Greater integration of digital technologies is ushering the era of flexibility into the mainstream
London, 25th September 2024 – Grid-scale battery energy storage systems (BESS) have entered a period of accelerated growth. A key piece of the puzzle in the energy transition, their deployment is crucial to providing the flexibility required to support higher levels of clean electrification relying primarily on variable renewable sources like wind and solar.
The global demand for grid-scale Battery Energy Storage Systems (BESS) is rapidly rising, driven primarily by decreasing battery costs and supportive regulation. Policymakers, regulators, and system operators are increasingly acknowledging the multiple roles that batteries play and fostering their inclusion in the energy mix.
The global grid-scale BESS market saw a near-tripling of annual installations in 2023, with 35.82 GW/87.69 GWh of capacity added. Predictions for 2024 indicate even greater growth, with 41.84 GW/104.67 GWh of new additions expected, equating to an investment worth $37.69 billion.
China and the United States are set to maintain their leadership in the sector. In 2023, the two countries accounted for more than 80% of the global grid-scale BESS market and are expected to account for nearly half of the total investment by 2035. However, market growth is rapidly spreading through an increasing number of countries. Frost & Sullivan’s BESS Growth Generator Data Platform shows that by the end of 2023, seven countries had surpassed 1 GW of total capacity, and the list is expected to grow to 33 countries by 2030 as project pipelines continue to stack up.
Battery Storage for AI and AI for Battery Storage
Grid-scale BESS will play a key role in sustaining the rise in electricity demand driven by data centres, AI, and the growing ambitions to supply it with 24/7 clean electrons. By storing the excess clean power produced by wind and solar and discharging it during peak demand, BESS can maximise rewewable energy performance and match the load curves of tech companies at all times.
AI is also playing a crucial role in transforming how BESS is manufactured, commissioned, and managed. Across the value chain, AI-driven platforms are emerging to drive more efficient, safe, and profitable operations. Today, AI software is already being used anywhere from lithium extraction and battery cell quality checks to BESS monitoring, optimisation, and even testing the residual performance for second-life applications.
Greater Transparency and ESG Accountability for Batteries
Digital technologies will also help the BESS value chain become more transparent and ESG-compliant. In addition to the European Union, which introduced the concept in its 2023 New Battery Regulation, several nations are now working on the launch of battery digital passports. These passports serve as central digital ledgers containing information on battery certifications, carbon footprint, materials and composition, performance, and durability. The repositories are expected to benefit the whole value chain, enabling informed purchasing decisions and facilitating servicing, risk assessment, and after-life applications, among others.
Maria Benintende, Industry Director at Frost & Sullivan, comments: “As with other clean energy technologies, the BESS industry once again highlights the intricate relationship between the core principles of the energy transition – decarbonisation and digitalisation. AI, machine learning, cloud computing, IoT, and digital ledgers are all being harnessed to enhance energy storage, augmenting its capabilities and creating new opportunities for product differentiation.”
She adds: “As the industry matures and grid-scale batteries prove to be the right fit for a wide range of applications, the focus is on increasing efficiency, profitability, and sustainability. We are seeing the emergence of advanced solutions combining real-time monitoring with battery health analytics, and simulation capabilities to optimise BESS configuration and operations from all three standpoints. These advancements will contribute to faster market growth, with deployments forecast to expand at a 17.3% CAGR to 2035, reaching a cumulative installed capacity of over 1 TW.
To stay ahead in the fast-expanding battery energy storage landscape, find out more about the growth opportunities here.
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Kristina Menzefricke
Marketing & Communications
Global Customer Experience, Frost & Sullivan
kristina.menzefricke@frost.com
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