Senior Research Analyst, North American Energy Storage Technology
It’s been an eventful year for the energy industry, and the storage segment was no exception. Growth continued at a staggering pace, driven by the increasing acceptance of energy storage as a mainstream power technology and the growing focus on net zero targets.
There have been both headwinds and tailwinds across the global market, however. Supply chain constraints caused significant headaches. Lithium-ion batteries, with a manufacturing base largely in Asia, were particularly affected. The invasion of Ukraine caused shocks to the European natural gas market, which in turn created significant power price spikes. And in the US, the Inflation Reduction Act provided upside across the renewable energy value chain.
These are clearly interesting times for this still-nascent market. And as technology continues to develop and markets continue to grow, the next 12 months hold real potential for more significant change.
So, what are the themes and trends to track as we head into the new year? We set out our predictions in Energy storage in 2023: headwinds, tailwinds and what to watch for. Read on for an introduction – and fill in the form for your complimentary copy of the full report.
The technology landscape gets more complicated: lithium-ion bifurcates, new technologies get a higher profile
Continuing supply chain pressures have created opportunities in the market for both new approaches to battery module manufacturing as well as entirely new technologies. As stationary energy storage integrators have struggled to compete with electric vehicle manufacturers for battery supply, some manufacturers have moved to fill the gap by building production capacity specifically for the stationary storage market.
Storage-specific manufacturing will contribute to projected price relief for storage developers, but it’s unclear when this shift in manufacturing will impact prices.
Meanwhile, the price pressure on lithium-ion has created more interest in long-duration storage.
Could 2023 could be a banner year for earlier-stage technology developers? Could sodium-ion batteries start to compete with lithium-ion on price, performance and security of supply? And, after two years of unprecedented lithium-ion battery system price increases, will prices stabilise in the year ahead? Read our view in the full report – fill in the form to get your copy.
Stakeholders across the value chain, from financiers to integrators to owners, are changing how they do business in response to the fast-moving environment.
Supply chain risk will shape stakeholder behaviour
The storage market is certainly growing. We project a roughly 30% annual average growth rate in worldwide storage deployments between now and 2031. But risk and uncertainty has also increased.
Stakeholders across the value chain, from financiers to integrators to owners, are changing how they do business in response to the fast-moving environment. Such change is normal for a nascent industry, but the current economic and supply chain environment has accelerated the pace.
Downstream players like developers and integrators are trying to hedge or reduce their supply chain risk wherever possible. Integrators are trying to control more of the supply chain.
The evolving risk environment will change energy storage finance dynamics
As construction debt financing becomes more expensive due to the inflationary environment, both private equity and traditional M&A have filled the financing gap. Companies like RWE and Engie have been acquiring storage portfolios late this year, and the acquisition of storage developers by holding companies, private equity firms and utilities will continue into next year and beyond.
2023 is likely to be a year of consolidation. This is because many storage developers are attractive acquisition targets and also due to the losses accrued from project delays, cancellations, and cost increases.
What other factors will shape the global energy storage market in 2023?
How will the Inflation Reduction Act (IRA) affect the US storage market? How will gas supply tightness alter the energy storage business case in Europe? And in Asia Pacific, which are the key markets to watch in 2023? Read Energy storage in 2023: headwinds, tailwinds and what to watch for to find out more.