Battery Storage Industry Seeing Massive Growth

The battery/energy storage industry saw massive growth in the final quarter of 2020 with close to 2.2 gigawatt-hours (GWh) of energy storage systems being put into operation.

The battery/energy storage industry saw massive growth in the final quarter of 2020 with close to 2.2 gigawatt-hours (GWh) of energy storage systems being put into operation. This represents an increase of 182 percent from the previous quarter where records were set. The data was supplied by energy data firm Wood Mackenzie.

The record fourth quarter of 2020 added to the total of 3.5 GWh installed for all of 2020, which was more than the 3.1 GWh installed in all of the previous six years combined. 

“This is the hallmark of a market beginning to accelerate exponentially, and momentum will only increase over the coming years,” Dan Finn-Foley, Wood Mackenzie’s head of energy storage, said in a press release.

What are energy storage systems?

Energy storage systems help to capture power when solar or wind energy supply exceeds demands. Homeowners, businesses, and electric utilities can use these systems to produce electricity that is emission-free when there is no renewable energy available for their properties.

California leading the pack in energy storage systems

California led the nation in energy storage systems in 2020. The state experienced a series of rolling blackouts caused by the climate throughout the year. According to the report from Wood Mackenzie, California led all three segments of the market: residential, non-residential, and front-of-the-meter.

Texas is expected to experience a growth in energy storage systems in 2021 following the cold snap that caused wind turbines and power plants in the Lonestar State to go offline in February 2020.

“We expect an uptick in home battery sales in Texas in the aftermath of February’s devastating outages,” Chloe Holden, a Wood Mackenzie research analyst, said in the press release.

2030 could signal huge growth in the industry

The Energy Storage Association has set a goal of deploying 100 GW by the year 2030. 

“If you look at what’s going on in storage, in about 10 years, 2030, the battery industry will grow about 10 times bigger,” Yi Cui, the director of Stanford University’s Precourt Institute for Energy, said at a recent event. “That’s reaching somewhere about 2 terawatt-hours of the battery capacities. It’s gigantic.”

A big difference over the past decade

Beginning in 2010, batteries were typically only used to provide power to phones, computers, toys, and flashlights, among other items. Now, in 2021, batteries are powering vehicles and even homes.

“Capturing the massive economic opportunity underlying the shift to controls and battery-based energy systems requires that planners, policymakers, regulators, and investors take an ecosystem approach to developing these markets,” sustainability-focused research firm Rocky Mountain Institute said.

UBS believes that the battery/energy storage industry will only continue to grow over the next decade. UBS claims that the industry should grow by close to $426 billion. UBS also estimates that during the upcoming decade, energy storage costs will fall between 66% and 80%. 

“Eventually this will come down to some industry leaders who make some money,” JMP Securities’ Joe Osha said. “I think all these companies are going to do a good job of delivering declining prices for [electric vehicle] manufacturers over the course of the next 5-10 years. I am not so sure that they are going to generate great stockholder returns in the process.”

Lithium-ion batteries leading the charge

Lithium-ion batteries were introduced in 1971 and didn’t become widely popular until 1991 when Sony used them for their handheld video recorders. Lithium-ion batteries can now be found in smartphones, planes, medical devices, and even the international space station.

How important has the development of the lithium-ion battery been? The Nobel Prize in Chemistry was awarded this year to the three scientists who created it.

“Over the past decades, this development [lithium-ion batteries] has progressed rapidly, and we can expect many more important discoveries to come in battery technology,” the Royal Swedish Academy of Sciences said in October. “These future breakthroughs will undoubtedly lead to further improvements in our lives, not only for our convenience, but also with respect to global and local environments and, ultimately, the sustainability of our entire planet.”

The auto industry is moving further towards battery power

Ford is just one automaker making a commitment to energy storage systems in its new vehicles. Tesla was the very first automaker to release a vehicle powered by a battery alone when the Roadster was released to the market in 2008.

Ford recently released its all-electric Mustang Mach-E in November. The Mach-E is part of the company’s plan of $11 billion to create 40 all-electric and hybrid models by the year 2022. Volkswagen is in the battery storage industry as well, increasing its goal of 50 electric vehicle models by 2028 to 70.

“Although the concept of electric vehicles is not new, what is different in this automotive cycle is the availability of reliable and low-cost batteries that possess excellent energy and power capabilities in a practical form factor,” Cowen analyst Jeffrey Osborne said when addressing clients.

As of July 2021, Tesla is the largest manufacturer of electric vehicles in the world but should see stiff competition in the near future.


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