China Energy Storage News: A research report released by Bloomberg New Energy Finance recently shows that the recent policy development of the United States and the European Union (EU) will significantly improve the company's forecast of global energy storage deployment prospects.

Bloomberg New Energy Finance predicted in the latest energy storage industry analysis report that by the end of 2030, the cumulative energy storage system deployed worldwide will reach 411GW/1194GWh. This is much higher than the forecast of the company in November last year, when the company predicted that the cumulative deployment of energy storage system would reach 358GW/1028GWh by 2030.

The installed capacity of the global cumulative installed energy storage system divided and predicted by regions by Bloomberg New Energy Finance Co., Ltd. RoW represents the "rest of the world" and "buffer zone" markets and use cases with low visibility

Even in November last year, the analysis agency emphasized that the 1920s is expected to be an "energy storage era", and its latest forecast seems to be strengthening this information.

In the previous analysis of Bloomberg New Energy Finance, the Asia Pacific region is largely driven by China's energy storage deployment strategy and related goals. It is expected that China will become the largest energy storage market in the Asia Pacific region by 2030.

Although at the national level, China and the United States will become the two largest markets in the world, accounting for half, or even more, of the total deployment of global energy storage. In other words, battery energy storage projects in the United States usually have higher energy storage capacity and longer duration.

Analysts from Bloomberg New Energy Finance said that these overall trends still exist, but the change in the prospects of the United States and the European Union is the reason for truly changing the overall pattern in a short time.

The inflation reduction bill and REPowerEU support the market optimism

In the United States, the Inflation Reduction Act is the main driving force. It is a surprising legislative breakthrough, including $369 billion in climate spending and tax incentives.

The Inflation Reduction Act will introduce an investment tax credit (ITC) for independently deployed energy storage systems, that is, battery energy storage systems or other energy storage assets are not co located or co deployed with solar power generation facilities.

This is known as a game changer, bringing economic feasibility and profitability to more grid scale energy storage projects. The bill encourages the use of locally produced equipment and labor in clean energy projects.

Yayoi Sekine, head of energy storage department of Bloomberg New Energy Finance, said that energy storage developers and integrators have been expanding their business scale to gain benefits from policy developments such as the Inflation Reduction Act.

In the EU, the REPowerEU policy is the main driver to promote the deployment of energy storage. The plan was formulated earlier this year to deal with the conflict between Russia and Ukraine and the dependence of the European energy market on imported fossil fuels. The plan is currently being implemented.

The policy includes significantly improving the deployment target of renewable energy, and clearly mentions the need to develop and promote the role of energy storage systems in integrating these renewable energy power and maintaining grid reliability.

Although the impact of REPowerEU may not be as obvious as the Inflation Reduction Act, Maros Sefcovic, Vice President of the European Commission, stressed in a recent speech that the energy storage system is considered an important part of ensuring European energy security and affordability. At the same time, it will also help the EU achieve decarbonization in the energy sector.

Based on the installed capacity, by 2030, the energy storage system for energy conversion applications, including the battery energy storage system deployed with solar power generation facilities (as shown in the figure below), will account for nearly two-thirds of the headquarters' deployment

Change the application mode

Bloomberg New Energy Finance's market analysis focuses on battery energy storage systems for a range of applications, including but not limited to ancillary services, energy conversion, supporting transmission networks and distribution networks, as an alternative to more expensive investments in upgrading and customer side on-site applications. It does not include pumped storage power generation facilities.

With the increasing share of renewable energy generation, the power market has also developed. The main applications of battery energy storage systems will be more and more connected with energy transfer. For example, the energy storage system stores the energy generated by solar power generation facilities during the day and provides power during the peak power demand at night.

The company said that by 2030, about 61% of all energy storage systems deployed will be mainly used for energy transfer applications, and pointed out that the growth of solar energy+energy storage projects has formed a trend.

Although residential energy storage projects currently account for only a small part of the overall energy storage market, their market share will also increase significantly in addition to some high growth regions such as Germany, Australia, Japan and California. Bloomberg New Energy Finance predicted that by 2030, the cumulative deployment of residential, commercial and industrial (C&I) energy storage systems will account for about a quarter of all global energy storage systems.

Short term supply chain impact will not kill the demand for energy storage deployment

In the short term, the prospect of energy storage deployment may be more complex.

According to industry media reports, at the RE+2022 conference held in California recently, Helen Kou, another analyst of Bloomberg New Energy Finance, explained how the supply chain restrictions inhibited the company's forecast of energy storage deployment in the United States this year.

Due to the impact of the global logistics slowdown caused by the COVID-19 and the super high demand for batteries in the electric vehicle (EV) industry, the price of lithium batteries will rise significantly after 2021.

Kou said at the RE+meeting that this led Bloomberg New Energy Finance to reduce its 2022 U.S. deployment forecast by 29%, while its competitor, Wood Mackenzie, also took a similar position.

However, the analyst reiterated that the demand for energy storage deployment remained strong, and the main challenge it faced was a series of delays in project development and implementation, rather than cancellation.

He said, "The energy storage industry is facing the trouble of growth. However, despite the rise in battery prices, the demand for energy storage deployment is clear. By 2030, the capacity of the energy storage system will exceed 1TWh. Some of the world's largest power markets, such as the United States, India and the European Union, have approved legislation to encourage energy storage deployment."