The global market for grid-scale battery energy storage systems (BESS) is undergoing rapid growth, playing a pivotal role in the ongoing energy transition.
As clean electrification increasingly relies on renewable energy sources such as wind and solar, the need for large-scale energy storage solutions has intensified, with BESS providing essential flexibility to balance supply and demand.
The latest IEA report says governments have earmarked $2 trillion in direct investment support for clean energy since 2020. Around 80 percent of direct government spending allocated was in China, the European Union and the United States.
A major driver behind this surge is the sharp decline in battery costs, along with favorable regulations worldwide. In 2023, grid-scale BESS installations surged nearly threefold, adding 35.82 GW/87.69 GWh of capacity. This trend is expected to continue in 2024, with projected additions of 41.84 GW/104.67 GWh, representing an investment worth $37.69 billion, Frost & Sullivan said.
Leading this growth are China and the United States, which collectively dominated over 80 percent of the global BESS market in 2023. By 2035, the two nations are forecast to account for nearly half of the sector’s total investment. However, the market is expanding into other countries, with seven nations surpassing 1 GW of capacity in 2023, and 33 countries expected to reach this milestone by 2030.
Top players in the grid-scale battery market are LG Chem (South Korea), Samsung (South Korea), Panasonic (Japan), Fluence (US), Tesla (US), BYD Company (China), ABB (Switzerland), GE (US), GS Yuasa (Japan), Toshiba (Japan), Saft (France), S&C Electric (US), and NGK Insulators (Japan), according to a research report.
In tandem with the energy demand growth driven by AI and data centers, BESS systems are essential in optimizing renewable energy performance. AI is also revolutionizing the BESS industry, from manufacturing and commissioning to real-time monitoring and optimization, improving safety, efficiency, and profitability.
The rise of digital technologies like AI, cloud computing, and IoT is further enhancing transparency and sustainability in the battery supply chain. With initiatives like the EU’s new Battery Regulation, several nations are developing battery digital passports — digital records that track battery certifications, carbon footprints, materials, and performance.
Maria Benintende, Industry Director at Frost & Sullivan, emphasized the role of AI and digitalization in improving BESS. She noted that advancements in battery health analytics, real-time monitoring, and configuration simulations are driving greater efficiency, profitability, and sustainability. BESS deployments are projected to grow at a 17.3 percent compound annual growth rate (CAGR), potentially reaching over 1 TW of installed capacity by 2035.
Baburajan Kizhakedath