NEW YORK, Feb. 5, 2025 /PRNewswire/ -- Report on how AI is redefining market landscape - The global battery for energy storage systems (ess) market size is estimated to grow by USD 22.18 billion from 2025-2029, according to Technavio. The market is estimated to grow at a CAGR of  23.8%  during the forecast period. Changing energy mix from fossil fuels to sustainable and renewable energy resources is driving market growth, with a trend towards increased adoption of microgrids. However, widening demand-supply disparity with regard to lithium  poses a challenge. Key market players include ABB Ltd., AEG Power Solutions BV, Corvus Energy, dSPACE GmbH, East Penn Manufacturing Co. Inc., Exergonix Inc., General Electric Co., Hitachi Ltd., LG Corp., Mitsubishi Heavy Industries Ltd., NEC Corp., Panasonic Holdings Corp., Philadelphia Scientific LLC, Samsung SDI Co. Ltd., Siemens Energy AG, SolarEdge Technologies Inc., TDK Corp., Tesla Inc., The AES Corp., and Toshiba Corp..

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Market Driver

The Battery for Energy Storage Systems (ESS) market is witnessing significant trends in lithium-ion batteries, grid modernization initiatives, and renewable energy sources. Grid operators seek reliable power sources for grid power stability, making ESS an essential component. Flow batteries and lead-acid batteries are popular choices due to energy density, power conversion systems, control systems, and thermal management systems. Safety measures, economies of scale, and manufacturing efficiency are key factors driving the market. Affordable and accessible ESS solutions are crucial for grid power, especially in harsh environmental conditions. Utility sector investments in above 500 MWh capacity utility-scale applications are on the rise. Renewable energy sources, such as solar and wind, are the main input energy sources. Lithium, cobalt, and copper are key raw materials. Energy demand, incentive programs, and peak shaving are driving the residential sector's renewable energy infrastructure growth. Lithium-ion BESS products are cost-effective solutions for peak power consumption, backup power, and self-consumption optimization. Renewable power sources, such as solar energy, are increasingly popular, with projects like France Territoire Solaire, Pillswood, Autobidder, and O-Uchi Kyuden System leading the way. Grid power grids, electrical substations, and renewable-energy sources face energy crises, making clean-energy investments in ESS essential. Firm frequency response, ancillary services, arbitrage, capacity auctions, and revenue models are key revenue streams. Telecommunication towers, data centers, and uninterruptible power supply systems also benefit from ESS. Battery prices and performance and lifespan are critical factors for battery producers and system integrators. Utilities and renewable energy sources rely on ESS for reliability, energy management systems, and ancillary services. Solar parks, wind farms, and peak power consumption are major applications. Demand charges, harsh environments, mining, construction, events, regulations, and self-sufficiency are other key considerations. The global BESS market is expanding, with BTM residential installations, utility-scale BESS, and FTM installations driving growth. Inverters, housing, balance of system, and profit pool are essential components. 

Microgrids are small-scale electricity systems that integrate local generation and energy storage resources. They can function independently from the main power grid or collaborate with other small grids. Known as hybrid microgrids when connected to the main grid, they offer the flexibility to operate in grid-connected and island modes. In response to the growing need to reduce fossil fuel usage, microgrids are increasingly adopting renewable energy sources such as solar and wind power. When the main power grid experiences power outages or during intentional disconnection, microgrids switch to island mode for uninterrupted power supply. 

