Global energy structure transformation drives the demand for energy storage, and the global energy storage market is flourishing. Against the backdrop of global energy transition and upgrade, the proportion of new energy generation continues to increase. However, challenges arise due to the randomness, intermittency, and volatility of renewable energy generation such as wind and solar power, posing stability challenges to the grid. Energy storage, as a system that effectively ensures the stable operation of the grid, is increasingly favored by countries worldwide.
According to CNESA data, before 2021, the annual newly added installed capacity of energy storage projects worldwide remained at around 6GW. However, in 2022, the newly added installed capacity reached 30.7GW, a year-on-year increase of 99.35%, marking a significant growth for two consecutive years at around 100%. However, in terms of cumulative installed capacity, as of the end of 2022, the cumulative installed capacity of globally operational power storage projects reached 237.2GW, still in its early stages compared to the cumulative installed capacity of wind and solar power, which is approximately 2000GW worldwide.
Pumped hydro storage is the most prominent form of energy storage, while new types of storage, represented by lithium-ion batteries, are rapidly gaining traction. Based on different technological types, energy storage methods primarily include mechanical energy storage, electromagnetic energy storage, and electrochemical energy storage, each with different inherent characteristics. Pumped hydro storage, with its early development and large capacity advantages, currently occupies the main installed capacity. As of the end of 2022, the cumulative installed capacity of pumped hydro storage worldwide accounted for 79.3%, marking the first time it fell below 80% compared to the previous year, decreasing by 6.8%. Conversely, there has been an increase in the proportion of new types of storage, led by lithium-ion batteries, reaching 19.3% by the end of 2022, up by 7.1% from the previous year.
New types of storage continue to grow rapidly and contribute the majority of the new installed capacity. Led by lithium-ion batteries, new types of storage have shown significant growth in recent years, with global new installed capacity reaching 20.38GW in 2022, a year-on-year increase of 99.01%, accounting for 66.39% of the total new installed capacity for the year and contributing the majority of the new installed capacity. The average annual compound growth rate from 2017 to 2022 reached 86.06%, maintaining a high growth rate. By the end of 2022, the cumulative installed capacity of new types of storage reached 45.75GW, an 80.36% increase year-on-year.
Regionally, China, the United States, and Europe constitute the three largest energy storage markets globally. China, the United States, and Europe are the main players in the energy storage market. In 2022, the combined newly added and operational projects in these three regions accounted for 86% of the global total, an increase of 6% from the same period in 2021. China surpassed the United States for the first time to become the largest energy storage market globally, accounting for 36%. Europe and the United States followed closely, accounting for 26% and 24%, respectively.
Domestically, energy storage in China maintains a high-growth trend. According to the latest data from CNESA, in 2022, the newly added installed capacity of energy storage projects in China reached 16.5GW, a year-on-year increase of 114.29%, with a cumulative installed capacity of 59.8GW, a year-on-year increase of 38.11%, accounting for 25.21% of the global market share, becoming a key force in the world's energy storage industry.
China's energy storage forms are comprehensive, and its structure is similar to that of the global market. In terms of the proportion of various energy storage forms, China's structure is basically consistent with the global market. As of the end of 2022, the proportion of cumulative installed capacity of pumped hydro storage in China also fell below 80% for the first time, decreasing by 9.2% compared to the previous year, while the proportion of new types of storage continued to grow rapidly, reaching 21.9%, a 9.4% increase year-on-year. In addition, projects using other technology routes such as compressed air energy storage, liquid flow batteries, sodium-ion batteries, and flywheels have made breakthroughs in scale and gradually increased their application models.
The main application scenarios of industrial and commercial energy storage include single-configuration storage, integrated solar storage charging, and microgrids. It helps enterprises save electricity costs by shaving peak loads and filling valleys or installing energy storage as backup power sources. Integrated solar storage charging is mainly used to increase the self-consumption rate of distributed photovoltaics and stabilize the impact of charging piles. Microgrids are divided into off-grid and grid-connected types, where energy storage can smooth out new energy generation and be used as backup power sources or for energy optimization and energy saving.
The main profit model of industrial and commercial energy storage is peak-valley price arbitrage, where the size of peak-valley price differences significantly affects its economic viability. Currently, the main profit of industrial and commercial energy storage in China comes from peak-valley price arbitrage. Supporting industrial and commercial energy storage can utilize the price difference between peak and valley periods to achieve investment returns, namely charging at low electricity prices during off-peak periods and discharging during peak periods to supply industrial and commercial users, enabling users to save electricity costs while avoiding the risk of power cuts. In addition, by "shaving peaks and filling valleys" for photovoltaic power sources, the self-consumption ratio of photovoltaic power generation can be maximized, effectively reducing electricity costs.
The overall development of the large-scale energy storage industry chain revolves around batteries. It mainly includes upstream raw materials and component suppliers, midstream battery packs, power conversion systems (PCS), battery management systems (BMS), energy management systems (EMS), and other equipment and system integration, with downstream applications mainly in power generation, grid-side, and user-side domains.
Different from power batteries, which pursue higher safety and energy density, energy storage batteries pay more attention to long cycle life and cost. Typically, the cycle life of power batteries is between 1000-2000 times, while the standard requirement for energy storage batteries is greater than 5000 times, moving towards 7000-12000 times. Additionally, larger cell sizes have lower costs, higher BMS management accuracy, and simplified assembly, making large-scaleization an important development trend for energy storage cells. Many battery manufacturers are actively deploying and mass-producing 280Ah cells, continuously promoting the increase in cell capacity.
According to the industry's major trends, the integration of photovoltaic and energy storage has transitioned from a trend to a reality. Photovoltaic with storage has become a standard configuration for photovoltaic installations in various regions. Meanwhile, photovoltaic manufacturers, photovoltaic inverters, and energy storage products are deeply integrated, launching energy storage systems and corresponding products. With the rapid growth of global energy storage installations, led by lithium-ion batteries, large-scale energy storage has entered a period of rapid development.
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