Distributed Energy Storage Market Review 2022-2023

Gabrielle Anderson Release: November 30, 2022 Update: December 9, 2022

The energy storage sector is heavily reliant on Distributed Energy Storage Systems (DESS). They provide several grid benefits and can be deployed in a variety of locations. This market is driven by a number of factors. This article delves into these factors. It also looks at potential problems. Continue reading to learn more about the DESS market.

Distributed Energy Storage Market Overview 2022

The Distributed Energy Storage industry is predicted to expand rapidly. As new market regulations allow for the deferral of transmission upgrades and the use of intermittent renewables, this business is prepared to grow substantially. These modifications will increase grid dependability and resilience. These insights should be useful to policymakers, technology developers, and grid operators as they plan for the next wave of storage adoption.

The cost of batteries is a big issue for the industry. The price of lithium, a critical mineral for automotive batteries, is currently more than seven times higher in May 2022 than in May 2021. Russia's conflict with Ukraine has disrupted supplies and global demand for batteries, causing prices to soar. Furthermore, high pricing may stymie the expansion of the Distributed Energy Storage market.

Another expanding market for distributed energy storage systems is the Asia-Pacific area. The market is anticipated to reach US$2.6 billion during the forecast period. The rising usage of renewable energy sources will boost market expansion. Furthermore, China is the world's most populous country, which increases energy demand.

Distributed Energy Storage Market Drivers 2022

The current market for distributed energy storage is driven by a variety of market forces. While power costs and renewable energy penetration are important market drivers, there are a number of additional factors that influence demand for this technology. The article that follows will examine some of these key drivers and their impact on the market.

For starters, a battery storage facility is far less expensive than a traditional combustion turbine. Furthermore, battery storage has the potential to engage in the capacity market. The second market driver is the rising economic competitiveness of battery storage. The importance of batteries to grid reliability decreases as renewable energy adoption rises. This may result in a decline in the relative importance of energy markets.

Another market driver is a greater readiness to invest in a startup's early phases. Early-stage funding is increasing, according to the IEA World Energy Investment 2021 study. This is encouraging news for the energy storage business. Investors are not only looking for new firms, but they also comprehend the move from traditional to inverter-based resources.

The International Energy Agency (IEA) is a Paris-based autonomous intergovernmental organisation, established in 1974, that provides policy recommendations, analysis and data on the entire global energy sector, with a recent focus on curbing carbon emissions and reaching global climate targets, including the Paris Agreement. The 31 member countries and 11 association countries of the IEA represent 75% of global energy demand.

Furthermore, rising investments in environmentally friendly EVs are propelling the battery industry. This is because of a government program to promote the use of these vehicles and reduce vehicular pollution. Furthermore, lithium-ion batteries have high energy density, energy efficiency (EE), and storage capacity, making them suitable for usage in electric cars. They also have low maintenance requirements and extensive life cycles. These and other factors are propelling the market for distributed energy storage.

Distributed Energy Storage Systems

Distributed Energy Storage Market Challenges 2023

States other than California and Texas are beginning to appreciate the value of grid-scale energy storage. Utility response is being driven by clean energy ambitions and increased load. As a result, connectivity queue volumes are increasing. Opportunities for hybrid storage are also appearing in the southern WECC region. Furthermore, as markets mature, PJM/MISO/Southeast markets are showing potential in the second part of the forecast.

Higher raw material costs are eroding system component pricing advantages. As a result, battery module prices have risen the most. However, improved standardization has helped to keep GSUs, inverters, and BOS prices stable. Furthermore, population increase in many regions of the world is fueling growth in the energy storage industry.

Despite the good deployment forecast, there are substantial challenges. Many markets are being hampered by regulatory hurdles and limited access to power markets. Furthermore, interconnection delays and supply chain pressures have stifled development. Despite these obstacles, deployments are likely to increase further, particularly in the United States and China. China recently announced a national program to accelerate energy storage deployment. The country's goal is to reach 30 GW by 2025.

Despite these obstacles, the market is expanding at an unprecedented rate. According to a new MarketWatch study, more than 1 gigawatt of battery storage is predicted to be deployed in the United States by 2022, and a record quarter was achieved in the first quarter of 2021. Furthermore, more than two gigatonnes of additional capacity are scheduled to be added in