Market development of battery storage systems, commercial storage systems and large-scale storage systems in Germany, Europe, China, Japan and South Korea

How battery storage ensures grid stability and efficiency

The battery storage market is experiencing tremendous growth globally. Large-scale and commercial storage systems, in particular, are gaining importance for ensuring grid stability, smoothing peak loads, and efficiently utilizing renewable energy. The updated market overview from pv magazine highlights that 75 providers with more than 390 products and services are now active in this sector – a clear indicator of the market's expansion and diversification.

Versatility and applications of battery storage systems

The versatility of modern battery storage systems is remarkable. On average, seven out of fourteen possible application areas for storage solutions are mentioned, with the most frequently cited use cases being:

1. Smoothing of load peaks – avoiding expensive load peaks through intermediate energy storage.
2. Optimizing self-consumption – maximizing the amount of electricity used from renewable energy sources.
3. Smoothing of generation peaks – ensuring a consistent feed-in of renewable energies into the grid.
4. Use as a charging booster – accelerating the charging of electric vehicles and reducing the load on the grid.
5. Additional important areas of application include the provision of primary control power, use in virtual power plants and marketing on energy and control power markets.

Growth and development of business models

In addition to hardware development, the service sector surrounding battery storage is also expanding. Key services include:

• EPC services (Engineering, Procurement, Construction) – Turnkey solutions for battery storage.
• Planning and optimization – integration of storage systems into existing energy networks.
• Monitoring and control – Intelligent software solutions for real-time monitoring.
• Trading on energy markets – participation in balancing energy markets for grid services.
• These developments demonstrate the growing interest in and increasing importance of battery storage in the energy transition.

Market developments in various regions

Global market developments show dynamic growth with regionally varying trends.

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Germany and Europe

Germany is one of the leading markets for battery energy storage systems (BESS) in Europe and is experiencing significant growth. According to forecasts, battery production in Germany is expected to reach a capacity of almost 400 gigawatt hours per year by 2030, which corresponds to about a quarter of total European production.

Europe plans to increase its battery cell production capacity to up to 1.5 terawatt-hours by 2030. The United Kingdom, in particular, is driving the development of battery storage systems. Here, the regulatory framework and investments in grid infrastructure are crucial.

China

China dominates the global market for battery energy storage systems and is expected to further expand its market leadership. Currently, Chinese battery manufacturers control approximately 80% of the global market for battery cells and secure a large share of the critical minerals required for production. The Chinese government actively supports the expansion of battery production and storage to strengthen energy independence and reduce emissions.

Japan and South Korea

Japan has ambitious goals for the implementation of battery storage. It is estimated that a battery storage capacity of 3 to 4 gigawatts will be developed by 2030.

South Korea has taken a leading role in battery production and development in recent years. Companies like LG Energy Solutions and Samsung SDI, in particular, are investing heavily in new technologies. South Korea is expected to maintain a top position in battery installations for the next few years before being overtaken by China.

Battery energy storage: A key technology for climate neutrality

The global battery energy storage market is projected to grow from US$25.02 billion in 2024 to US$114.05 billion in 2032, representing a compound annual growth rate (CAGR) of 20.88%. By 2040, a cumulative installed battery storage capacity of 942 gigawatts is expected, requiring a total investment of US$620 billion.

Market drivers

• Renewable energies: The growing share of renewable energies such as solar and wind power makes battery storage indispensable for stabilizing the grids.
• Grid stability: Storage solutions are increasingly being used to compensate for frequency fluctuations and grid overloads.
• Decreasing costs: Advances in battery production and economies of scale are leading to continuous cost reductions.
• Political support: Governments worldwide promote the expansion of battery storage through subsidies and legal frameworks.

Market share comparison: Europe vs. China

Europe

Europe, and Germany in particular, dominates the market for home energy storage systems. In 2020, approximately 70% of all home energy storage systems installed in Europe were located in Germany. The leading manufacturers in this segment are:

1. BYD
2. sun
3. SENEC
4. E3/DC

These four companies covered more than three-quarters of the German market in 2021 and 2022. Besides Germany, Italy, Great Britain, Austria, and Switzerland are important markets. Together, these five countries account for 93% of all home energy storage systems installed in Europe.

China

China dominates the global market for battery energy storage systems:

• Chinese battery manufacturers control approximately 67% of the battery cell market.
• CATL, a Chinese company, holds a global market share of approximately 38% in energy storage systems for “electromobility”.

