Battery Energy Storage Market Size, Share & Industry Analysis, By Type (Lithium-Ion Battery, Lead Acid Battery, Flow Battery, and Others), By Connectivity (Off-Grid, On-Grid), By Application (Residential, Non-Residential, Utility, and Others), By Ownership (Customer-Owned, Third-Party Owned, and Utility-Owned), By Capacity (Small Scale {Less than 1 MW} and Large Scale {Greater than 1 MW}), and Regional Forecast, 2024-2032

The global battery energy storage market size was valued at USD 18.20 billion in 2023 and is projected to grow from USD 25.02 billion in 2024 to USD 114.05 billion by 2032, exhibiting a compound annual growth rate (CAGR) of 20.88% from 2024 to 2032. The battery energy storage system market in the U.S. is projected to grow significantly, reaching an estimated value of USD 31.36 billion by 2032, driven by the integration of renewable energy sources like solar and wind, enhancing grid stability and resilience.

Battery energy storage or BESS is an modern energy storage solution that enables to store energy using multiple battery technologies including li-ion for later use. Batteries receives energy from solar/wind or any other energy sources and consequently store the same as current to later discharge it when needed. Energy is a fundamental necessity for carrying out day-to-day activities across private, commercial, industrial, and numerous different verticals. Different organizations and countries are constantly striving to secure agreements with stakeholders in the innovation system with the quickly expanding electricity demand in different sectors. Moreover, continually rising emissions of hazardous ozone-depleting greenhouse gases (GHG) have forced organizations to adopt low-carbon emission frameworks for energy generation. Subsequently, one such facet is significantly driving innovation is Battery Energy Storage Systems (BESS) that use different battery chemistries to store energy to meet peak demand.

The global abrupt outbreak of COVID-19 affected different countries across the globe. A worldwide crisis, such as the COVID-19 pandemic, has altogether impacted other business and modern tasks globally.  However, the national administrations have set significant targets to move the 'green wave' brought about by interferences of industrial processes leaning toward the industry landscape. Moreover, various state governments' supportive economic stimulus packages combined with industry players' persistent endeavors set to boost the interest for BESS units. For example, during pandemic in August 2020, ABB announced to combine efforts with Zenobē Energy Limited, a BESS producer, to give an advanced traction power solution for the U.K. railroads. The association plans to manufacture a 25 kilovolt (kV) rail traction power system framework to convey yield by converting power from batteries over to proceed with a continuous power supply to trains.

Battery Energy Storage System Market Trends

Investment in Designing and Manufacturing of BESS Devices to Play a Significant Role in Industry Dynamics

Various industry players are constantly innovating to expand their product offerings and enhance their global market acceptance. Likewise, various players are presenting new and advanced BESS units to keep up with the growth across the business. For example, in March 2021, Tesvolt, a German storage system manufacturer, launched a technologically advanced product line, TS-I HV 80 battery, primarily designed to shave load peaks and comply with the demand from business and modern clients.

Expanding Grid Infrastructure to Unlock New Opportunities for Market Growth

The exponential demand for energy resources across developing and developed countries, combined with expanding measures to guarantee energy security, is set to drive market growth. Furthermore, advancements in the rising integration of new power generation technologies and upgrading existing infrastructures have increased the requirement for new grid systems with effective backup and peak load characteristics. For example, in June 2020, National Thermal Power Corporation (NTPC) Limited, an India-based independent power maker (IPP), announced its plans to deploy around 1 GWh Battery Energy Storage System across its principal matrix scale generation facilities.

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Battery Energy Storage System Market Growth Factors

Paradigm Shift toward Low Carbon Energy Generation and Rising Supportive Policies and Investments to Increase BESS Demand

The shift toward lower gas emissions during power generation has fueled the adoption of cleaner alternatives, including renewable energy sources and BESSs. For instance, in April 2023, RWE Group decommissioned the Emsland nuclear power plant in Germany and invested heavily in BESS projects. The company is working on a large-scale 220 MW Battery Energy Storage System project in North Rhine-Westphalia and is likely to be commissioned in 2024.

The battery energy storage systems industry has witnessed a higher inflow of investments in the last few years and is expected to continue this trend in the future. According to the International Energy Agency (IEA), investments in energy storage exceeded USD 20 billion in 2022. Moreover, rising investments combined with supportive government initiatives are likely to stimulate the adoption of BESS across the globe. Recently, in September 2023, the Government of India approved the scheme of ‘Viability Gap Funding’ for the BESS sector, with a target of raising 4000 MWh worth of BESS projects by 2031.

Rising Adoption of Grid-scale Energy Storage to Stimulate Market Growth

As the world shifts toward green energy production, the need for utility-scale energy storage is growing to balance power demand and generation. In particular, lithium-ion batteries are very useful during peak loads and can replace gas-fired power plants. Moreover, energy transitions toward cleaner and more sustainable sources, such as solar and wind power, and the intermittency of these sources presents a challenge for maintaining grid stability and reliability. As a result, the amount of electricity they generate varies from zero to full capacity, depending upon conditions. Battery Energy Storage System offer a solution by storing excess energy generated during periods of high renewable output and releasing it during times of high demand or low generation.

