IHS Markit has increased its energy storage forecasts, expecting a fivefold rise in annual installations from 2019 to 2025.
Despite the impact of COVID-19, the energy storage market is on track to rise, with global installations growing by more than 5 gigawatts (GW) in 2020, as per a new report from IHS Markit.
In 2019, the energy storage space experienced its first year-on-year decline, but a strong start of the year and a quick bounceback in the US and China have helped the market make a turn.
“The fact that the energy storage industry is proving resilient and has resumed a growth trajectory during the pandemic and subsequent economic shock proves that the 2019 market retraction was an aberration,” said Julian Jansen, research manager at IHS Markit.
“The 2020 rebound highlights the importance of the technology and the strength of the underlying market fundamentals,” he added.
IHS Markit has increased its forecasts, expecting a fivefold rise in annual installations from 2019 to 2025, reaching 15.1 GW or 47.8 gigawatt hours.
Annual grid-connected energy storage hardware revenues are forecast to more than double, jumping from US$4.2 billion in 2020 to US$9.5 billion in 2025. That’s despite falling battery module prices, which are expected to drop 32 percent in the next five years.
“The increasing competitiveness and critical role of battery energy storage assets in supporting the decarbonisation and resilience of the electricity system means that opportunities for energy storage continue to develop despite the turmoil caused by the COVID-19 pandemic,” Jansen added.
Looking ahead, IHS Markit expects the US to remain the largest market, while China is forecast to install 6.5 GW through 2025 and be the second largest market throughout the 2020 to 2025 period.
In Europe, the outlook has strengthened as new opportunities develop in a wide range of countries.
Over in Australia and the UK, wholesale arbitrage is becoming a major driver for front-of-the-meter battery energy storage, signaling a turning point as merchant energy storage breaks into a new opportunity.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.