Other leading Chinese manufacturers include:

• BYD
• Ganfeng lithium
• CALB
• EVE Energy28

Chinese companies account for approximately 60% of the global battery cell market. CATL and BYD are the leading manufacturers, together representing about 55% of the worldwide market . Including other Chinese companies in the top 10, this share rises to 67.1%. This dominance extends across the entire value chain, from raw material extraction to battery cell manufacturing .

CATL remains the undisputed market leader with a market share of approximately 43%, followed by BYD with around 25%. This dominance is supported by strong demand for lithium iron phosphate (LFP) batteries and comprehensive control of the value chain in China.

A comparison reveals that China holds a significantly stronger position in the global battery market than Europe. While Europe, particularly Germany, leads in home energy storage systems, Chinese companies dominate the overall market for battery storage and cells. Asian dominance in the battery market is further underscored by the fact that no European company is among the top 10 global battery manufacturers.

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Technology and demand: The key role of battery storage in the energy transition

The global market for battery storage systems is experiencing dynamic growth. While Europe, and Germany in particular, is leading the way in home storage, China remains the dominant player in global battery production and will continue to extend this lead.

Technological developments, political frameworks, and the increasing demand for renewable energies will further drive the expansion of the battery storage market in the coming years. In an increasingly electrified world, efficient and high-performance storage systems will be a key pillar of the energy transition.

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Growth markets for battery storage: Battery storage as a key to integrating renewable energies

The global market for battery storage is experiencing unprecedented dynamism and rapid growth. This development is not only an indicator of technological progress but also a crucial factor for the success of the global energy transition. Battery storage is no longer a niche technology but is evolving into a central pillar of a sustainable and resilient energy supply. Particularly in the context of the increasing integration of renewable energies such as solar and wind power, it plays an indispensable role in balancing the inherent fluctuations of these energy sources and ensuring grid stability.

The importance of battery storage is evident in various applications, ranging from stabilizing large-scale power grids to optimizing self-consumption in private households. This versatility makes battery storage a key element for a future-oriented energy infrastructure. The growing number of suppliers and products on the market underscores the expansion and diversification of this sector. Current market overviews reveal an impressive variety of players and solutions, which stimulates competition and drives innovation.

Battery storage: Guarantees for grid stability and efficiency

The primary function of battery storage in the energy system is to ensure grid stability and efficiency. In a world increasingly characterized by volatile renewable energy sources, storage is becoming an indispensable tool for maintaining the balance between energy generation and consumption. It allows excess energy to be stored when production is high—for example, due to wind or solar radiation—and fed back into the grid when needed. This capability is crucial for minimizing frequency fluctuations and preventing voltage dips that could jeopardize the stability of the entire grid.

Furthermore, battery storage systems contribute significantly to increasing the efficiency of the energy system. They allow energy to be used when it is most valuable, and not necessarily when it is being generated. This optimizes the use of renewable energies, reduces curtailment measures, and minimizes the need for conventional power plants, which are often inefficient and environmentally damaging. The ability to reduce peak loads and optimize self-consumption are further aspects that significantly improve the efficiency of the energy system through battery storage.

Versatility and application areas of battery storage systems

The versatility of battery storage systems is remarkable and spans a wide range of applications. Modern storage solutions are not limited to a single purpose but can be flexibly deployed in various sectors to address diverse challenges within the energy system. On average, a multitude of potential applications are identified for storage solutions, with some applications standing out in particular:

Smoothing of load peaks: Increased efficiency and cost reduction

Peak load smoothing is one of the most common and economically attractive applications for battery storage. Industrial and commercial enterprises, as well as grid operators, often face high costs associated with peak loads caused by short but intense periods of electricity consumption. Battery storage offers an elegant solution by storing energy during periods of low demand and releasing it precisely when peak loads occur. This not only reduces energy costs for end users but also relieves pressure on the power grid and helps prevent overloads. The ability to mitigate peak loads makes battery storage a valuable tool for efficient load management and optimized grid utilization.

Optimizing self-consumption: Maximizing renewable energy in households and businesses

In both the private and commercial sectors, optimizing self-consumption is a key concern, especially for operators of photovoltaic systems. Battery storage makes it possible to use self-generated solar power even when the sun isn't shining. This increases energy independence, reduces reliance on the public grid, and maximizes the profitability of one's own renewable energy system. By storing excess solar power during the day and releasing it in the evening or at night, households and businesses can significantly increase their self-consumption and sustainably reduce their electricity costs. This application makes a significant contribution to the decentralization of the energy supply and strengthens the role of prosumers.

