidance of the global concept of promoting clean and green energy, major economies have put forward large-scale new energy installation targets, and the energy storage industry has also been stimulated by many governments. In recent years, the energy storage market has been growing rapidly, mainly in the US, China and Europe, with other regions also experiencing development on various scales and with huge market potential. Since 2021, the development of the energy storage industry has accelerated due to the global energy crunch, and by the end of 2021, the cumulative installed capacity of power storage projects in operation worldwide was 209.4GW. In the further future, the demand for energy storage will remain high growth.

Household and large-scale energy storage develop in parallel.

Depending on the location of the energy storage system in the grid, it can be divided into segments such as grid-side, user-side, peak and frequency regulation, and auxiliary services.

Energy storage systems serve different purposes in different application scenarios. On the grid-connected side, it can smooth out fluctuations in wind power generation and promote the consumption of new energy.; On the household side, it can achieve a self-supply of new energy power; Due to the diverse demand for the energy storage systems, the energy storage market has also gradually explored a variety of business models. Different countries and regions have different grid sizes and different tariff pricing models, leading to different development trends for energy storage in different regions. In terms of installed capacity, Germany is the largest market for residential energy storage, while the rest of Europe and the US have a combination of residential and large-scale storage, while China’s market is dominated by large-scale storage.

Global energy policies and development status in major economies

Global energy storage development status: high growth of electrochemical energy storage

The global energy storage industry development glorious in 2021. According to incomplete statistics from CNESA’s global energy storage project database, by the end of 2021, the cumulative installed capacity of commissioned power storage projects worldwide will be 209.4 GW, an increase of 9% year-on-year. Among them, the cumulative installed capacity of pumped storage accounted for less than 90% for the first time, a decrease of 4.1% compared to the same period last year; while the cumulative installed capacity of new energy storage followed closely behind at 25.4GW, up to 67.7% by last year. Major countries around the world have made the development of the energy storage industry a national strategy, and the competition for the strategic high ground in the international market for energy storage manufacturing has kicked off. In 2021, the energy storage industry is set to flourish and become an emerging industry in the global race. The US has launched the Energy Storage Grand Challenge (ESGC), and the scale of new projects installed last year exceeded that of China again, and was the first to enter the 10GWh era; Europe has proposed the Battery Alliance 2030, with various technology R&D and industry chain building tasks are being deployed in an orderly manner.

Energy storage development in the US: leading the world in scale growth

Currently, the United States is the largest and fastest growing energy storage market in the world. Under the challenge of battery supply chain shortage and price hike in 2021, with some project construction delays, the US energy storage market still breaking records, and new energy storage projects exceeded 3GW for the first time, in the same period in 2020 2.5 times, is about to open from the 100 MW level to a new era of gigawatt-level projects. Wood Mackenzie’s Global Energy Storage Outlook, published on 28 July, says that the US will remain the market leader in energy storage over the next 10 years and that it will be the market with an average of 27GW of energy storage systems deployed annually by 2031.

Energy storage development in China: Large market size and increasing installed base

In terms of China’s energy storage market size, the cumulative installed capacity of commissioned power storage projects in China was 46.1 GW  by the end of 2021, accounting for 22% of the total global market size, up 30% year on year. Of these, pumped storage had the largest cumulative installed capacity at 39.8GW, up 25% year-on-year, but its share declined again compared to the same period last year by 3%. The market increment mainly came from new energy storage, with the cumulative installed capacity reaching 5,729.7MW, up 75% year-on-year. In 2021, the installed capacity of new power storage projects in China exceeded 10GW for the first time, reaching 10.5GW, including 8GW of new pumped storage, an increase of 437% year-on-year, and 2.4GW of new energy storage, an increase of 54% year-on-year. Among the new types of energy storage, both lithium-ion batteries and compressed air have 100MW projects in operation, especially the latter, which has achieved a leap forward in 2021, with a new scale of 170MW in operation, nearly 15 times the cumulative installed capacity at the end of 2020.

Energy storage development in Europe: Rapid development and high performance.

Europe is the third largest energy storage market in the world after the US and China, and the European energy storage market has continued to grow at a high rate of installed capacity since 2016. In 2021, the installed capacity of new energy storage in Europe reaches 3.5 GWh, an increase of 67.2% year-on-year, with more than 3GWh of new installed capacity for electrochemical energy storage. In terms of applications, new energy storage installations in Europe are mainly contributed by pre-meter (generation-side and grid-side) energy storage and household energy storage, with household energy storage maintaining a growth rate of over 40% for many years. In 2021, Europe has achieved 1.7 Gwh new installed capacity for household energy, up to 60.2% by last year.

Current status of energy storage development in Australia: Actively building new energy storage facilities and promoting grid interconnection

Based on Australia’s climate advantages in wind and photovoltaic fields, as well as the threats posed by extreme weather such as forest fires and storms to the safety and stability of the power system, Australia is actively seeking to build new energy storage facilities and enhance the interconnection capacity between transmission grids. IHS Markit also considers Australia as a key growth market for front-of-the-meter and behind-the-meter energy storage, believing that it is necessary to support a rapid transition from fossil fuel-dominated power generation to a distributed grid dominated by renewable energy sources. With over 3 million rooftop photovoltaic systems deployed in Australia, rooftop solar power generation is expected to exceed coal-fired power generation by 2025, making the energy storage market a new focus of Australia’s decarbonization of the power system. According to IHS Markit’s forecast, Australia’s energy storage capacity will increase from 500 MW to over 12.8 GW by 2030.

