Distributed Energy Storage System Market is Expected to Increase at a 9.79% of CAGR by 2032
The Distributed Energy Storage System (DESS) is a decentralized energy storage model utilized across grids or local energy systems. It stores energy for peak times, grid disturbances, or when energy creation isn't possible. The DESS market, valued at USD 4.89 billion in 2022, is predicted to hit USD 12.44 billion by 2032, growing at a 9.79% CAGR from 2023-2032. Key growth drivers include decreasing technology costs, renewable energy integration, demand flexibility, grid resilience, regulatory support, consumer energy independence, technological innovations, sustainability goals, new business models, and urbanization. Asia-Pacific dominates the DESS market, with significant contributions from China, Australia, South Korea, and India.
A Distributed Energy Storage System (DESS) refers to a decentralized system of energy storage units placed throughout a grid or localized energy system. These units store energy for use during peak demand times, grid disruptions, or when energy generation is not feasible. The distributed energy storage system market, which was valued at USD 4.89 billion in 2022, is anticipated to reach USD 12.44 billion by 2032, growing at a CAGR of 9.79% between 2023 and 2032.
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The growth of Distributed Energy Storage Systems (DESS) is being driven by a combination of technological, economic, environmental, and societal factors. Such as
Falling Costs of Technologies: The cost of battery storage, especially lithium-ion batteries, has decreased significantly over the past decade. This decline has made DESS more economically viable for a broader range of applications.
Integration of Renewable Energy: As the adoption of renewable energy sources like solar and wind grows, there's a need for storage solutions to manage the intermittent nature of these resources. DESS allows for capturing excess energy during peak production times and discharging it during periods of low generation.
Demand Flexibility: DESS can help in managing peak electricity demand. By releasing stored energy during high demand periods, DESS can reduce the strain on the grid and potentially decrease electricity costs for consumers.
Grid Resilience and Reliability: DESS can provide backup power during grid outages and support the grid by offering services like frequency regulation and voltage support. This enhances grid stability and resilience against disruptions.
Regulatory and Policy Support: Governments and regulatory bodies around the world are introducing policies, incentives, and mandates that encourage or require the use of energy storage. These measures recognize the potential benefits of DESS for the grid and for reducing carbon emissions.
Consumer Energy Independence: DESS, combined with localized energy generation like rooftop solar panels, allows consumers and businesses to become more independent from the central grid, providing them more control over their energy usage and costs.
Technological Advancements: Continued innovations in battery chemistry, energy management systems, and software analytics are making DESS more efficient, long-lasting, and user-friendly.
Environmental and Sustainability Goals: As global efforts intensify to combat climate change, transitioning to cleaner energy solutions becomes vital. DESS facilitates the shift towards a more sustainable energy system by enabling greater integration of clean energy sources.
Emergence of New Business Models: Models such as energy-as-a-service and battery leasing are making it easier for consumers and businesses to adopt DESS without significant upfront costs.
Decentralization of the Energy System: There's a broader trend towards the decentralization of energy systems, moving away from large, centralized power plants to distributed energy resources (DERs). DESS plays a crucial role in this evolving landscape.
Microgrid Development: DESS is a key component of microgrids, which are localized energy systems that can operate independently of the main grid. Microgrids are gaining popularity in remote areas, industrial settings, and even urban communities for their resilience and efficiency benefits.
Electrification and Urbanization: As urban areas grow and electrification expands, DESS can help meet increasing energy demands without the need for heavy investments in grid infrastructure.
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key stats of distributed energy storage system market
- Cost Reduction: The cost of lithium-ion batteries, which dominate the DESS market, dropped by approximately 89% from 2010 to 2020, according to Bloomberg New Energy Finance (BNEF).
- Global Capacity: By the end of 2020, the global energy storage market was projected to grow to more than 15 gigawatt-hours (GWh), marking a substantial increase from the previous decade.
- Regional Leaders: The U.S., China, and several European countries were leading in terms of installed energy storage capacity and ongoing investments in the DESS sector.
- Growth Projections: The global energy storage market was expected to exceed 230 GWh by 2025, according to some market research firms. This includes both distributed and utility-scale storage.
- Investment Trends: The DESS market attracted billions in investments, with projections showing continuous growth. In 2019, for instance, corporate funding into the battery storage sector reached $6.4 billion globally, up from $2.8 billion in 2018, according to a report by Mercom Capital.
- Integration with Renewables: The combined installed capacity of solar and storage in residential markets, especially in countries like the U.S. and Australia, showed a consistent upward trend.
- Utility Engagement: By 2021, utilities globally were increasingly incorporating DESS into their grids for stabilization, peak shaving, and to defer the costs of grid upgrades.
- Microgrid Popularity: The global microgrid capacity, which often incorporates DESS, was estimated to surpass 15 GW by the end of 2021, with continued growth expected in the following years.
- Technological Developments: Beyond lithium-ion, there was an increased interest in other battery technologies such as flow batteries, with hundreds of megawatt-hours of projects either announced or under development.
- Policy Impact: Over 30 U.S. states had set energy storage targets or were deploying regulatory mechanisms to encourage energy storage by 2021, indicative of a broader global trend toward policy support for DESS.
- Market Players: Major companies like Tesla, LG Chem, BYD, and Samsung SDI were significant players, but there was a growing ecosystem of startups, mid-tier companies, and energy industry stalwarts investing in DESS technologies and projects.
In 2022, the distributed energy storage market was dominated by Asia-Pacific.
The Asia-Pacific region has been a significant player in the Distributed Energy Storage System (DESS) market due to its rapid economic growth, increasing energy demands, aggressive renewable energy targets, and significant investments in technological innovation.
China is a market leader because of its robust local demand and importance in the supply chain for battery production. While Australia has a strong market for home energy storage due to the country's high rates of household solar adoption.
Government subsidies and a robust battery manufacturing sector favor South Korea. India is still developing, but it is being propelled by aggressive renewable energy goals.
Market Drivers of Asia-Pacific are
- Increasing need for renewable integration, especially in countries with aggressive green energy targets like China and India.
- Electrification & urbanization trends necessitate new energy solutions.
- Presence of major local battery manufacturers in countries like China, South Korea, and Japan.
- Supportive government policies & incentives across the region.
Segments covered in the report
By Technology
- Thermal Storage Technology
- Mechanical Technology
- Electro Chemical Technology
By Application
- Renewable Energy Storage
- Grid Storage
- Transportation
- Others
By Geography
- North America
- Europe
- Asia-Pacific
- Latin America
- Middle East and Africa
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