Smoothing of generation peaks: Stable feed-in of renewable energies into the grid

The volatile nature of renewable energy sources like wind and solar power poses a challenge for grid integration. Significant fluctuations in generation can lead to grid instability. Battery storage systems offer a solution by smoothing generation peaks and ensuring a more consistent feed-in of renewable energy into the grid. They can absorb excess energy when wind turbines or solar parks are producing a lot of electricity and release it when needed, when generation decreases. This function is crucial for increasing the share of renewable energy in the grid without compromising grid stability. Battery storage systems thus act as a buffer, enabling the integration of large quantities of fluctuating renewable energy.

Use as a charging booster: Fast charging of electric vehicles and grid stability

With the increasing prevalence of electric vehicles, the need for high-performance charging infrastructure is growing. At the same time, the simultaneous charging of many electric vehicles can place a significant strain on the power grid, particularly during peak loads in residential areas or at fast-charging stations. Battery storage systems can be used as "charging boosters" to shorten charging times and simultaneously reduce grid load. They can store energy and deliver it to charging stations at high power when needed. This enables faster charging processes and avoids grid congestion. Furthermore, battery storage systems, in combination with charging stations, can also perform grid-supporting functions, such as providing balancing power or contributing to grid stabilization.

Additional important areas of application: balancing power, virtual power plants and energy markets

Beyond the main applications mentioned above, there are a number of other important areas of application for battery storage that highlight its versatility and value for the energy system:

Provision of primary control reserve

Battery storage systems are ideally suited to react quickly and precisely to frequency fluctuations in the grid and thus provide primary control reserve. Their response speed is significantly higher than that of conventional power plants, making them a valuable tool for grid stabilization. Participation in the balancing energy market opens up additional revenue streams for battery storage operators and contributes to the profitability of storage investments.

Use in Virtual Power Plants (VPPs)

Battery storage systems can be integrated into virtual power plants (VPPs) to form a flexible and controllable energy portfolio together with other decentralized energy generation and consumption facilities. VPPs enable the combined flexibility of many small plants to be marketed on the energy market and to provide grid support services. Battery storage plays a key role in VPPs, as it provides the necessary flexibility and controllability to respond to fluctuating generation and loads.

Trading on energy and balancing energy markets

Battery storage systems enable active participation in energy trading and allow companies to profit from price differences in the energy markets. Through the intelligent use of storage, energy traders can buy electricity when prices are low and resell it when prices are high. In addition to participation in the balancing energy market, battery storage systems thus offer diverse opportunities for value creation in the energy sector.

Growth and development of business models in the battery storage market

Parallel to the technological advancements in battery storage, the service sector surrounding this technology is also expanding. The complexity of battery storage systems and their diverse applications necessitate specialized services in various areas:

EPC services (Engineering, Procurement, Construction)

EPC service providers offer turnkey solutions for battery storage projects, from planning and design to component procurement, installation, and commissioning. They assume responsibility for the entire project and ensure that the storage system meets the customer's requirements and operates smoothly. EPC services are particularly important for larger battery storage projects in the industrial and commercial sectors, as well as for grid operators.

Planning and optimization

Integrating battery storage systems into existing energy grids requires careful planning and optimization. Specialized planning and engineering firms support clients in designing the storage system, dimensioning components, planning grid connections, and developing operating strategies. Optimizing storage deployment is crucial to maximizing the system's economic viability and efficiency and to optimally support the desired applications.

Monitoring and control

Intelligent software solutions for real-time monitoring and control are essential for the operation of battery storage systems. These systems continuously collect data on the storage system's condition, energy flow, and grid conditions, enabling optimal control and monitoring of storage operations. Modern monitoring and control systems often utilize artificial intelligence and machine learning to optimize storage operation, detect faults early, and extend the storage system's lifespan.

Trading on energy markets and services for marketing

Participation in energy trading and the provision of balancing power require specialized services for marketing storage flexibility. Energy traders and aggregators offer services to integrate battery storage into the energy market, develop trading strategies, and handle the billing of services rendered. These services are crucial for maximizing the economic viability of battery storage and strengthening its role in the energy system.

Regional market development: Focus on Europe, China, Japan and South Korea

The global market development for battery storage systems is characterized by regionally diverse trends and dynamics. While some regions are already leading the way, others are still in the early stages of market development. A detailed look at the key regions reveals the diversity and different focuses within the global battery storage market:

Germany and Europe: Pioneers in home storage and a growing focus on large-scale storage.

