The global energy storage system market is estimated to be valued at USD 49.34 Bn in 2024 and is expected to reach USD 79.87 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 7.1% from 2024 to 2031.
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Widespread emphasis on renewable energy sources and need for effective management of intermittent power supply from renewable sources is accelerating the deployment of energy storage systems. Favorable government policies and incentives promoting the adoption of clean energy through energy storage applications will further boost the market growth in the coming years. Transition towards decentralized grids and growing consumer preference for energy independence is also supporting the market growth globally.
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Insights By Technology: Pumped Storage: A Mature and Reliable Option for Large-Scale Energy Needs
In terms of technology, the pumped storage segment is expected to contribute 35.3% share of the market in 2024, due to its ability to handle massive amounts of energy on demand. Pumped storage works by pumping water from a lower reservoir to an upper reservoir during off-peak times when energy demand is low. This stored water is then released to generate hydroelectric power during peak demand periods, providing a reliable and cost-effective way to meet large energy needs.
Insights By End User: Grid Storage Dominates Due to Vast Energy Capacity Needs
In terms of end user, the grid storage segment is expected to contribute 33.3% share of the market in 2024, due to the immense energy capacity required by utilities and power grid operators. Meeting the diverse electricity demands of populations and industrial sectors requires large-scale energy storage solutions. Technologies such as pumped hydro, compressed air, and grid-scale lithium-ion batteries are currently the most economical options to handle substantial energy capacities.
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Regional Analysis:
Dominating Region: Asia Pacific
Asia Pacific is projected to lead the energy storage system market with 47.5% share of the market in 2024, driven by supportive government policies, tax incentives in countries like India, China, and Japan, and significant investments in renewable energy projects. The region's dominance is further bolstered by its status as a major hub for lithium-ion battery innovation, with leading companies spearheading research and development in advanced battery technologies essential for energy storage.
Fastest-Growing Region: North America
North America exhibits the fastest growth and is expected to dominate future expansion. Strong government backing for clean energy development to reduce fossil fuel import dependence as well as cope with increasing power demands is a major factor. Nations such as the U.S. and Canada have ambitious targets for renewable capacity additions over the coming years, necessitating energy storage deployment to support intermittent renewable sources.
Energy Storage System Market Outlook for Key Countries
A Leader in Clean Energy Transition in the U.S.
The U.S. energy storage system market is led by California with its robust policies to achieve carbon neutrality and modernize the electric grid. Companies like Tesla and Fluence have established a sizable presence supporting the state's clean power goals. The U.S. energy storage system market is experiencing rapid growth, driven by federal incentives and state-level policies. For instance, data published by The Conference of the Parties (COP) in 2023, The global energy storage capacity reached approximately 230 GW in 2022. According to Bloomberg NEF estimates, this capacity is forecasted to reach 650 GW by the end of this decade. However, the current installed capacity and projected trends are not sufficient to ensure a green energy transition.
China Dominates Energy Storage System Market with Record Growth and Cost Reductions
China leads the global energy storage system market, with substantial investments in renewable energy and storage solutions. For instance, data published by Statista in October 2024, in 2023, over 23 gigawatts in energy storage capacity had been added in China, which was a 221 percent increase compared to the previous year. Popular storage methods are pumped hydro and lithium-ion batteries.
India Accelerates Energy Storage System Market Growth with Policy Support and Major Investments
India continues to lead on the policy front with schemes boosting renewable capacity addition and interest in energy storage from both central and state governments. Reliance Industries is investing heavily in battery manufacturing to gain a foothold. India is actively advancing its energy storage capabilities through a series of government initiatives under the National Energy Storage Mission (NESM). In August 2023, the Ministry of Power released a comprehensive framework aimed at facilitating the development and deployment of ESS across the country. The framework outlines objectives such as improving grid reliability, supporting renewable energy integration, and fostering innovation in energy storage technologies.
Canada Advances Clean Energy Transition with Major Energy Storage Investments
Canada is investing in energy storage projects to support its clean energy transition. The country is focusing on integrating energy storage solutions to enhance grid reliability, manage peak demand, and facilitate the integration of renewable energy sources. In 2023, Ontario is developing the Oneida Energy Storage Project, a 250-megawatt (MW) battery storage system. This project, a collaboration between the Six Nations of the Grand River Development Corporation, Northland Power, NRStor, and Aecon Group, is set to become Canada's largest battery storage facility. It will enhance grid stability and support renewable energy integration.
Japan Prioritizes Energy Storage for Renewable Energy Growth and Energy Security
Japan is focusing on energy storage to support its renewable energy expansion and ensure energy security. The government has implemented policies and incentives to promote the adoption of energy storage systems, aiming to balance the intermittent nature of renewable energy sources and reduce reliance on fossil fuels. HDRE, a Taiwan-based company, entered the energy storage system in Japan market by securing a 20-year government subsidy for its decarbonization initiatives. The company plans to build 1.5 GW of energy storage systems in Japan over the next three years, involving a capital investment of approximately US$ 1.50 billion.