Moreover, battery storage allow a high level of integration with renewable energy systems into existing power systems, enabling higher penetration of renewables and supporting the transition toward green energy infrastructure. As a result, the demand for BESS solutions is expected to continue growing, driven by the need to optimize renewable energy utilization, enhance grid flexibility, and accelerate the transition toward a sustainable energy future. Apart from that, considering current trends and technological advancement, battery technologies are likely to evolve and witness further developments in energy density, cost reduction, and safety configurations. This evolution is likely to promote the adoption of battery energy systems, particularly in developing economies such as India, Brazil, and Mexico, among others, where the BESS market is at the nascent stage.

RESTRAINING FACTORS

High Initial Investment May Hinder Market Pace

The higher initial cost is the primary restraining factor for the battery energy storage market growth. These systems are predominantly utilized in large-scale plants to meet energy demands during peak loads. For instance, according to the Energy Sector Management Assistance Program (ESMAP), administered by the World Bank, the total installed cost of various energy storage technologies can fluctuate significantly. This range spans from slightly over USD 2,000 per kW to approximately USD 3,300 per kW, impacting initial capital investments. However, ongoing research and development efforts aimed at enhancing battery performance characteristics while reducing the capital required for new systems are expected to lower battery costs and offset market growth constraints during the forecast period. According to the International Renewable Energy Agency (IRENA), the total installed cost is likely to decline by 50% and battery cell cost by even more than 60% (as compared to prices recorded in 2016) by the year 2030. This reduction is attributed to the optimization of manufacturing facilities, combined with better combinations and reduced use of materials.

Segmentation Analysis of Battery Energy Storage System Market

By Type Analysis

Lithium-ion Battery Segment to Dominate Market Owing to Its Technological Advancments 

Based on type, the market is categorized into lithium-ion battery, lead-acid battery, flow battery, and others.

The lithium-ion battery segment is projected to lead the industry and is anticipated to hold a significant market share during the forecast period. Increasing deployment of new large-capacity grid infrastructure, along with continuous technological advancements in Li-ion BESS products, will drive the segment growth.

Demand for lead-acid batteries is expected to be bolstered by the transportation sector, which is slated to grow exponentially by the end of 2029 due to increasing hybridization of vehicle fleets. These batteries are valued for their safe & reliable operations in rechargeable systems. Furthermore, various companies are investing in expanding operational capabilities of different types, such as vanadium redox (VRB) flow batteries, to cater to the increasing need across numerous applications.

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By Connectivity Analysis

Off-grid Segment Dominated the Market Attributed to the Rising Off-grid BESS Projects

Based on connectivity, the market is bifurcated into off-grid and on-grid.

The off-grid segment dominated the market in 2023 and is expected to continue the same trend during the forecast period. Continuous launch of BESS expansion projects by various large and small scale companies is set to favor the off-grid BESS market size. On-grid segment is expected to witness substantial growth during the forecast period owing to the growing setup of vast electricity networks by public and private utility companies and increasing investments to revolutionize the grid infrastructure are set to favor the segment scenario.

By Application Analysis

Utility Segment to Lead Owing to Rising Electrification Initiatives

By application, the market is segmented into residential, non-residential, utility, and others.

The utility segment is projected to account for the leading share in the industry due to increasing electrification initiatives to power distant and remote locations. Moreover, rising infrastructure modernization projects, growing integration with renewatble sources and huge power generation capacity of utility stakeholders likely to contribute significantly to the growth of the utility sector.

Clear directives aimed at boosting the integration of storage devices across solar power technologies, coupled with the rapid expansion of residential solar power installation, are set to favor the residential segment size.

The non-residential segment is anticipated to grow steadily due to the setup of new advanced commercial and industrial infrastructures coupled with increasing demand for energy security across the verticals.

By Ownership Analysis

Utility-Owned Segment Led Owing to Government and Non-Government Investments

Based on ownership, the market is trifurcated into customer-owned, third-party-owned, and utility-owned. The presence of different solutions providers & manufacturers of compact & small renewable energy systems in the region is expected to favor the customer-owned segment to rise.

The utility-owned segment held the largest battery energy storage market share in the global market in 2023. The rise in investment from the government & non-government utility companies will propel the demand for utility-owned BESS units in the coming years. Majority of power negration capacity is owned by utility stakeholders, hence subsequently is the largest consumer of Battery Energy Storage System solutions in the world.

The third-party-owned segment growth is backed by continuous partnerships by different players to establish BESS networks, especially across low-income areas.