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 Market Challenges

• The Battery for Energy Storage Systems (ESS) market is experiencing significant growth due to grid modernization initiatives, renewable energy sources, and the need for a reliable power source. Grid operators face challenges integrating these renewable energy sources into the power grid, making energy storage an essential solution. Lithium-ion batteries currently dominate the market due to their energy density and power conversion efficiency. However, flow batteries and lead-acid batteries offer advantages in terms of cycle life and cost-effectiveness for certain applications. Manufacturing efficiency, economies of scale, and safety measures are crucial factors for battery producers. Grid power outages and the increasing adoption of renewable energy sources as alternative energy sources necessitate the availability of affordable and accessible battery storage solutions. Utility-scale applications, such as solar parks and wind farms, require above 500 MWh capacity batteries for peak shaving, self-consumption optimization, and backup power. The utility sector invests heavily in these installations, with the largest share coming from the solar energy segment. Input energy sources, such as renewable energy, raw materials like lithium, cobalt, and copper, and energy demand drive investments in the ESS market. The residential sector, with its growing electricity consumption and work-from-home trend, also presents opportunities for battery storage. Battery prices and performance and lifespan are critical factors for both utility-scale and residential installations. Harsh environmental conditions, such as extreme temperatures, pose challenges for battery storage systems. Maintenance activities, spare parts availability, and local service providers are essential considerations for ensuring reliability and optimal performance. Regulations, incentive programs, and revenue models, such as ancillary services, arbitrage, and capacity auctions, also impact the ESS market. Applications in telecommunication towers, data centers, uninterruptible power supply, and diesel generators further expand the market's reach. Lithium-ion BESS products, rooftop solar, and excess energy from factories offer opportunities for demand charge management and self-sufficiency. Smart homes, microgrids, and optimized self-consumption are emerging trends in the ESS market. Battery cells, packs, inverters, and housing, along with the balance of system, form the profit pool for system integrators. Firm frequency response, solar parks, wind farms, and ancillary services provide revenue opportunities for utilities. In conclusion, the Battery for Energy Storage Systems market faces numerous challenges, including grid power integration, renewable energy sources, and harsh environmental conditions. However, the opportunities for growth are immense, with potential applications in various sectors, including utility-scale and residential installations, and diverse input energy sources. Investments in clean-energy infrastructure, renewable-energy generation, and energy storage systems will continue to drive the market forward.
• Lithium-ion batteries have emerged as the dominant technology in the energy storage systems (ESS) market, accounting for over 75% of the global electrochemical energy storage capacity in 2023. This shift is driven by the increasing adoption of these batteries in the transportation sector, particularly in electric vehicles (EVs), due to their advantages in energy and power density, safety, cost, and cycle life. In consumer electronics, lithium-ion batteries are already widely used in devices such as laptops and smartphones. The growing demand for larger batteries and stationary storage in EVs is further fueling the market growth for lithium-ion batteries.

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Segment Overview 

This battery for energy storage systems (ess) market report extensively covers market segmentation by  

• Technology
• Lithium-ion Batteries
• Flow Batteries
• Others
• Connectivity
• On-grid
• Off-grid
• Geography
• APAC
• North America
• Europe
• Middle East And Africa
• South America
• Battery
• Lithium-ion Batteries
• Advanced Lead-acid Batteries
• Flow Batteries
• Others
• Ownership
• Customer Owned
• Third-party Owned
• Utility Owned

1.1 Lithium-ion batteries-  The lithium-ion batteries segment holds a substantial market share in the global Battery for Energy Storage Systems (ESS) market in 2024, driven by their high energy density, improved energy-to-density ratio, and lower self-discharge rate compared to other battery technologies. Among various types of lithium batteries, Li-ion batteries are the most preferred choice due to their efficiency and ability to store large amounts of power. The increasing demand for renewable energy, especially in China and other countries, is fueling the growth of the ESS market, with Li-ion batteries being the go-to choice for energy storage due to their suitability for smart grids and renewable power plants. The reliability of power supply is a major concern in regions like Eastern Europe and the Middle East and Africa, leading to significant investments in ESS projects. Although Li-ion batteries are currently perceived as unsuitable for large-scale grid storage due to cost concerns, their suitability is expected to increase with the implementation of smart grids. The growing focus on enhancing power reliability and the mounting demand for electricity storage are expected to drive the growth of the Li-ion batteries segment in the global ESS market during the forecast period.