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Top Strategies Followed by Global Energy Storage System Market Players
Emerging Startups in the Global Energy Storage System Market
Innovative Technologies: Startups such as Stem and Anthropic are developing groundbreaking energy storage technologies using AI, predictive algorithms, and smart sensors. Products like virtual power plants optimize output, reduce costs, and increase reliance on renewables. Their success could transform centralized grid operations.
Sustainable Solutions: Rising startups also focus on sustainability. Form Energy aims to commercialize low-cost, long-duration iron-air batteries for utility-scale storage. This can facilitate increased adoption of intermittent renewables and help decarbonize the grid. Other examples are working on eco-friendly chemistries or recycled materials.
Market Contribution: Niche startups cater to specific customer demands, like those for portable power or electric vehicle charging. Partnerships with industrial giants and research initiatives help verify technologies and speed up market entry.
Key Takeaways from Analyst
The global energy storage system market is expected to witness significant growth over the coming years due to increasing demand for reliable and clean electricity. Major drivers for the market growth include rising investments in renewable energy projects and focus on decarbonization of energy systems. Governments across regions have introduced supportive policies and incentives to integrate more renewable sources into the energy mix. This is increasing the need for efficient energy storage technologies that can store surplus renewable energy for use when solar and wind resources are unavailable. Lithium-ion battery technology is currently dominating the market owing to its versatile usage and declining costs. Residential electricity consumers are also increasingly adopting battery storage to manage electricity bills.
However, volatile prices of raw materials can pose challenges to the stable supply of lithium-ion batteries. Additionally, development of newer and cost-effective technologies is important to meet the rapidly growing energy storage demand. The Asia Pacific region, led by China, is anticipated to continue leading the global energy storage system market owing to strong government support for clean energy adoption and large renewable energy projects in the region. North America and Europe are also attracting major investments in the development of sustainable and resilient energy infrastructure involving energy storage systems. Overall, the energy storage system industry is expected to grow multi-fold over the next decade.
Energy Storage System Market Report Coverage
Report Coverage | Details | ||
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Base Year: | 2023 | Market Size in 2024: | US$ 49.34 Bn |
Historical Data for: | 2019 To 2023 | Forecast Period: | 2024 To 2031 |
Forecast Period 2024 to 2031 CAGR: | 7.1% | 2031 Value Projection: | US$ 79.87 Bn |
Geographies covered: |
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Companies covered: |
Tesla, Inc., LG Chem Ltd., Samsung SDI Co., Ltd., Panasonic Corporation, BYD Company Limited, Siemens AG, ABB Ltd., Schneider Electric SE, Fluence Energy, Inc., Eos Energy Enterprises, Inc., Enphase Energy, Inc., AES Corporation, Saft Groupe S.A., Varta AG, and Kokam Co., Ltd. |
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Restraints & Challenges: |
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Market Driver - Increasing demand for renewable energy sources and grid stability
The global energy landscape is changing rapidly. There is increasing awareness about the need to transition to cleaner forms of energy to reduce carbon emissions and tackle climate change. As a result, many countries such as the U.S., Canada, and China have set ambitious renewable energy targets and are investing heavily in infrastructure to promote the use of renewables such as solar and wind power. However, one of the key challenges of renewable energy is that its generation is variable and depends on factors like availability of sunlight and wind speed.
Market Challenge - High initial costs of energy storage systems
One of the major challenges currently faced by the global energy storage system market is the high initial costs associated with these systems. The high battery and installation costs make energy storage projects uneconomical for many potential commercial and residential customers. While technology prices are declining over time, energy storage systems still entail a significant capital outlay for businesses and consumers. This poses a major barrier for widespread adoption, especially in price-sensitive markets. Additionally, the return on investment timelines can be quite long for energy storage assets.
Market Opportunity - Growth of electric vehicles (EVs) driving demand for storage solutions
One major opportunity for this market is the rapid growth expected in the electric vehicles industry. As EVs become more popular with consumers, worldwide EV sales are projected to increase drastically over the next decade. This rise in EVs on roads will spur demand for large-scale stationary storage solutions that can charge EV batteries and also feed power back to the grid during periods of high energy demand. Auto companies and utilities are already partnering to deploy vehicle-to-grid (V2G) technology that uses EV batteries for energy storage networks. Furthermore, governments and businesses are supporting widespread EV adoption through incentive programs, regulations, and investment in charging infrastructure.
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About Author
Sakshi Suryawanshi is a Research Consultant with 6 years of extensive experience in market research and consulting. She is proficient in market estimation, competitive analysis, and patent analysis. Sakshi excels in identifying market trends and evaluating competitive landscapes to provide actionable insights that drive strategic decision-making. Her expertise helps businesses navigate complex market dynamics and achieve their objectives effectively.
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