Distributed Energy Storage Systems Market Drivers and Challenges

Distributed Energy Storage Systems (DESS) are an important component of the energy storage market. They have numerous benefits to the grid and can be installed in a variety of locations. There are several drivers for this market. This article explores these drivers. It also examines potential challenges. Read on to learn more about the DESS market.

 

Distributed Energy Storage Market Overview 2022

The Distributed Energy Storage market is expected to grow at a significant rate. This industry is poised to expand rapidly, as new market regulations allow for postponement of transmission upgrades and incorporating intermittent resources. These changes will improve grid reliability and resilience. These findings should aid policymakers, technology developers, and grid operators in planning for the next wave of storage deployment.

 

One major challenge for the industry is the cost of batteries. Currently, the price of lithium, a key mineral for automobile batteries, was over seven times higher in May 2022 than in May 2021. The price rise is due to Russia’s conflict with Ukraine, which has disrupted supplies and the global demand for batteries. Additionally, high prices can hinder the growth of the Distributed Energy Storage market.

 

The Asia-Pacific region is another growing market for distributed energy storage systems. During the forecast period, the market is expected to reach US$2.6 billion. The growth in the market will be driven by increased use of renewable energy sources. Additionally, China is the world’s most populous country, which leads to an increased energy demand.

 

Distributed Energy Storage Market Drivers 2022

The current market for distributed energy storage is based on a number of different market drivers. While electricity costs and renewable energy penetration are major market drivers, there are also several other factors that affect the demand for this technology. The following article will look at some of these market drivers and their impact on the market.

 

First, a battery storage facility is a much more cost-effective solution than a conventional combustion turbine. Furthermore, battery storage can participate in the capacity market. The second market driver is that battery storage is becoming increasingly economically competitive. As renewable energy penetration increases, the contribution of batteries to grid reliability is reduced. This may lead to a reduction in the role of energy markets relatively.

 

Another market driver is the increased willingness to invest in the early stages of a startup. According to the IEA World Energy Investment 2021 report, early-stage funding is growing. This is a good sign for the energy storage industry. Investors are not just hungry for new startups, but they also understand the transition from conventional resources to inverter-based sources.

 

The International Energy Agency (IEA) is a Paris-based autonomous intergovernmental organisation, established in 1974, that provides policy recommendations, analysis and data on the entire global energy sector, with a recent focus on curbing carbon emissions and reaching global climate targets, including the Paris Agreement. The 31 member countries and 11 association countries of the IEA represent 75% of global energy demand.

 

Additionally, increasing investments in environmental-friendly EVs are driving the market for batteries. This is due to a government initiative to encourage the adoption of these vehicles and decrease vehicle pollution. Furthermore, lithium-ion batteries offer excellent energy density, energy efficiency (EE), and storage capacity, allowing them to be used in electric vehicles. Further, they have low maintenance costs and long life cycles. These factors, along with other factors, are driving the market for distributed energy storage.

 

Distributed Energy Storage Market Challenges 2023

States outside of California and Texas have begun to recognize the importance of grid-scale energy storage. Clean energy goals and increasing load are driving utility response. Consequently, interconnection queue volumes are swelling. Hybrid storage opportunities are also emerging in the southern WECC region. Additionally, PJM/MISO/Southeast markets are showing promise in the back half of the forecast, as markets mature.

 

Higher raw material costs are undermining price gains from system components. This has resulted in the largest increase in battery module prices. However, increased standardization has helped to maintain prices for GSUs, inverters, and BOS. In addition, growing population in many parts of the world is driving growth in the energy storage market.

 

Despite the positive outlook for deployment, there are significant challenges. Regulatory barriers and limited access to power markets are limiting deployments in many markets. In addition, interconnection delays and supply chain pressures have been hampering development. Despite these hurdles, deployments are expected to continue to rise, particularly in the U.S. and China. Recently, China implemented a national policy to accelerate deployment of energy storage. The country has set a target of 30 GW by 2025.

 

Despite these challenges, the market is still growing at an unprecedented pace. According to a new report by MarketWatch, more than 1 gigawatt of battery storage is expected to be installed in the U.S. by 2022, and a record quarter was achieved in Q1 of 2021. In addition, more than two-gigawatts of additional capacity are planned to be installed in 2022 and 2023.