Current situation of energy storage development in Japan: High penetration rate of household energy storage

In terms of application, the penetration rate of household energy storage in Japan is high, second only to Germany. In 2021, the installed capacity of behind-the-meter energy storage in Japan was 931 MWh (an increase of 8% YoY), and household energy storage accounted for 90% of behind-the-meter energy storage. In terms of energy policy, in 2016, Japan issued the “Energy Environment Technology Innovation Strategy for 2050”, which clearly included electrochemical energy storage technology as one of the five technology innovation areas, and proposed key research and development of low-cost, safe and reliable advanced energy storage battery technology. In 2021, the “Basic Energy Plan for Japan” underwent its sixth update, which encouraged the development of renewable energy sources. On August 31, 2022, the “Battery Industry Strategy” was released to improve the manufacturing and utilization environment of battery storage, and approximately 24 billion US dollars will be invested in the fields of electric vehicles and energy storage. The goal is to achieve a production capacity of 150 GWh in Japan’s electric vehicle and energy storage battery industry by 2030, with a global production capacity of 600 GWh.

Current situation of energy storage development in India: Huge demand for energy storage systems

In order to achieve the net-zero emissions target by 2070, the Indian market has a huge demand for energy storage systems. India has set a target to deploy 450 GW of solar and wind energy facilities by 2030. According to the Central Electricity Authority of India’s estimates, the cumulative deployment of energy storage systems will reach 27 GW/108 GWh by 2030. In addition, according to data from the Indian Energy Storage Alliance (IESA), in order to integrate 500 GW of non-fossil fuel energy into the grid by 2030, India will need at least 160 GWh of energy storage. This energy storage capacity includes energy storage for behind-the-meter grid scale, energy storage for directly integrating renewable energy, energy storage for transmission and distribution grids, and energy storage for providing ancillary services to balance the grid.

Current situation of energy storage development in Southeast Asia: Urbanization drives the increase in demand for new energy

Currently, Southeast Asia is experiencing rapid economic development, population growth, and expanding urbanization, resulting in a sustained increase in energy demand. According to the “Southeast Asia Energy Outlook 2022” released by the IEA this year, energy demand in Southeast Asia has been growing at an annual rate of about 3% over the past 20 years, and this trend is expected to continue until 2030. In Southeast Asia, coal-fired power generation still dominates, so various countries in Southeast Asia are actively laying out the new energy industry to address this huge challenge. For example, six Southeast Asian countries including Singapore, Indonesia, Thailand, Myanmar, Malaysia, and Laos have announced net-zero emissions and carbon neutrality goals. In the sustainable development scenario predicted by the IEA, the Southeast Asian region will add an average of 21 GW of renewable energy capacity per year by 2030.

The rapid increase in new energy generation,the role of energy storage systems is highlighted

High demand for renewable energy in the context of carbon neutrality

In the context of carbon neutrality, the proportion of renewable energy is rapidly increasing. The Paris Agreement in 2015 proposed that the temperature increase should be further limited to within 1.5 ℃ by 2050. Subsequently, major countries have successively proposed carbon neutrality targets, and the global energy transformation process is progressing in an orderly manner. According to IEA, based on the assumption that global warming does not exceed 1.5 ℃, 90% of global electricity consumption in 2050 will come from renewable energy, with wind and solar power accounting for nearly 70% of the total electricity consumption. There are three directions for achieving carbon neutrality: developing clean energy, improving energy efficiency, and carbon capture and storage. Clean energy refers to new energy technologies that can effectively reduce greenhouse gas emissions. Developing new energy is a key link in the path to carbon neutrality, which has directly stimulated many emerging industries, such as wind power and solar power, and also promoted the development of mature clean energy such as hydropower and nuclear power.

Application of new energy: Wind energy is one of the fastest-growing renewable energy sources

Wind energy generation uses the kinetic energy of moving air to convert it into electrical energy through wind turbines or wind energy conversion systems. It can be deployed onshore, using fixed turbines deployed near the seabed, or floating structures deployed in deeper waters. According to the BP Statistical Review of World Energy 2021, the cumulative installed capacity of wind power globally reached 824.9 GW in 2021, with China, Europe, and the United States ranking the top three with cumulative installed capacity of 328.97 GW, 223.92 GW, and 132.74 GW, respectively. Wind power generation has also shown explosive growth with the increase in installed capacity. In 2021, global wind power generation has exceeded 1800 TWh, and China’s wind power generation has surpassed Europe, becoming the world’s number one.

Electricity energy transformation: The global proportion of new energy is increasing

Traditional energy sources still have advantages, and the development potential of new energy is enormous. From the trend of global energy structure changes, since the beginning of the 21st century, traditional fossil fuels such as oil, natural gas, and coal continue to play their respective advantages. However, it is undeniable that the world is currently in a transitional period from traditional mineral energy to new energy systems, with the proportion of coal and oil gradually decreasing and the proportion of renewable energy represented by wind and solar power gradually increasing.

The role of energy storage systems is highlighted

The development of wind and solar power is strong, and the role of energy storage systems is prominent. Energy storage systems have a wide range of application scenarios and can be mainly divided into three categories: power generation side, grid side, and user side. The power generation side has a variety of demand scenarios for energy storage, including power peak regulation, system frequency regulation, and renewable energy grid connection. Grid-side energy storage is mainly used to alleviate grid congestion, delay power transmission and distribution capacity expansion, etc. User-side energy storage is mainly used for self-generated and used electricity, peak-valley price difference arbitrage, capacity electricity fee management, and improving power supply reliability. As energy demand shifts towards new energy supported by renewable energy policy, energy storage systems will become an indispensable part of the power system.