The landscape for energy storage is poised for significant installation growth and technological advancements in 2024. Countries across the globe are seeking to meet their energy transition goals, with energy storage identified as critical to ensuring reliable and stable regional power markets. The Contact online >>
The landscape for energy storage is poised for significant installation growth and technological advancements in 2024. Countries across the globe are seeking to meet their energy transition goals, with energy storage identified as critical to ensuring reliable and stable regional power markets. The demand for energy storage continues to escalate, driven by the pressing need to decarbonise economies through renewable integration on the grid while electrifying sources of consumption.
In this dynamic environment, staying abreast of the latest market trends and developments is crucial for industry players. This insight explores five key trends shaping the energy storage market in 2024 that will shape how the industry continues to mature and progress forward.
Alternatives to lithium are heating up as companies like Form Energy, EnerVenue, and ESS, Inc have manufacturing facilities under construction, and sodium-ion cell manufacturing has commenced in China. Developers are looking to diversify their options from traditional lithium-ion with non-lithium alternatives, driven by systems deemed to be safer, with no augmentation, and lower life cycle costs, amongst other attributes.
Incentives in Latin America, long-term contracts in Europe, capacity markets in APAC, and revenue stacking in the US all point to the increasing importance of stable, guaranteed revenue streams, particularly for standalone storage systems. Capacity reform and implementation provides reliability to the grid and much-needed offtake revenue streams. The full report includes regional details on revenue trends.
The evolution of energy storage safety has been marked by a dynamic interplay between technological advancements, regulatory frameworks, and industry best practices. One significant catalyst for the improvement of energy storage safety has been the accumulation of operational experience – Wood Mackenzie has tracked 14.8 GW of operational capacity in the US as of Q3 2023, a 159% increase from just 2021.
Although early adopters in the field helped refine best practices and learn to navigate regional safety regulations, this knowledge is not evenly distributed across the industry. This year, developers will be contending with the rapidly evolving learning curve of safety implementation in design, siting, and operations.
Pressure to engage with local communities much earlier than in years past will only heighten in 2024, which increases costs, logistics, and labour for developers. These early-stage development challenges will persist well into this year, as the industry grapples with storage adoption at the local level.
Distributed storage will continue to increase as more households aim to hedge against increasing retail prices, reduce their carbon footprint, and have back-up power available and permitting is becoming more challenging as battery fire safety comes under scrutiny.
• BloombergNEF''s Energy Transition Investment Trends 2024 finds that renewable energy, electric vehicles, hydrogen and carbon capture all drive investment growth year-on-year• China leads with $676 billion invested in 2023, or 38% of the global total• Together, the EU, US and UK invested more than China in 2023, which was not the case in 2022• Investment in the clean energy supply chain hit $135 billion globally in 2023, and could rise to $259 billion by 2025
New York, January 30, 2024 – Global investment in the low-carbon energy transition surged 17% in 2023, reaching $1.77 trillion, according to Energy Transition Investment Trends 2024, a report published today by research provider BloombergNEF (BNEF). This number is a new record level of annual investment and demonstrates the resilience of the clean energy transition in a year of geopolitical turbulence, high interest rates and cost inflation.
The report finds that electrified transport is now the largest sector for spending in the energy transition, growing 36% in 2023 to $634 billion. This figure includes spending on electric cars, buses, two- and three-wheelers and commercial vehicles, as well as associated infrastructure.
Electrified transport overtook the renewable energy sector, which saw an 8% increase to $623 billion. This figure reflects investment to construct renewable energy production facilities, such as wind, solar and geothermal power plants, and biofuels production plants – among other things. Power grid investment was the third-largest contributor at $310 billion. Grids are a critical enabler for the energy transition, and investment in them will need to rise in the coming years.
“Last year brought new records for global renewable energy investment. Strong growth in the US and Europe drove the global rise, even as China, the world’s largest renewables market, sputtered, recording an 11% drop. Despite a year of tough headlines, a record amount of offshore wind capacity also reached financial close,” said Meredith Annex, BNEF''s Head of Clean Power and co-author of the report.
There was also strong growth in emerging areas such as hydrogen (with investment tripling year on year), carbon capture and storage (near-doubling) and energy storage (up 76%).
The largest country for investment by far was China, with $676 billion invested in 2023 – equivalent to 38% of the global total. Although China remains dominant, its lead has been reduced. Taken together, the European Union, US and UK outpaced China with $737 billion of investment – a feat they hadn''t managed to achieve in 2022. Investment in the US jumped 22% year-on-year, to $303 billion, as the effects of the Inflation Reduction Act started to be felt.
The current level of investment in clean energy technologies is not nearly sufficient to set the world on track for net zero by mid-century. According to the report, energy transition investment would need to average $4.8 trillion per year from 2024 to 2030 to align with BNEF''s Net Zero Scenario, a Paris Agreement-aligned trajectory from the 2022 New Energy Outlook. This is nearly three times the total investment observed in 2023.
"Our report shows just how quickly the clean energy opportunity is growing, and yet how far off track we still are," said Albert Cheung, Deputy CEO of BNEF. "Energy transition investment spending grew 17% last year, but it needs to grow more than 170% if we are to get on track for net zero in the coming years. Only determined action from policymakers can unlock this kind of step-change in momentum."
Antoine Vagneur-Jones, Head of Trade and Supply Chains at BNEF, said, "Abundant supply chain investment should continue to tamp down equipment prices across most sectors, which is good news for the energy transition. But the ensuing oversupply heralds an era of squeezed margins for solar and battery manufacturers.”
Aside from tracking the funding for clean energy deployment and clean energy supply chain investment, the Energy Transition Investment Trends 2024 report also tracks two other types of funding:
o This figure has fallen for the past two years, as rising interest rates have made it harder for companies to raise capital. Companies had raised $168 billion in 2021 and $127 billion in 2022.o Clean energy-focused companies raised more equity than any other sector in 2023, at $49 billion.o Companies in the clean transport sector saw funding drop the most sharply, from $47 billion raised in 2022 to just $18 billion in 2023. Transport remained the second-largest funding sector, followed by Industry, Buildings, Agriculture and ''Climate and Carbon''.
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