The Rise Of BESS: The ‘Age of Batteries’ Draws Closer

BESS (Battery Energy Storage System) technology has emerged as a key product for transforming as well as storing, distributing the excess green electricity for later use and for reducing the emissions of CO2.

According to the International Energy Agency (IEA), World Energy Outlook 2024 Report, in 2023 battery storage in the power sector was the fastest growing energy technology, with deployment more than doubling year-on-year.  Scale, price, density and even set uo time have all shrunk visibly. Today, a 20 feet container that was used to house upto 1 MWh of storage is being used to house 5 times as much, pre-installed and ready to connect.

The report highlights strong growth of BESS in utility-scale projects, behind-the-meter batteries, mini-grids and solar home systems for electricity access, with over 42 GW of battery storage capacity added globally. Energy experts suggest that the “battery age” has arrived. But what’s charging the rise of battery storage?

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The Demand from Energy Sector

Industry Arc’s market forecast (2024-2030) cites “high demand for grid storage systems for the storage of renewable energy, especially solar and wind energy,” behind the demand and investment in the BEES. Despite the rise in the use of lithium-ion batteries in billions of personal devices across the world, in 2024 the energy sector alone accounts for over 90 per cent of annual lithium-ion battery demand compared to 50 per cent in 2016. The Global market for BEES has been forecasted to reach $11.7 billion by 2026. 

The falling prices of Lithium-ion batteries

One big reason behind Lithium-ion batteries outclassing other energy alternatives over the last decade is over 90 per cent cost reductions since 2010. The falling price trend, led by China, is expected to continue in 2024 as well. 

In 2010, Lithium-ion batteries cost $1,400 per kilowatt-hour. In 2023, it stood at $140 per kilowatt-hour in 2023 and with the process improvement, economies of scale and declining raw materials cost it is expected to go further. Prices are already nudging $100 per kW, and expected to do so for a wider share of the market soon enough.

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These lower prices have had an impact on stationary storage, where falling battery prices make the economics of adding grid-scale batteries far more attractive.  From none in 2015, to over 20 countries seeking multi GWh storage today is a big jump in itself.

Battery storage in Net-Zero Scenario (NZS)

As per IEA, to increase the renewable energy capacity to three times by 2030 while maintaining electricity security, energy storage needs to increase six-times. To facilitate the rapid uptake of new solar PV and wind, global energy storage capacity increases to 1500 GW by 2030 in the NZE Scenario, which meets the Paris Agreement target of limiting global average temperature increases to 1.5 °C or less in 2100. 

The case of California

Californians are familiar with Flex Alerts. Up until 2023, ‘flex alerts’- asking businesses and homeowners to voluntarily reduce electricity use to avoid power disruptions- was quite common. These were mainly driven by strain on the grid by heatwaves, resulting in blackouts. 

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But in 2024, California’s power grid emerged from a nearly three weeklong record-setting heat wave relatively unscathed. Officials credited years of investment in renewable energy — particularly giant batteries. California, now, is a world leader in energy storage with the largest fleet of batteries that store energy for the electricity grid. A big part of the reason, experts say, is a boom in the construction of giant battery projects

As per California State Commission, between 2018-2024, the battery storage capacity increased from 500 MW to more than 10,300 MW. The state has planned an additional 3,800 MW by the end of 2024. Interestingly, California alone projects 52,000 MW of battery storage will be needed by 2045. Its a story that Australia is seeking to replicate, as a tremendous jump in solar and wind energy generation frequently delivers more power than the grid can use, particularly  in South Australia. What that means is, rather than seeking 100& renewable powered grids, seeking 98% can be a much more lower cost option with large batteries and some gas/fossil fired power back up.  

Where does India stand?

To develop a domestic battery manufacturing industry, India has allocated USD 2.5 billion through its Production-Linked Incentive scheme. As per the Central Electricity Authority (CEA) estimates, India would require 41.7 GW of BESS and 18.9 GW of PSPs by 2029-30. IEA estimates that India is expected to become the world’s third largest market for utility-scale batteries by 2030. That would be in line with the expected rank of the country’s economy globally, though India would do well to explore taking chunks of its consumption centres off grid as well with the help of energy storage.