According to the new market research report "Battery Energy Storage System Market with COVID-19 Impact by Element (Battery, Others), Battery Type (Lithium-Ion, Flow Batteries), Connection Type (On-Grid And Off-Grid), Ownership, Energy Capacity, Application, and Geography - Global Forecast to 2025", the battery energy storage system market is projected to grow from USD 2.9 billion in 2020 to USD 12.1 billion by 2025; it is expected to grow at a CAGR of 32.8% from 2020 to 2025. The growth of this market is expected to be driven by the prevailing trend of adopting low-carbon and less fossil fuel-based economy and ongoing renewable energy revolution, surging requirement of continuous power supply from critical infrastructures in wake of COVID-19, growing adoption of lithium-ion batteries in renewable energy sector owing to their low costs and improved performance, and increasing demand for grid energy storage systems. These factors have helped the battery energy storage system market gain traction in applications, such as utilities, residential, and commercial.
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COVID-19 impact on the battery energy storage system market
The battery energy storage system market has historically been subjected to significant growth due to the rise in demand for battery energy storage systems in the utility sector. However, the outbreak of the COVID-19 pandemic has resulted in a decline in the growth rate.
As a result of COVID-19, the expected growth of several application segments of the battery energy storage system market is expected to decline as it is restricting the supply of batteries and other components and the adoption due to severe disruptions in businesses and the global economy. The current situation has impacted the supply chain of the energy industry, particularly renewable energy technologies and battery energy storage systems. The key components of battery energy storage systems are mainly manufactured in Asia Pacific. The COVID-19 situation has exposed the overdependency on the region for key raw materials, especially China. The business of the energy storage system manufacturers in the US, Germany, and Australia has been adversely affected by the shutdown of operations in China and other Asia Pacific countries. It has also resulted in limited production leading to a serious decline in business inputs. The recovery depends on government assistance as well as the level of corporate debt and how the companies and markets cope with the low demand. The current demand for utility-owned energy storage systems is largely affected by the COVID-19 pandemic. Most of the projects in China, the US, Germany, and South Korea are operational and are used for integrating renewable energy power generation and grid balancing operations. However, some of the companies are facing short-term operational issues due to the limited availability of workforce. In addition, the per capita income of individuals has also been affected due to the pandemic, which has consequently declined the demand for residential battery energy storage systems. However, in countries such as India, where power cut is a major issue, battery energy storage systems have been used as a backup energy source during power shortage. However, there is no major surge in demand.
It is expected that the demand would increase in the coming years, and the market would recover by 2022. The deployment of battery energy storage in upcoming projects in the utility sector will support the recovery of the market. After the recovery phase, the market is expected to grow at a moderate rate until 2025.
Lithium-ion battery type segment held the largest share of battery energy storage system market in 2019
The battery energy storage system industry, based on battery type, is led by the lithium-ion battery segment (in terms of size). The lithium-ion battery exhibits high energy and power density, which leads to low standby losses and high life expectancy. Due to these characteristics, lithium-ion batteries are likely to account for a major share of the battery energy storage system market by 2025. The lithium-ion-based battery energy storage systems are used in the utility application to address the demand during peak time as these systems offer high response time and can store excess energy. The COVID-19 pandemic has impacted the supply of lithium-ion batteries and raw materials from China from the start of January 2020. Major battery manufacturers, including General Electric (US), Panasonic (Japan), and Samsung SDI (South Korea), have shifted their focus on making healthcare equipment such as masks and sanitizers to combat the spread of COVID-19.
The market for battery element segment led the battery energy storage system market in 2019
The battery elements used in the battery energy storage system are in the form of modules and racks. The battery element alone constitutes 60% of the total battery energy storage system. It is the major element, where the functioning is regularized by hardware and software, which increase its efficiency. Majorly used battery types in battery energy storage systems are lithium-ion and lead-acid batteries.
APAC accounts for the largest market size during the forecast period
APAC held the largest battery energy storage system market share in 2019, followed by North America and Europe. The market in APAC mainly comprises developing economies, such as China and India, which have tremendous potential for installation of energy storage projects due to increasing renewable energy integration. APAC is expected to witness plans for electrification in remote areas, which are majorly off-grid in several countries. The use of residential energy storage technology will enable to increase access to electricity for these remote and island communities in the region. The battery energy storage system market in APAC is highly competitive with the presence of established players. These players are continually upgrading their product portfolio with the launch of technologically advanced energy storage products.
Some of the major battery energy storage system manufacturers based in Asia Pacific are Samsung SDI (South Korea), LG Chem (South Korea), Hitachi (Japan), Panasonic (Japan), and NEC Corporation (Japan).
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