Global Battery Energy Storage Systems Market By Battery Type(Lithium-Ion Battery, Lead Acid Battery, Flywheel Battery, Other Battery Types), By Connection Type(On-grid, Off-grid), By Ownership (Customer-Owned, Third-Party Owned, Utility-Owned), By Energy Capacity(Below 100 MWh, Between 100 to 500 MWh, Above 500 MWh), By Application (Residential, Commercial, Utility) as well as By Region and Companies - Industry Segment Outlook, Market Assessment, Competition Scenario, Trends and Forecast: 2023-2033

Market Overview

The global Battery Energy Storage Systems market size is expected to be worth around USD 56.2 billion by 2033, from USD 5.4 billion in 2023, growing at a CAGR of 26.4% during the forecast period from 2023 to 2033.

This market will be strengthened by a growing demand for reliable, continuous power supply solutions from various end-use sectors, such as medical, telecom, marine, and data centers.

Note: Actual Numbers Might Vary In Final Report

Key Takeaways

• Market Growth Projection: The Battery Energy Storage Systems market is expected to surge significantly, reaching approximately USD 56.2 billion by 2033 from the current valuation of USD 5.4 billion in 2023, marking a striking CAGR of 26.4% during the forecast period.
• Dominant Battery Types: Lithium-ion batteries take the lead in market revenue, constituting 53.3% of the market share due to their lightweight nature, cost-effectiveness, and growing infrastructural spending in residential and commercial sectors.
• Emerging Technologies: Flywheel battery technology is anticipated to witness the fastest growth. Offering uninterrupted power supply, instant response, and cost-effectiveness, flywheel batteries are gaining traction due to their longer service life and lower maintenance costs.
• Connection Types: On-grid connections hold a dominant market position, capturing over 63% of the market share. These systems play a crucial role in stabilizing power grids and integrating renewable energy sources like solar and wind power efficiently.
• Ownership Models: Different ownership models exist—customer-owned, third-party-owned, and utility-owned systems—each catering to specific energy storage needs. Customer-owned systems offer end-user control, while utility-owned systems support grid stability.
• Energy Capacity Segmentation: The market is segmented by energy capacity, ranging from below 100 MWh to above 500 MWh. These segments cater to localized, medium-sized, and large-scale energy storage needs across residential, commercial, and utility applications.
• Application Analysis: Datacenter applications hold a significant share and are expected to grow substantially due to the need for uninterrupted power supply. The telecom sector is also driving market growth by replacing diesel generators with efficient batteries.
• Market Drivers and Restraints: Accelerated deployment of grid energy storage systems aids in grid modernization efforts, stabilizing grids, and integrating renewable energy sources. However, high initial investment costs remain a challenge, especially for smaller enterprises.
• Regional Analysis: Asia Pacific leads with 43.8% of the market revenue in 2023, driven by rapid population growth, increased power consumption, and the penetration of renewable energies.
• Key Market Players: Major industry players such as EnerSys, Siemens AG, LG Energy Solutions, ABB Ltd., Tesla, and others are actively participating, driving innovation, and expanding their market offerings.

Battery Type Analysis

With 53.3% of market revenue, the lithium-ion battery segment accounted for the highest revenue share. Due to its low weight, cost, and limited coverage, lithium-ion battery energy storage systems are projected to register an increase in demand. The market for lithium-ion batteries will continue to grow due to increased infrastructural spending by both the residential and commercial sectors.

Governments of different countries are focusing on reducing adverse effects on the environment of the energy sector and it is leading to an increase in the deployment of battery energy storage systems in public and residential utility applications.

The second-largest share of the market for battery energy storage systems was accounted for by the lead-acid battery segment. The cost of lead-acid batteries is lower than that of other batteries. They can also be manufactured using low-tech equipment.

This will allow for industry growth. However, the rise of alternative battery technology like Li-ion and volatile material prices are likely to slow down the revenue growth trajectory of this market over the next decade.

Flywheel battery technology is expected to grow the fastest due to these products being able to offer continuous uninterrupted power supply. It also has instant response, frequency regulation, quality improvements in terms of electricity, and response. Flywheel batteries can be more cost-effective than other options. The flywheel’s longer service life and lower maintenance costs are other main reasons.

By Connection Type

In 2023, On-grid connections held the dominant market position in Battery Energy Storage Systems (BESS), capturing over 63% of the market share. On-grid systems are crucial for stabilizing the main power grid, managing peak demands, and efficiently integrating renewable energy sources like solar and wind power.

Off-grid connections represent another segment, catering to areas without access to the main power grid. Off-grid BESS solutions are essential for providing reliable power in remote locations or regions where establishing traditional power infrastructure is challenging.

The significant market dominance of On-grid connections highlights their essential role in stabilizing power grids and supporting renewable energy integration. Off-grid connections, meanwhile, are critical for ensuring reliable power access in remote or underserved areas where traditional power supply options are limited.

