Batteries lead global ‘cleantech race’ as solar, wind sectors struggle: experts

Battery energy storage systems appear poised to win "the cleantech race" for various energy needs over the next few years, with S&P Global Energy CERA forecasting installed capacity to grow eightfold from 0.3 terawatt in 2025 to 2.5 TW by 2035, analysts said in a webinar Nov. 4.

Meanwhile, the solar equipment industry is in "oversupply," and wind turbine makers emphasize combining their hardware with "firming" technologies such as batteries or hydrogen electrolyzers, according to CERA analysts.

"We've now reached this point in many markets where there's so much wind and solar on the grid that flexibility is absolutely critical," said Susan Taylor, CERA principal analyst for renewable markets. "That, of course, then improves the business case for storage, particularly when it is co-located with renewables."

Another factor contributing to BESS success is declining costs, Taylor said.

"This means that storage is also starting to make economic sense in sectors where previously it didn't," Taylor said, adding that the commercial and industrial sector "is a good example."

"And within the C&I segment, of course, we hear a lot of talk, a lot of focus on data centers," Taylor said. "So this is a massive new demand segment for battery storage, and it's adding hugely to the overall growth outlook."

'So much more uncertainty'

Reliability and energy security combine as a third driver for BESS deployment, Taylor said.

"In the world that we live in today in 2026, there's just so much more uncertainty — a lot of geopolitical tensions we couldn't have foreseen — and it's really putting a strong focus on that energy security," Taylor said. "And at the same time, grids are under pressure. This is because we have now more renewables. ... I think a very good example of that is what happened in Spain and Portugal with the blackout, and that really brought to light just how important that energy security and reliability of our grids are."

Manufacturers see the opportunity and are ramping up production, but it is so far "heavily, heavily concentrated in China," Taylor said.

China accounts for about 85% of global BESS assembly and production capacity but buys only 40% of that production, with the rest sold on international markets. Global supply capacity exceeds global sales by about 50%, Taylor said.

"That doesn't mean that demand is not there," Taylor said. "We've seen that demand is certainly there for storage. What's changed, though, is the situation of oversupply building competition that's driving system prices down, and that's obviously impacting overall revenues in the [battery electric vehicle] sector."

The webinar's presentation slides showed that renewable capacity is expected to triple to about 9 TW by 2035, which "will keep equipment demand strong" through the period. Still, China's manufacturing scale has cut equipment prices, particularly for solar, battery and wind equipment. China produces about 70% of the global equipment for these sectors, according to the presentation.

Solar, wind challenged

While the BESS sector continues to face growing demand amid its own oversupply, the solar equipment industry and wind turbine producers face their own challenges, Taylor said.

"Solar is an oversupply," Taylor said. "Suppliers are under pressure, prices are low, and margins are negative. Wind, on the other hand, is coming out of a downturn in a recovery phase, although that recovery is still relatively uneven across the different suppliers."

Jessica Jin, CERA senior principal analyst for clean technologies and supply chains, said, "In 2026, we can see the module capacity is still expected to be twice the level of annual installations, which highlights the scale of the current oversupply."

Solar equipment suppliers cut their photovoltaic production from 75% of capacity in 2023 to 60% in 2026, Jin said.

Policies in various nations are bringing solar PV production closer to key markets, such as the US, India and Europe, but costs are higher – 65% in the US, 16% in India and 42% in Europe, for example, the webinar presentation shows.

Regarding the wind sector's challenges, Taylor said, "You see firm power really being offered by a lot of these suppliers in the wind sector, so that's batteries or it's coupling with hydrogen or electrolyzers."

"There's definitely a shift in that direction — coupling that hardware with complementary technologies," Taylor said. "So I think that's really the message here. Suppliers are trying to build more value around their hardware. And I think in the future, if we were to look ahead in two, five, 10 years, I think a lot of these pure equipment manufacturers are going to look a lot more like energy solutions providers, so to say."