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Research Analysis

The Battery for Energy Storage Systems (ESS) market is experiencing significant growth due to the increasing integration of renewable energy sources into the power grid. Grid modernization initiatives are driving the demand for energy storage solutions to manage the variability of renewable energy generation and ensure grid stability. Lithium-ion batteries are currently the most popular technology for ESS due to their high energy density, long cycle life, and decreasing costs. However, other technologies like flow batteries are also gaining traction due to their longer cycle life and ability to use a wider range of raw materials, including cobalt, lithium, and copper. The global BESS market is expected to grow exponentially due to increasing energy demand, clean-energy investments, and the need for peak shaving, self-consumption optimization, backup power, and renewable energy infrastructure. Battery prices are decreasing, making ESS more affordable for both residential and utility-scale installations. BTM residential installations and FTM installations are key areas of focus for the market, with utility-scale installations leading the way in terms of capacity additions.

Market Research Overview

The Battery For Energy Storage Systems (ESS) market is witnessing significant growth due to the increasing integration of renewable energy sources into the power grid. Grid modernization initiatives are driving the demand for reliable and efficient energy storage solutions, with lithium-ion batteries leading the way. However, other types of batteries like flow batteries and lead-acid batteries also play a role in the market. Energy density, power conversion systems, control systems, thermal management systems, and safety measures are crucial factors influencing the performance and lifespan of these batteries. Economies of scale and manufacturing efficiency are key drivers for affordability and accessibility in the utility sector. Grid operators and local service providers are essential players in the market, providing maintenance activities, spare parts, and ensuring the reliability of energy storage systems. Alternative energy sources, such as wind and solar energy, are major input energy sources for ESS, with solar energy segment showing significant growth. Geographic footprint, cycle life, energy conversion rate, cost-effectiveness, power quality, and utility-scale applications above 500 MWh capacity are some of the critical factors shaping the market. Input energy sources, raw materials like lithium, cobalt, and copper, and energy demand are significant investment areas. The residential sector, renewable energy infrastructure, electricity consumption, disposable incomes, work-from-home trend, and power outages are driving the demand for energy storage systems in the residential sector. Distributed energy resources, renewable power sources, peak shaving, self-consumption optimization, backup power, and revenue models are essential aspects of the utility-scale applications. Telecommunication towers, data centers, uninterruptible power supply, diesel generators, and lithium-ion BESS products are some of the significant applications of energy storage systems. Harsh environmental conditions, mining, construction, events, regulations, and self-sufficiency are some of the challenges faced by the market. Overall, the global BESS market is expected to grow significantly due to the increasing demand for clean energy, renewable energy generation, and the need for firm frequency response, ancillary services, arbitrage, capacity auctions, and peak shaving.

Table of Contents:

1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation

• Technology
• Lithium-ion Batteries
• Flow Batteries
• Others
• Connectivity
• On-grid
• Off-grid
• Geography
• APAC
• North America
• Europe
• Middle East And Africa
• South America
• Battery
• Lithium-ion Batteries
• Advanced Lead-acid Batteries
• Flow Batteries
• Others
• Ownership
• Customer Owned
• Third-party Owned
• Utility Owned

7 Customer Landscape
8 Geographic Landscape
9 Drivers, Challenges, and Trends
10 Company Landscape
11 Company Analysis
12 Appendix

About Technavio

Technavio is a leading global technology research and advisory company. Their research and analysis focuses on emerging market trends and provides actionable insights to help businesses identify market opportunities and develop effective strategies to optimize their market positions.

With over 500 specialized analysts, Technavio's report library consists of more than 17,000 reports and counting, covering 800 technologies, spanning across 50 countries. Their client base consists of enterprises of all sizes, including more than 100 Fortune 500 companies. This growing client base relies on Technavio's comprehensive coverage, extensive research, and actionable market insights to identify opportunities in existing and potential markets and assess their competitive positions within changing market scenarios.

Contacts

Technavio Research
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UK: +44 203 893 3200
Email: media@technavio.com
Website: www.technavio.com/

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