Battery Energy Storage System Market | Opportunity and Challenges

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According to the new market research report "Battery Energy Storage System Market by Element (Battery, Hardware), Battery Type (Lithium-Ion, Advanced Lead Acid, Flow Batteries, Sodium Sulfur), Connection Type (On-Grid And Off-Grid), Ownership, Application, and Geography - Global Forecast to 2023", the battery energy storage system market is expected to grow from USD 1.98  Billion in 2018 to reach USD 8.54 Billion by 2023, at a CAGR of 33.9% between 2018 and 2023. Factors that are driving the growth of the market include the increasing demand for grid-connected solutions, high demand for the lithium-ion technology in the renewable energy industry, and declining prices of lithium-ion batteries.

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Driver:  Increasing Demand For Grid-Connected Solutions

The most prominent types of renewable energy sources are solar and wind that are stored in the grid. However, the concealing of the sun by clouds or fluctuations in the wind current lead to the variations in the process of energy generation. Such fluctuations create a need for the flexible grid systems for energy storage. Battery energy storage systems help the grid operators to save the electricity when the quantity of electricity exceeds the demand for electricity. The adoption of these systems improves the reliability and flexibility of the electricity supply system with respect to generation, transmission, and distribution. During transmission and distribution, battery energy storage systems can handle the aspects such as asset deferral, frequency regulation, harmonic suppression, voltage support, and power quality. Electric energy time shift, baseload leveling and peak shaving, renewable energy time shift, and renewables capacity firming are the other benefits of using battery energy storage systems for grid-connected solutions, which drive the adoption of these systems, thus fueling the growth of the market.

Siemens offers SIESTORAGE, an intelligent grid solution. SIESTORAGE is capable of overcoming the challenges phased during the 3 main aspects of power supply—optimizing grid connections, providing flexible energy for modern grids, and supporting large energy consumers. In July 2015, EDP Distribuicao offered Storage InovGrid tender to Siemens’s SIESTORAGE in Évora (Portugal). The SIESTORAGE system provides services such as energy back-up, voltage regulation, and peak shaving in EDP’s grid stability, and reflects the benefits of intelligent grids to the grid operators.

Opportunity:  Increasing focus on rural electrification worldwide

Rural electrification is the process of bringing electrical power to rural or remote areas. Battery energy storage is the most effective storage technology for rural electrification applications. Various countries in the world are trying to develop their remote areas. They need to have a reliable and uninterrupted power supply from the renewable and conventional sources, increase the overall system efficiency, and provide economic savings across the system life cycle to fulfill this purpose.

The Alliance for Rural Electrification (ARE) is an international association that works toward the integration of renewables into rural electrification markets in developing and emerging countries. The growing volume of entrepreneurial seed capital, utility corporate social responsibility funding, and corporate and social investor capital are supporting the investment for rural electrification. For instance, in June 2016, ABB installed a 1 MVA/380 kWh battery-based PowerStore solution to maximize the renewable energy penetration and reliability of power supply. Its facility in Longmeadow (Johannesburg, South Africa) had the power load of ~750 kW, and the facility was grid-connected. The facility suffered from frequent grid outages, which was impacting its operations and power quality on site. The PowerStore system enables high renewable energy penetration and smooth transitioning from grid-connected to off-grid mode in the event of a grid outage.

Challenge: Installation of battery energy storage systems in remote locations

The installation of battery energy storage systems in remote locations is difficult as these locations are difficult to reach. The remote locations usually include island and off-grid remote locations, which face various challenges due to a variable generation and supply of power generated through renewable energy sources. The challenges include ambient conditions such as temperature variation during day and night, costly maintenance due to travel requirements to reach these locations, and lack of installation infrastructure for equipment. The sun-belt regions (off-grid) exceed the local load during the sunniest hours of the day, and the battery energy storage systems store the excess solar energy and compensate the photovoltaic (PV) power fluctuations. Reaching the remote areas frequently is not possible for the operators; hence, they also use diesel generators, which are only activated when the charge status of the battery falls below the minimum set point. The diesel generators are expensive and have high emissions. Also, the shipping of battery energy storage systems and diesel generators to remote areas becomes difficult due to the restrictive government regulations. This factor acts as a challenge for the growth of the battery energy storage system market in remote localities, such as island and off-grid regions.

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