The global battery energy storage market is expected to reach $4.4 billion in 2022

According to data released by Markets and Markets, a global market research institution, the world battery energy storage system market is expected to reach $4.
4 billion in 2022, and this data is expected to increase to $15.
1 billion by 2027, with a compound annual growth rate of 27.
9%.

Opportunities & challenges

Increasing demand for grid energy storage systems due to ongoing grid modernization, and substantial growth in renewable energy sources due to energy transition are the major factors
contributing to the rapid growth of this market.
Solar and wind energy are the most prominent types
of renewable energy stored in the grid.
However, the sun being obscured by clouds or fluctuating wind currents can lead to changes
in the process of energy production.
This fluctuation creates the need
for flexible grid systems for storing energy.
Battery energy storage systems are becoming an integral part of
grid modernization.
When electricity generation exceeds electricity demand, these systems help grid operators save power
.
The adoption of battery energy storage systems also helps to improve the reliability and flexibility
of power supply systems in terms of generation, transmission and distribution.

However, the high capital expenditure required to install battery energy storage systems is restraining the market growth
.
On the other hand, the surge in the number of rural electrification projects across the globe, the increasing number of data centers leading to an increase in the demand for continuous power supply, and the declining price of lithium-ion batteries are expected to create huge opportunities for battery applications in energy storage systems
in the coming years.
In addition, battery energy storage system manufacturers face challenges
due to factors such as the complexity of installing battery energy storage systems on islands or remote areas, overheating of lithium-ion batteries, aging of lithium-ion batteries, etc.

However, the COVID-19 virus pandemic that swept the world in early 2020 severely affected the global economy and all industries
.
Total lockdowns in the early days of the pandemic severely affected people's livelihoods and quality of life
.
This has led to disruptions
in global supply chains.
Economies around the world have declined
due to a sharp drop in demand for the product.
Production in various industries has been restricted
due to the shortage of raw materials due to the pandemic.
Declining exports and supply chain disruptions were the main factors
contributing to the decline in production.

The sudden outbreak of the novel coronavirus has adversely
affected the growth of utility applications.
In 2021, the installed volume of battery energy storage systems in various projects declined
.
However, the increasing installation of battery energy storage systems in operational projects and the increasing emphasis of the government on modernizing the power sector are expected to increase the adoption of batteries, thereby increasing the demand for
battery energy storage systems.
However, the market value may not reach pre-COVID-19 levels until 2027
.

High investment costs are the major factors restraining the growth of
the market.
Battery energy storage technologies, including lithium-ion, flow and lead-acid batteries, require increased installation investment
due to the high energy density and improved performance they provide.
Lithium-ion batteries are costly because they offer high energy density, low self-discharge rates and require less maintenance
.
However, the cost of lithium-ion batteries is expected to decline
in the future.
These batteries are also used in electric vehicles (EVs) because they are lightweight, compact, and have a large
capacity.
In addition, high initial investment costs required for flow battery manufacturing are also major factors
restraining the growth of the market.

Segment analysis

Rural electrification is the process of
achieving electricity supply in rural or remote areas.
Battery energy storage systems are effective
for rural electrification.
Countries around the world are trying to develop remote areas, such as remote rural and peri-urban areas, especially in developing countries, and small islands
separated from the national grid.
As a result, they need to provide reliable and uninterrupted power using renewable and conventional energy sources to improve overall system efficiency and ensure economic savings
throughout the system lifecycle.
The installation of battery energy storage systems in rural areas will serve as a solution to provide a reliable and safe power supply
to businesses and local communities.

However, the deployment of battery energy storage systems on islands or remote areas will face many challenges, especially related to environmental conditions, such as temperature changes during the day and night, expensive maintenance costs due to the difficulty of commuting to these locations, and lack of equipment installation infrastructure
.

From the perspective of battery type, lithium-ion batteries accounted for the largest share of the battery energy storage system market in 2021 and are expected to remain unchanged
during the forecast period.
The growth of this segment is attributed to the advantages of batteries, such as high energy and power density, which results in low standby losses and a high life expectancy of about 5-15 years and efficiency of 98
%.
In addition, lithium-ion sulfur battery energy storage systems support frequency regulation, demand reduction charging, grid buffering, and renewable energy integration for grid-connected connections
.

In terms of installations, grid-connected systems accounted for the largest share of the battery energy storage systems market in 2021 and are expected to maintain a significant CAGR
during the forecast period.
Compared to off-grid systems, grid-tied connections have lower upfront costs because excess energy is sent to the grid and can later be metered
.
Reduced energy bills of customers who rely on utility grid power supply are expected to drive the growth
of this segment.
The need for grid modernization by renewable energy suppliers and new regulatory policies in the energy industry are also driving the growth of the
utility-connected battery energy storage system market.

From the perspective of developers, utility applications will maintain the maximum growth rate
of the battery energy storage system market through 2027.
The utility application market dominated in 2021
.
Meeting peak electricity demand is a major factor
driving the growth of the utility market.
Utility BESS provides power quality, frequency and voltage control services in case of sudden fluctuations
in energy supply.
Battery energy storage systems enable grid operators to save electricity
when there is a surplus of renewable energy.
Increasing demand for reliable and efficient power supply in most regions, as well as growing demand for renewable energy, are responsible for
the high demand for battery energy storage systems in the utility sector.

From the perspective of the regional market, battery energy storage systems in Asia Pacific are expected to grow
at the highest CAGR during the forecast period.
The Asia-Pacific region is the center of
the battery energy storage system industry.
Asia Pacific is expected to witness electrification initiatives
in remote areas.
Energy storage investment in the Asia-Pacific region is expected to increase significantly as governments in developing economies develop new policies to improve the reliability and quality
of power distribution facilities for residential customers.
Governments in the region are working to minimize
the adverse environmental impacts of the energy sector.
These factors have led to an increase
in the deployment of battery energy storage systems in residential and utility applications.

From the perspective of service providers, BYD (China), Samsung SDI (South Korea), LG Energy (South Korea), and Panasonic (Japan) are the key players in this market and are expected to continue to maintain their dominant position
in the market during the forecast period.