By Ownership

Customer-owned systems are owned and managed by the end-users themselves, enabling them to have control over their energy storage solutions. These systems cater to individual needs, allowing consumers to manage their power usage efficiently.

Third-party systems are owned and operated by entities other than the end-users or utilities. These entities offer energy storage services to customers under various agreements or contracts, providing flexibility and accessibility without the direct ownership of the system.

Utility-owned systems are owned and managed by utility companies, playing a crucial role in grid stability, load management, and supporting overall energy infrastructure.

Each ownership model in the BESS market offers unique advantages, whether it’s customer control and autonomy, third-party flexibility, or utility-driven grid support. These models cater to diverse energy storage needs and preferences within the market.

By Energy Capacity

Below 100 MWh: This segment comprises smaller-scale energy storage systems suitable for localized applications or smaller energy demands. These systems cater to residential, small commercial, or community-level needs.

Between 100 to 500 MWh: Falling within a moderate capacity range, these systems serve medium-sized applications such as larger commercial or industrial setups. They offer a balance between scalability and capacity to meet diverse energy storage requirements.

Above 500 MWh: These systems represent large-scale energy storage solutions, catering to significant industrial, utility, or grid-level demands. They provide substantial energy reserves and support grid stability, especially in large utility-scale applications.

Application Analysis

Datacenter applications accounted for a significant market share in 2023, and it is expected that this segment will grow at a substantial CAGR over the forecast period. Data centers need an uninterrupted power supply. The financial losses that can be caused by power outages are significant. Annual losses of around US$50 million in the USA are due to power outages and other related problems.

Energy dips and spikes can cause equipment in data centers to suffer from damage, leading to losses. The line-interactive UPS can also be used as a filter to refine power entering the UPS. This adjusts the output to ensure internal systems have an uninterrupted supply.

For the supply of electricity to the consumers, utility grids are used by battery energy storage systems which reduces energy bills for customers.

Market growth for battery energy storage systems is expected to be boosted by the replacement of diesel generators with highly efficient batteries in the telecom industrial sectors.

Market players in the telecom industry have agreements with battery storage system manufacturers. This allows them to provide a continuous, cost-effective power supply. The rise in telecom subscriptions has led to a spike in telecom tower installations, which is expected positively to impact the battery storage system market. The CAGR for the ‘Other Applications’ segment is expected to be 27% over the forecast period.

The forecast period will also index an increase in product demand due to the augmentation of renewable energy sources and the development of numerous solar and wind renewable energy projects. Micro-grid development is an area of great potential that can be used to aid in military operations and in disaster relief.

Additionally, the rapid development of grid storage infrastructure and the support provided by governmental regulations are likely have a positive effect on this market’s growth trajectory.

Note: Actual Numbers Might Vary In Final Report

Key Market Segments

By Battery Type

• Lithium-Ion Battery
• Lead Acid Battery
• Flywheel Battery
• Other Battery Types

By Connection Type

• On-grid
• Off-grid

By Ownership

• Customer-Owned
• Third-Party Owned
• Utility-Owned

By Energy Capacity

• Below 100 MWh
• Between 100 to 500 MWh
• Above 500 MWh

By Application

• Residential
• Commercial
• Utility

Drivers

Accelerated deployment of grid energy storage systems in ongoing grid modernization on projects

Grid modernization efforts focus on integrating renewable energy like solar and wind power into the grid. However, these sources are unreliable, leading to power fluctuations. Battery energy storage systems tackle this by storing extra energy when there’s a surplus and releasing it when needed or when renewables aren’t active.

This stabilizes the grid and guarantees a steady power supply. They help grid operators save excess electricity and boost reliability and flexibility in generating, transmitting, and distributing power.

During transmission, these systems handle various tasks like deferring asset use, regulating frequency, suppressing harmonic effects, supporting voltage, and maintaining power quality. They also aid in shifting energy timing, leveling power usage, and managing peak loads, enhancing the reliability of renewable energy and overall grid performance.

Restraints

High initial investment costs of installing battery energy storage systems

Battery energy storage technologies, like lithium-ion, flow, and lead-acid batteries, need significant upfront investment due to their high energy capacity and better performance. Lithium-ion batteries are expensive but offer high energy density, low self-discharge rates, and need minimal maintenance.

However, their costs are expected to decrease in the future. They’re commonly used in electric vehicles due to their lightweight nature, compact size, and large capacity. On the other hand, flow batteries require substantial initial investment for manufacturing, posing a challenge to market growth.

Moreover, supporting infrastructure like power conversion systems, control systems, and safety measures add to the overall system costs. For flow batteries, the expenses cover capital, components, materials, installation, and upkeep, posing a significant investment challenge for smaller enterprises.

