With the large-scale development and utilization of new energy sources, and the increasing demands for diversity and reliability of electricity, every aspect of the power system, from production to consumption, is undergoing profound changes. Energy storage technologies and systems have broken the bottleneck of real-time power balance in traditional power systems, significantly enhancing the flexibility of the power system. This, in turn, directly drives the gradual transformation of the power architecture, which was originally dominated by fossil fuels, into one dominated by new energy sources, and this process is continuously deepening.
Compared to other forms of energy storage technologies, battery energy storage systems (BESS) possess diverse control characteristics and a wide range of integration methods. This allows BESS to meet the needs of both the power system and consumers in various ways, thus attracting widespread attention. Furthermore, research into BESS integration technology directly impacts the development of BESS and has become one of the key technologies for its large-scale application and popularization.
Overview of the energy storage market
According to incomplete statistics from the Global Energy Storage Project Database of the Zhongguancun Energy Storage Industry Technology Alliance (CNESA), as of the end of 2019, the cumulative installed capacity of energy storage projects worldwide (including pumped hydro storage, battery energy storage, molten salt thermal energy storage, flywheel energy storage, and other energy storage methods) reached 184.6 GW, a year-on-year increase of 1.9%. Of this, pumped hydro storage had the largest cumulative installed capacity at 171.0 GW, a year-on-year increase of 0.2%; battery energy storage followed closely with a cumulative installed capacity of 9520.5 MW; among various battery energy storage technologies, lithium-ion batteries had the largest cumulative installed capacity at 8454.2 MW, as shown in the figure.
Cumulative installed capacity of global energy storage projects (in MW)
By the end of 2019, China's cumulative installed capacity of energy storage projects reached 32.4 GW, accounting for 17.6% of the global market, a year-on-year increase of 3.6%. Of this, pumped hydro storage had the largest cumulative installed capacity at 30.3 GW, a year-on-year increase of 1.0%; battery energy storage ranked second with a cumulative installed capacity of 1709.6 MW, a year-on-year increase of 59.4%. Among various battery energy storage technologies, lithium-ion batteries had the largest cumulative installed capacity at 1377.9 MW, as shown in the figure below.
Cumulative installed capacity of energy storage projects in China (Unit: MW)
Although physical energy storage methods, represented by pumped hydro storage, still dominate global energy storage projects, accounting for 92.6%,their initial investment costs are high, and there is limited room for future cost reductions, and they have high requirements for geographical location. Battery energy storage, as an important form of electrical energy storage, has developed rapidly in recent years. BESS (Battery Energy Storage Systems) have technical advantages such as flexible application, low conversion losses, fast response speed, high regulation accuracy, and are not limited by geographical conditions, making them suitable for mass production and large-scale, multi-field applications. More importantly, the cost of various battery energy storage systems is expected to further decrease by 50% to 60%. Therefore, according to the International Renewable Energy Agency (IRENA), the global BESS scale will rapidly increase to 175 GW by 2030. According to CNESA's forecast, between 2020 and 2024, the size of the Chinese battery energy storage market will continuously increase, with a compound annual growth rate of 55% to 65%, reaching over 15 GW to 24 GW by 2024.
However, the regional distribution of battery energy storage projects remains highly uneven. Although new battery energy storage projects were commissioned in 49 countries or regions worldwide in 2019, the top ten countries, represented by China, the United States, the United Kingdom, Germany, and Australia, accounted for 91.6% of the total global capacity added in 2019. The battery energy storage project capacity in China and the United States exceeded 500 MW, with China, in particular, rising from fifth place in 2017 and second place in 2018 to first place in 2019. South Korea, which ranked third in 2017 and first in 2018, saw a stagnation in new battery energy storage projects in 2019 due to safety incidents.
In 2019, the top ten provinces (autonomous regions, municipalities) in China with the largest newly installed battery energy storage projects were Guangdong, Jiangsu, Hunan, Xinjiang, Qinghai, Beijing, Anhui, Shanxi, Zhejiang, and Henan. The combined new capacity in these ten provinces (autonomous regions, municipalities) accounted for 88.9% of China's total new capacity in 2019.
Thanks to continuous advancements in energy storage technology and the well-developed electricity market in the United States, battery energy storage has become the fastest-growing energy storage technology in the US, and is widely applied in all aspects of the power system, including generation, transmission, distribution, and consumption, forming a relatively clear technological roadmap and effective business model.
2019 was dubbed the breakout year for the US energy storage industry, with the total installed capacity of battery energy storage reaching 1600 MW in that year. According to the latest data released in the "2019 Energy Storage Monitoring Yearbook" by the Energy Storage Association (ESA), the total new installed capacity of energy storage in the US in 2019 reached 522.7 MW/1113 MWh, with the fourth quarter alone accounting for 186.4 MW/264.2 MWh. McKinsey & Company predicts that the US battery energy storage deployment capacity will be three times that of 2019 in 2020, more than double by 2021, and reach 7.3 GW by 2025; the total investment in the US energy storage market in 2019 was $712 million, while it is projected to jump to $2 billion in 2020.
Due to differences in power systems and electricity demand both domestically and internationally, the main application areas of battery energy storage technology also vary. Taking lithium-ion battery energy storage systems as an example, globally, the most common application is on the grid side, such as frequency regulation, peak shaving, and ancillary services, accounting for 52.7%, followed by supporting renewable energy integration at 28.9%, and distributed and microgrid applications on the user side at 18.4%. In China, supporting renewable energy integration is the most common application, accounting for 37.7%, followed by grid-side and user-side applications at 25% and 25.3%, respectively.
Although the growth rate in 2019 was relatively slower compared to the 126% growth rate of the global energy storage market in 2018, energy storage will continue to maintain a strong growth trend as major countries deepen their energy transitions and increase their demands for power system flexibility. It has already become a key technology for countries to achieve their energy strategic goals. Therefore, as of June 2020, the cumulative installed capacity of power storage projects in operation globally reached 185.3 GW, with China's cumulative installed capacity reaching 32.7 GW. Of this, the global cumulative installed capacity of battery energy storage reached 10,112.3 MW, surpassing the 10 GW mark, representing a year-on-year increase of 36.1%, while China's cumulative installed capacity reached 1,831.0 MW, a year-on-year increase of 53.9%.