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New Opportunities Erupting for Energy Storage! Sustained Demand Driving the U.S. Market
Robust Energy Storage Demand in Overseas Emerging Markets
Overseas emerging markets have become an important growth point for energy storage demand. Among them, the South American market is a bright spot. Take Chile as an example, the scale of Chile's energy storage projects has grown significantly. As of March 2024, Chile's operational energy storage projects reached 364 MW, with 240 MW in the preliminary testing stage, and about 1.05 GW of projects under construction. Additionally, there are 2.23 GW of projects pending approval. Chile's massive energy storage project scale foreshadows rapid future growth. The boom in Chile's energy storage market benefited from the Energy Storage Incentive Act passed in 2022, allocating $2 billion for auctions of large-scale energy storage projects. With Chile's online projects around 6 GW, corresponding to an installed capacity close to 30 GW, it is a significant source of energy storage growth in emerging markets.
The Brazilian market is also worth noting. The Brazilian region may increase energy storage coupling through capacity auctions, which is expected to receive significant stimulation in the second half of the year.
The Australian government has provided some guidance on energy storage demand and has continued to raise it over the past two years. The commercialization scale of Australia's energy storage market is continuously improving. Last year, Australia installed 2.5 GW, an 89% year-on-year increase. According to statistics from the Australian Commission, by the end of 2023, Australia's online projects will reach 11 GW, a significant increase from 2 GW at the end of 2022.
The South African market has an urgent demand for energy storage due to the frequent power outages caused by an aging grid. According to statistics, South Africa has an energy storage project scale of 6.4 GW. The Middle Eastern market is closely tied to the energy transition, with large projects already landed or being tendered, such as Saudi Arabia's planned future city Neom project. Projects in Morocco are also sizeable, possibly related to the new energy and Chinese industrial layout in the country over the past two years.
The European market has existed for a long time but has a slower construction pace than the United States and China. Hydropower in the Nordic countries has played an important role in regulation.
The demand for energy storage in overseas emerging markets is constantly growing, becoming a popular investment direction. Government policy support and positive changes in the market environment have brought tremendous business opportunities for the energy storage industry.
Rapid Growth in Energy Storage Installed Capacity in Major Countries
Against the backdrop of the large-scale development of renewable energy, energy storage technology has become an indispensable and important component of power systems. In recent years, the installed capacity of energy storage in several major global markets has shown rapid growth. Take the UK as an example; in the past two to three years, energy storage installations have increased by more than 160 GWh, mainly relying on frequency response market returns. As the proportion of new energy increases, the profits from the peak shaving market have also continued to rise, and the grid-connection progress of UK energy storage projects has reached a new single-quarter high.
In the German market, due to the significant increase in new energy installations and the existence of cross-regional regulation issues, it is expected that Germany's energy storage installations will reach a scale of hundreds of MWh this year. At the same time, Italy is also brewing a large-scale energy storage investment plan.
In the U.S. market, the significant decline in battery and EPC costs, coupled with the implementation of the ITC tax credit policy, has further highlighted the economic viability of energy storage projects. Although issues such as transformer shortages exist, against the backdrop of soaring electricity prices due to extreme weather, the U.S. energy storage market is showing a vigorous development trend. Among them, stand-alone energy storage projects in Texas and California occupy an important position.
The U.S. Market Offers the Most Promising Prospects
Driven by demands such as backup power and arbitrage, the return on energy storage projects is expected to reach around 35%, and this attractive profit level will undoubtedly attract more capital inflows into this field.
Industry insiders point out that the U.S. market is particularly noteworthy at present. Affected by the dual impact of aging local grids and growing electricity demand, the stand-alone energy storage market has maintained rapid growth over the past two years. Even though facing certain approval obstacles, as the summer peak electricity demand arrives, the hardware shortage issue is expected to be alleviated, and energy storage demand will be unleashed. It is expected that in the next one to two years, the installed capacity of energy storage in the U.S. market will achieve a growth of 100% to 140%.
At the same time, the growth momentum of overseas markets is also considerable. Analysts predict that both overseas and domestic energy storage installations will achieve growth rates of over 60%. However, after experiencing price adjustments last year, the industry is gradually finding more mature business models, and the future development prospects remain optimistic.
