London — Global installed battery storage capacity could reach 100 GW as early as 2025 with falling costs set to attract $620 billion in investment by 2040, Bloomberg NEF said in a report this week.
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BNEF's annual energy storage report predicts global capacity (excluding pumped hydro) to reach 942 GW by 2040 with the 300 GW breached around 2030.
The cost of a utility-scale lithium-ion battery storage system is forecast to fall by 52% between 2018 and 2030, BNEF said.
This would transform the economic case for batteries in both the vehicle and the electricity sector, the report said.
In addition to falling costs and growing demand from electric transportation, BNEF cites electrification of remote regions as a key driver for its bullish forecast.
"We see energy storage growing to a point where it is equivalent to 7% of the total installed power capacity globally in 2040," BNEF's head of energy storage Logan Goldie-Scott said.
The majority of storage capacity would be utility-scale until the mid-2030s, after which behind-the-meter applications would become the primary driver of growth.
China, the US, India, Japan, Germany, France, Australia, South Korea and the UK will be the leading countries with these nine markets potentially representing two thirds of installed capacity by 2040, the report said.
Despite the rapid growth, stationary batteries will only make up 7% of total battery demand in 2040, dwarfed by the EV market which would have a material impact on the supply, demand and price of metals such as lithium and cobalt, BNEF said.
The International Renewable Energy Agency (IRENA) forecast global battery storage capacity to reach 175 GW by 2030 in its latest 2017 report.
IRENA estimated that the cost of stationary battery storage could drop 66% by 2030 as EV development accelerated.
Europe's battery storage market is expected to reach 3.5 GW capacity by end-2019, more than doubling within two years, the European storage association EASE said in its latest report this summer.
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However there are concerns that in some advanced markets like the UK, a first wave saturation level may have been reached with utility-scale battery systems requiring new business models beyond the balancing market.
Permitted battery storage capacity is approaching 5 GW in the UK, according to a report this week by RenewableUK.
The average capacity of applications for new battery projects rose to 27 MW from 10 MW in 2016, it said.
The number of projects proceeding to financing, however, has slowed after the UK government tightened rules in the capacity market.
Analysts at the Royal Bank of Canada expect battery projects to struggle if low prices persist in the capacity auction in 2019.
Germany is the European leader in residential energy storage mainly due to its solar-rooftop expansion with over 100,000 units already installed and continued government support.
France is expected to go for a more centralized model with state-owned utility EDF this summer launching a 10 GW battery plan with an estimated investment volume of almost $10 billion through to 2035.
Europe's grid-scale battery storage capacity is forecast to exceed 2.1 GW by 2022, with around 1.6 GW in the UK and 570 MW in Germany, according to a September report on European storage by S&P Global Platts Analytics.
Lithium battery prices are expected to fall below Eur600/kWh for a one-hour duration battery in 2018, Platts Analytics said, before reaching Eur500/kWh in 2019 and around Eur400/kWh in 2021.
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--Edited by Jonathan Loades-Carter, firstname.lastname@example.org
(Changes 2040 investment volume in story due to correction to original BNEF report)