Opportunity

Reduction in prices of lithium-ion batteries

The cost of lithium-ion batteries has significantly dropped due to tech advancements, larger-scale production, and better manufacturing efficiency. This decline has made battery energy storage systems (BESS) more budget-friendly and accessible for various uses.

With a lower cost per kilowatt-hour (kWh) of energy storage, businesses can invest in larger and more powerful systems, ensuring they can handle power needs during outages or high-demand periods. This cost reduction in lithium-ion batteries is a major driver for the BESS market growth.

Cheaper batteries make BESS a more viable, competitive, and appealing solution for ensuring a reliable and uninterrupted power supply.

Challenges

Difficulties pertaining to the installation of battery energy storage systems in remote and isolated locations

Setting up battery energy storage systems in remote areas poses challenges due to limited or unreliable grid power. Establishing a dependable power source for installation and maintenance might require alternative options like solar panels.

Maintaining these systems in remote areas can be tough due to limited local service providers and spare parts access. Additionally, harsh environmental conditions like extreme temperatures, high humidity, or corrosive atmospheres in these isolated locations can affect system performance and lifespan, demanding extra protection and durability measures.

Regional Analysis

The Asia Pacific was responsible for 43.8% of this market’s revenue in 2023. Rapid population growth has caused an increase in electrical power consumption across developing countries. To prevent power outages, grid operators have been installing battery energy storage systems over the past seven years to increase grid flexibility and improve grid flexibility.

Furthermore, this region will index increased penetration of renewable energies and a growing demand for distributed power generation in many Asian Pacific economies. This is expected to increase regional market growth prospects in the process.

In the Asia-Pacific, countries such as Australia, Japan, and India are experiencing rapid population growth. This tends to increase the demand for electricity and uninterrupted power, which in turn will boost the growth of the regional battery storage market over the forecast period. China emerged as the Asia-Pacific’s largest country for battery storage deployment in 2023.

China’s battery energy storage market will continue to grow due to its lower technology costs and greater technological advancements. The unit cost of lithium batteries has fallen by half in recent years compared with industry benchmarks. Additionally, industry growth will be driven by innovative business cases and manufacturing economies that are large-scale.

North America is second in this market for battery energy storage systems. This is due to the U.S. contributing the most to regional growth. Energy storage is an integral part of energy planning in the U.S. Owing to this, the safety of these storage systems is one of this industry’s top priorities.

After the explosion at the Arizona Public Service facility, it was imperative to establish safety regulations for storage technology and energy storage system integration monitoring. North American nations such as the U.S., Canada, and Mexico have well-developed energy markets.

These markets include power generation, capacity and transmission, as well as pollutant emission trading permits and renewable credits. Canada and the United States are major contributors to the battery storage market’s revenues in North America.

Note: Actual Numbers Might Vary In Final Report

Key Regions and Countries

• North America
  • US
  • Canada
  • Mexico
• Europe
  • Germany
  • UK
  • France
  • Italy
  • Russia
  • Spain
  • Rest of Europe
• APAC
  • China
  • Japan
  • South Korea
  • India
  • Rest of Asia-Pacific
• South America
  • Brazil
  • Argentina
  • Rest of South America
• Middle East & Africa
  • GCC
  • South Africa
  • Israel
  • Rest of MEA

Competitive Landscape

There are many prominent players in this global industry that offer a wide variety of products and solutions to boost their respective market position. There has been steady participation among several key regional and global players, as well as small and medium-sized system integrators.

Key Market Developments Siemens Energy and EnergyNest entered into a long-term partnership in June 2023 to supply industrial users with thermal energy storage systems.

Market Key Players

• EnerSys
• BYD Company Limited
• EVE Energy
• Siemens AG
• LG Energy Solutions
• Kokam
• Narada Asia Pacific
• ABB Ltd.
• Tesla
• Fluence Energy
• General Electric
• TotalEnergies
• Tata Power Company Limited
• Samsung SDI
• Nissan Motor
• VRB Energy and Black & Veatch Holding Company

Recent Development

In June 2022, General Electric announced its recent renewable hybrid factory that expanded its manufacturing capacity for power electronics systems in solar and battery energy storage We will customize the research for you, in case the report listed above does not meet your exact requirements. Our custom research will comprehensively cover the business information you require to help you arrive at strategic and profitable business decisions.

In May 2022, Toshiba Corporation introduced the 125VDC SCiB Energy Storage System (ESS), which combines the dependability of Lithium Titanium Oxide (LTO) battery chemistry with a flexible and expandable cabinet design. It is made suitable for integration with Uninterruptible Power Systems (UPS) or DC Load applications.

In February 2022, LG Energy Solution has successfully acquired NEC Energy Solutions, a grid battery integrator based in the United States, from its parent company, NEC Corporation. This strategic move aims to enhance LG Energy Solution’s Energy Storage System (ESS) business portfolio by expanding its offerings.

Report Scope