By Leman Zeynalova
China is expected to become the largest energy storage market in Asia Pacific by 2024, Trend reports citing Wood Mackenzie.
“China’s cumulative energy storage capacity is projected to skyrocket from 489 megawatts (MW) or 843 megawatt-hours (MWh) in 2017 to 12.5 gigawatts (GW) or 32.1GWh in 2024. This represents an increase in the installed base of 25 times,” reads a report by the company.
Policy incentives have been the main drivers behind China’s rapid growth in storage deployments in 2018, already pushing China to become the second largest market behind South Korea in terms of annual deployment, said Wood Mackenzie.
“The market deployed 580MW (1.14GWh), reaching a cumulative market size of 1.07GW (1.98GWh) last year. Front-of-the-meter (FTM) storage led growth, up five-fold in terms of installed power capacity compared to 2017. State Grid Corporation of China, a state-owned utility company, has deployed 452MWh of grid-connected FTM pilot projects, which accounted for 83 percent of FTM market growth nationwide last year. These pilot projects were supported by government research grants,” said the report.
Dr Le Xu, senior analyst at Wood Mackenzie, said that based on current project economics and without policy support, utilities have limited incentive to scale-up investment in FTM storage as part of grid infrastructure.”
“This is set to change next year. According to China’s National Energy Administration, the ancillary services market will be transitioning from a basic compensation mechanism to a market integrated with spot energy prices by 2020. That, along with maturity in technology and subsequent cost reduction, are key factors that will contribute to the exponential growth in the nation’s energy storage market through to 2024.”
Reportedly, of storage projects deployed to participate in ancillary services in 2018, 60 percent were deployed as stand-alone, 14 percent paired with coal plants, and 19 percent were renewables-plus-storage.
“Although China’s energy storage market is still in its infancy, we can expect to see continued strong growth driven by battery cost reduction, policy incentives and power market reform. “By 2024, global cumulative capex investment in the energy storage sector could grow to $71 billion. China will account for about 14 percent or just over $10 billion,” Dr Xu added.
The global battery energy storage market will to grow to $13.13 billion by 2023, according to a new forecast by GlobalData. Asia-Pacific (APAC) and EMEA will be the dominant markets for battery energy storage systems over the forecast period 2019-2023.
The company’s latest report finds that the fall in technology prices and increasing pace of development in the power market are the primary driving factors for the battery energy storage market.
APAC will continue to be the largest market, reaching $6.05 billion in 2023, as countries are increasing investments for improving their grid infrastructure and improving the market structure to attract foreign investments. With respect to technology, Lithium-ion is and will continue to be, the preferred technology for market deployment.