A battery energy storage system (BESS) is an integrated system that uses rechargeable batteries to store electrical energy for later use. With the increased integration of intermittent renewable energy resources such as wind and solar into the grid, utility-scale BESS installations are critical for balancing energy supply and demand, enhancing grid stability, and for providing backup power during outages.
A typical BESS includes batteries, an AC/DC power conversion system, an energy management system that monitors and controls the BESS’ operations, a thermal management system that maintains optimal temperatures to ensure battery efficiency and longevity, and safety systems that protect against overcharging, overheating, and other potential hazards.
In this blog post, we’ll explore the fast-growing BESS market, the factors driving that growth, and emerging trends shaping the future of energy storage.
The exponential growth of the BESS market
The global BESS market size is currently estimated to be worth $7.8 billion. The market is rapidly expanding and is expected to reach $35.6 billion by 2029, growing at a compound annual growth rate (CAGR) of 26.9%. New BESS installations added up to 74 gigawatt-hours (GWh) worldwide in 2023, up from 27 GWh the previous year. Capacity is expected to grow at a CAGR of 24% between 2024 and 2030, surpassing 400 GWh by the end of the decade.
Figure 1 Source: fDi Intelligence
During the first half of 2024, companies pledged to complete 35 standalone BESS projects in the U.S., worth a record $11.45 billion. Analysis from market research firm fDi Intelligence reveals that California and Texas are leading the way in terms of BESS operating capacity and planned investments.
BESS market growth drivers
Here are a few of the key factors driving BESS market growth.
1. Increasing renewable energy capacity
Battery energy storage mitigates the intermittent nature of wind and solar, one of the primary challenges with integrating more renewable energy resources into the grid. For example, a BESS can store solar energy during the day, dispatching at night once the sun’s set. As the energy mix of the country becomes greener, BESS will help ensure the reliability of the grid.
2. Government incentives and investments
The U.S. government is betting big on battery technologies, with agencies from the Department of Energy (DOE) and Department of Defense (DOD) earmarking billions in federal funds to drive technological advancements.
3. Grid modernization projects
Grid modernization projects, such as virtual power plants and demand and capacity response programs are on the rise. These systems, many of which require a BESS, improve grid resilience by providing immediate backup power during outages or disruptions.
Trends shaping the future of energy storage
There are two key trends shaping the future of energy storage.
Technological advancements
Battery manufacturers and research organizations are working to enhance storage capacity, charging speeds, safety, and battery lifespan to make systems more economically viable for residential and commercial applications. Promising new chemical, thermal and electrochemical battery designs are being tested or demonstrated, including utility scale deployment of non-lithium, long duration energy storage (LDES) systems that can store energy for eight to 12 hours, much longer than shorter duration lithium ion chemistries.
Artificial intelligence
Manufacturers are increasingly integrating artificial intelligence into BESS, leveraging the power of AI to enhance battery performance, improve efficiency, and optimize charging and discharging cycles.
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