By Capacity Analysis

Large Scale Segment to Dominate the Market Owing to Higher Adoption of BESS Technology

Based on capacity, the market is predominantly bifurcated into small scale (less than 1 MW) and large scale (greater than 1 MW). The large scale segment is projected to hold the major share of the market, owing to the significant usage of advanced BESS technologies at utility scale to simulate the operational capabilities of the grid networks mandated by regional regulatory policies.

Moreover, small scale segment is expected to witness substation growth during the forecast period. This is attributed to the rising adoption of small scale solar integrated energy storage systems in residential and commcercial sectors.

REGIONAL INSIGHTS

Based on geography, the battery energy storage market is segmented into Europe, North America, the Asia Pacific, and the Rest of the World.

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The Asia Pacific dominated the Battery Energy Storage System market globally in 2023 and is likely to maintain this trend during the forecast period, attributed to the greater adoption of BESS in China. China has been the major source of lithium cells in the world. Hence, Chinese battery manufacturers hold around 80% of the battery cell market and most of the remaining 20% of the companies rely on the lithium-ion cell components provided by Chinese companies. Moreover, China controls the majority of critical minerals required for battery cell manufacturing, consolidating its dominance in the global market by a huge margin and is expected to continue the same trend in the coming years.

North America battery energy storage market is likely to witness significant growth during the forecast period owing to the rising adoption of BESS in the U.S. As China controls the lithium-ion supply chain, the U.S. is actively exploring alternatives to lithium-based batteries through research and development efforts, ultimately supporting the growth of the market.

The U.K. is the front-runner in the Europe battery energy storage system market, while Germany is likely to be the fastest-growing market for BESS. This is attributed to the rising investment in BESS projects in these countries. For instance, in July 2023, Eco Stor, a System integrator, announced the plan to build a 300MW/600MWh energy storage system in Germany, one of the largest BESS projects across Europe. Regional market growth is also supported by growing investments in the expansion and modernization of grid infrastructure networks combined with energy security policies, stimulating demand for Battery Energy Storage System.

KEY INDUSTRY PLAYERS

Key Players Focus on Advanced Energy Storage Systems to Fortify its Position in the Industry

The global battery energy storage market dominated by a few major players and a significant number of other players delivering a wide range of products and solutions to bolster their market position. Additionally, the market is comprised of several small and medium-scale system integrators.

LG Energy, a branch of LG’s chemical company, is among the world's leading battery energy storage system providers. Recently, in January 2024, the company unveiled plans for ten grid-scale battery storage projects lined up for 2024.

Additionally, Samsung SDI, Total, Hitachi, and GE are among the leading players delivering numerous types of advanced energy storage battery systems and solutions. These participants also concentrate on R&D activities to extend their product reach across different applications and secure contracts for large-capacity projects.

LIST OF TOP BATTERY ENERGY STORAGE COMPANIES:

• GE (U.S.)


• ABB (Switzerland)


• Samsung SDI (South Korea)


• Hitachi Chemical Co., Ltd. (Japan)


• Siemens Energy (Germany)


• Total (France)


• LG Energy Solution (South Korea)


• Fluence (U.S.)


• Narada (China)


• VRB Energy (Canada)


• Kokam (South Korea)


• EVE Energy Co., Ltd. (China)


• Black & Veatch (U.S.)


• Hitachi Energy (Switzerland)

DEVELOPMENTS IN THE BATTERY ENERGY STORAGE SYSTEM MARKET:

• February 2024- LG Energy Solution agreed with WesCEF to expand and strengthen its lithium supply chain for competitive procurement. As per the agreement,  WesCEF is poised to supply up to 85,000 tons of lithium concentrate, a crucial raw material for cathodes.


• January 2024- Spearmint Energy announced the completion of the 300-megawatt Revolution BESS project. The Electric Reliability Council of Texas will be responsible for managing, distributing, and marketing the power. 


• August 2023- ENGIE announced an agreement to acquire Broad Reach Power, the company that specializes in battery storage and operates 350 MW worth of capacity along with 880 MW worth of additional capacity expected to be commissioned by 2024.


• February 2022- LG Energy Solution announced the completion of its acquisition of NEC Energy Solutions, a U.S.-based grid-battery integrator. This acquisition will help LG Energy Solution to merge energy storage system integration with battery manufacturing vertically.


• December 2021 – TotalEnergies completed the construction of a battery-based energy storage facility in Dunkirk, France. The facility has a capacity of 61 MW and a total storage capacity of 61 megawatt-hours (MWh). The project was chosen as part of the long-term plan rolled out by the French Electricity Transmission Network (RTE) in February 2020. The commissioning of the site is believed to be a breakthrough in the growth of TotalEnergies' battery energy storage capabilities.

REPORT COVERAGE

The research report offers a qualitative and quantitative in-depth analysis of the global industry. It further provides details on the adoption of BESS systems across several regions. The report provides a detailed competitive landscape by presenting information on key players and their strategies in the market. Information on trends, drivers, and market restraints can further help stakeholders gain valuable insights into the market.

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