Analyst Insight: Megatrends Impacting Energy Storage

Energy storage systems (ESS) provide critical services to the grid. They can increase energy savings, increase energy security and reliability, and decrease carbon footprints. A growing awareness of these advantages and the further integration of renewable generation into the grid have led to significant advances in the energy storage market in recent years. While energy storage projects are on the rise, monitoring the underlying drivers and barriers of storage adoption is important.

Three factors impacting the energy storage market are recent supply chain bottlenecks, inflation, and increases in demand for energy storage. Supply chain bottlenecks are being driven by labor shortages and political tensions that make access to the natural resources necessary for producing batteries more difficult. Global inflation is creating short-term increases in the costs for developing ESSs. Increased demand for Li-ion batteries in the grid storage and EV markets are leading to higher prices and a rush to increase manufacturing capacity. Additionally, grid operators with decarbonization mandates face significant cost premiums for storage solutions.

This Guidehouse Insights Energy Storage Analyst Insight focuses on three megatrends currently impacting the global energy storage market: supply chain bottlenecks, inflation, and demand shifts. It includes a discussion of market inflection trends; market drivers and barriers; analysis of supply chain bottlenecks, inflation, and demand shifts impacting ESS; an overview of the distribution of raw materials mined and refined for ESS development; and conclusions for stakeholders in the energy storage industry. It is based on data from the Energy Storage Tracker released in 4Q22.