Robust Energy Storage Demand in Overseas Emerging Markets
Overseas emerging markets have become an important growth point for energy storage demand. Among them, the South American market is a bright spot. Take Chile as an example, the scale of Chile's energy storage projects has grown significantly. As of March 2024, Chile's operational energy storage projects reached 364 MW, with 240 MW in the preliminary testing stage, and about 1.05 GW of projects under construction. Additionally, there are 2.23 GW of projects pending approval. Chile's massive energy storage project scale foreshadows rapid future growth. The boom in Chile's energy storage market benefited from the Energy Storage Incentive Act passed in 2022, allocating $2 billion for auctions of large-scale energy storage projects. With Chile's online projects around 6 GW, corresponding to an installed capacity close to 30 GW, it is a significant source of energy storage growth in emerging markets.
The Brazilian market is also worth noting. The Brazilian region may increase energy storage coupling through capacity auctions, which is expected to receive significant stimulation in the second half of the year.
The Australian government has provided some guidance on energy storage demand and has continued to raise it over the past two years. The commercialization scale of Australia's energy storage market is continuously improving. Last year, Australia installed 2.5 GW, an 89% year-on-year increase. According to statistics from the Australian Commission, by the end of 2023, Australia's online projects will reach 11 GW, a significant increase from 2 GW at the end of 2022.
The South African market has an urgent demand for energy storage due to the frequent power outages caused by an aging grid. According to statistics, South Africa has an energy storage project scale of 6.4 GW. The Middle Eastern market is closely tied to the energy transition, with large projects already landed or being tendered, such as Saudi Arabia's planned future city Neom project. Projects in Morocco are also sizeable, possibly related to the new energy and Chinese industrial layout in the country over the past two years.
The European market has existed for a long time but has a slower construction pace than the United States and China. Hydropower in the Nordic countries has played an important role in regulation.
The demand for energy storage in overseas emerging markets is constantly growing, becoming a popular investment direction. Government policy support and positive changes in the market environment have brought tremendous business opportunities for the energy storage industry.
Rapid Growth in Energy Storage Installed Capacity in Major Countries
Against the backdrop of the large-scale development of renewable energy, energy storage technology has become an indispensable and important component of power systems. In recent years, the installed capacity of energy storage in several major global markets has shown rapid growth. Take the UK as an example; in the past two to three years, energy storage installations have increased by more than 160 GWh, mainly relying on frequency response market returns. As the proportion of new energy increases, the profits from the peak shaving market have also continued to rise, and the grid-connection progress of UK energy storage projects has reached a new single-quarter high.
In the German market, due to the significant increase in new energy installations and the existence of cross-regional regulation issues, it is expected that Germany's energy storage installations will reach a scale of hundreds of MWh this year. At the same time, Italy is also brewing a large-scale energy storage investment plan.
In the U.S. market, the significant decline in battery and EPC costs, coupled with the implementation of the ITC tax credit policy, has further highlighted the economic viability of energy storage projects. Although issues such as transformer shortages exist, against the backdrop of soaring electricity prices due to extreme weather, the U.S. energy storage market is showing a vigorous development trend. Among them, stand-alone energy storage projects in Texas and California occupy an important position.
The U.S. Market Offers the Most Promising Prospects
Driven by demands such as backup power and arbitrage, the return on energy storage projects is expected to reach around 35%, and this attractive profit level will undoubtedly attract more capital inflows into this field.
Industry insiders point out that the U.S. market is particularly noteworthy at present. Affected by the dual impact of aging local grids and growing electricity demand, the stand-alone energy storage market has maintained rapid growth over the past two years. Even though facing certain approval obstacles, as the summer peak electricity demand arrives, the hardware shortage issue is expected to be alleviated, and energy storage demand will be unleashed. It is expected that in the next one to two years, the installed capacity of energy storage in the U.S. market will achieve a growth of 100% to 140%.
At the same time, the growth momentum of overseas markets is also considerable. Analysts predict that both overseas and domestic energy storage installations will achieve growth rates of over 60%. However, after experiencing price adjustments last year, the industry is gradually finding more mature business models, and the future development prospects remain optimistic.
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