Electricity storage systems will reach a $150 billion turnover by the end of the decade

The world economy’s dependence on fossil fuels is a challenge to deal with not only by increasing renewable sources but also with mass energy storage, an emerging technology that is rapidly gaining popularity. This makes up the battery energy storage system (Bess) market, a new steadily growing market full of opportunities: the flexibility offer by storage systems will make them a central part of applications such as Peak Shaving as well as optimizing self-consumption and back-up power. Data show that Bess market will double by 2030.

Producing energy is not enough: how to store it

Energy storage is a little-known issue with high technical complexity, mainly due to the non-constant nature of renewable sources that makes this practice really difficult especially for self-consumption.
Another crucial factor is the role of energy storage in the electrification of activities not directly connected to the power grid, such as electric cars charge.
Despite the sensitivity and complexity of the topic, a McKinsey analysis finds that more than $5 billion was invested in Bess in 2022, nearly triple the previous year’s amount, and predicts that the market for Bess systems will double to $120-150 billion by 2030.
The budget will be divided into three segments: public-scale front-of-the-meter (Ftm) installations, which typically exceed ten megawatt-hours (MWh); commercial and industrial behind-the-meter (Btm) installations, which range from 30 kilowatt-hours (kWh) to ten MWh; and residential Btm installations, which are less than 30 kWh.
The batteries used for Bess systems change according to the specific needs of the application, but the main ones are lithium-ion batteries, which offer a combination of high energy density, long life, and low weight. It is estimated that lithium demand for energy storage applications will increase by 20 percent per year in the coming years.

Growth predictions

Public-scale installations will grow the most, at 29% per year for the next ten years. Moreover, the 450-620 GWh of annual installations projected for 2030 would give the Bess in this segment a share of up to 90% of the total market in that same year.
In the long term the segment will grow thanks to the construction of solar and wind farms, with an increase in demand for short-term storage batteries.
As for the commercial and industrial sector, which includes electric vehicle charging infrastructure, it is expected to have a compound average annual growth of 13% by 2030, which should enable to reach between 52 and 70 GWh of annual increases. According to the McKinsey Center for Future Mobility, electric vehicles will grow from about 23% of all global vehicle sales in 2025 to 45% in 2030. This growth will require rapid expansion of regular charging stations and superchargers, putting pressure on the network infrastructure.
Finally, according to the prediction of about 20 GWh in 2030, residential battery installations represent the smallest sector but will offer opportunities for innovation and differentiation: from traditional home storage to the creation of microgrids in remote communities. Moreover, from a sales perspective, they can be combined with photovoltaic panels or integrated into smart homes or home charging systems for electric vehicles. This will create a market based on tailored products that will help residential users achieve goals of self-sufficiency, optimizing self-consumption, and reducing peak energy consumption, bringing higher margins.

The Bess Market in Italy

The Italian Government is promoting the BESS development with a series of measures, such as tax incentives and favorable network tariffs. Also for this reason, BESS Italian market is growing rapidly: according to ANIE data, the national association of electric utilities, 123 MW of Bess were installed in Italy during 2022 for a total of 264 MWh. Most of the systems have been installed for the self-consumption of renewable energy, but systems for the optimization of the electricity grid and backup power supply are increasing.
In addition, the country’s renewables-focused capacity auctions, by offering a mechanism to repay the capacity provided, become an important tool to promote the development of renewables and provide space for Bess operators, helping to improve the electricity system flexbility by reducing the need for new infrastructure.

Who stands to gain?

The Bess investment chain has many players, starting with the companies that interact with the FTM system, whose revenue models are the public-scale front-of-the-meter Bess, i.e., connected directly to the electricity grid, and who are highly dependent on the regions administrations. These pursue, for the most part, a strategy of revenue stacking, the ability to generate revenue from different services or activities with a single power generation or storage system, thus lending themselves to participation in ancillary services, arbitrage and capacity auctions.
Storage components manufacturers, including cells and battery packs, inverters, enclosures and other components, are a key part of the Bess value chain with about half of the market’s profits, while system integrators are expected to get another 25-30% of the available revenue stream. Finally, sales activities, project development organizations and other customer acquisition and commissioning activities will get between 10% and 20% of the profit pool.