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Energy Storage Installations Surge by 61% This Year

Writer's picture: Energy BoxEnergy Box

Despite a challenging year for battery manufacturers, the stationary storage market is experiencing significant growth in 2024, according to BloombergNEF.



Battery and cell makers have struggled with declining margins and revenues due to slower-than-expected global electric vehicle (EV) sales, leading to reduced volumes.

However, BloombergNEF (BNEF) reports a 61% increase in the stationary storage market and a 43% decrease in turnkey system prices from 2023, with prices hitting a record low of $115 per kilowatt-hour for two-hour energy storage systems in April.


Analysis of annual lithium-ion battery production by Chinese manufacturers reveals that stationary energy storage has surpassed consumer electronics as the second-largest application for battery production. The global stationary energy storage market is projected to nearly triple by 2023.


While EVs still dominate battery demand, the ratio of EV battery demand to stationary battery demand has decreased from 15:1 to 6:1 over the past four years. The stationary storage segment is growing rapidly, driven by mandates in China for co-location with solar and wind projects, the US Inflation Reduction Act, and similar measures in Europe, Japan, and Latin America, with Germany and Italy leading the residential market.

In terms of battery chemistry, BNEF forecasts that by 2030, the market share of NMC (nickel, cobalt, and manganese) batteries will drop to around 1%, while the more affordable and potentially safer LFP (lithium iron phosphate) batteries will gain market share.


Shifting market dynamics

Early battery energy storage systems (BESS) projects primarily sold ancillary services to the grid, such as voltage support and frequency regulation, generating significant revenues. However, these markets have since contracted.

This contraction has led to substantial growth in energy-switching applications for BESS. In China, some provinces now require solar projects to include energy storage. BNEF's forecast for 2024 predicts that these applications will account for around 70% of all demand, up from 2023.


Future demand and supply challenges

Future demand for batteries will largely depend on the recovery of the EV market and the demand for associated batteries, as well as the price of raw materials like lithium carbonate, which remains 80% lower than its 2022 peak.

On the supply side, low prices are prompting mining and refining companies to halt planned investments or idle assets. Chemical company Albemarle recently paused its $1.3 billion lithium refinery project in South Carolina, with CEO Kent Masters citing current low prices as a deterrent to investment. Similarly, Australian lithium companies have delayed expansion plans or closed mines throughout 2024, with Arcadium Lithium announcing a pause in investment for two of its four expansion projects this week.

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