Germany is considered one of the leading markets for battery storage systems in Europe, particularly in the area of ​​residential storage. The combination of high electricity prices, a strong photovoltaic industry, and progressive energy policies has fostered a dynamic market for residential storage in Germany. Forecasts indicate that battery production in Germany could reach a capacity of almost 400 gigawatt-hours per year by 2030, which would correspond to about a quarter of total European production. This underscores Germany's ambition to play a significant role in the European battery industry.

Ambitious goals are also being pursued at the European level. The European Union plans to increase its battery cell production capacity to up to 1.5 terawatt-hours by 2030. Besides Germany, other European countries such as the United Kingdom, France, and Poland are also driving the development of battery storage systems. The United Kingdom, in particular, is heavily investing in battery storage to increase grid stability and accelerate the integration of renewable energies. Regulatory frameworks, investments in grid infrastructure, and funding programs play a crucial role in market development in Europe. The focus is increasingly shifting to large-scale storage systems to ensure grid stability at the transmission network level and to enable the integration of large quantities of renewable energy.

China: Dominance in the global battery market and strategic focus on energy storage

China dominates the global market for battery energy storage systems and is expected to further consolidate its market leadership in the coming years. Chinese battery manufacturers already control a large share of the global battery cell market and secure a significant portion of the critical minerals required for battery production. The Chinese government actively supports the expansion of battery production and storage to strengthen energy independence, reduce emissions, and boost domestic industry. This strategic focus on battery storage makes China a key player in the global energy transition.

The Chinese battery industry benefits from economies of scale, low production costs, and strong domestic demand. Chinese companies like CATL and BYD have risen to global market leaders, dominating not only the battery cell market but also the market for battery storage systems. The Chinese government pursues a comprehensive industrial policy that encompasses everything from raw material extraction and battery cell production to system integration. This integrated value chain gives Chinese companies a competitive advantage and strengthens their position in the global market.

Japan and South Korea: Technological expertise and ambitious expansion goals

Japan and South Korea are also key players in the global battery storage market, distinguished by their technological expertise and ambitious expansion targets. Japan has set itself the goal of installing 3 to 4 gigawatts of battery storage capacity by 2030. This target underscores the importance of battery storage for Japan's energy transition and ensuring a stable energy supply.

South Korea has taken a leading role in battery production and development in recent years. Companies like LG Energy Solutions and Samsung SDI are among the world's largest battery manufacturers and are investing heavily in new technologies such as solid-state batteries and improved lithium-ion batteries. South Korea is expected to maintain a leading position in battery storage installations for the next few years before potentially being overtaken by China. The South Korean battery industry benefits from a strong research and development landscape, a highly skilled workforce, and an export-oriented economy.

Battery energy storage: A key technology for climate neutrality and a sustainable energy future

The global battery energy storage market is poised for tremendous growth. Forecasts predict that the market will expand from US$25.02 billion in 2024 to US$114.05 billion in 2032, representing an impressive average annual growth rate of 20.88%. By 2040, a cumulative installed battery storage capacity of 942 gigawatts is expected, requiring a total investment of US$620 billion. These figures underscore the enormous potential and crucial role of battery storage in the energy transition and the achievement of climate neutrality.

Market drivers for the growth of the battery storage market

The rapid growth of the battery storage market is driven by a number of mutually reinforcing factors:

Increasing share of renewable energies

The growing share of renewable energies such as solar and wind power makes battery storage indispensable for stabilizing grids and ensuring a reliable energy supply. The volatility of renewable energies requires flexible storage solutions to maintain the balance between generation and consumption and to guarantee grid stability. Battery storage is therefore an enabling technology for an energy transition based on renewable energies.

Increasing need for grid stability and flexibility

The increasing electrification of the transport and heating sectors, as well as the decentralization of energy generation, are increasing the need for grid stability and flexibility. Battery storage systems are being used more extensively to compensate for frequency fluctuations and grid overloads that can arise from the integration of large amounts of fluctuating renewable energy sources and new load profiles. They contribute to the modernization of electricity grids and enable greater resilience to disturbances and extreme weather events.

Continuously decreasing costs for battery technology

Advances in battery production, economies of scale, and technological innovations are leading to continuous cost reductions for battery technology. These lower costs are making battery storage increasingly competitive with conventional energy technologies and opening up new areas of application. Cost parity with fossil fuels is approaching, making the use of battery storage economically attractive in various sectors.

Political support and regulatory frameworks

Governments worldwide are promoting the expansion of battery storage through subsidies, tax incentives, feed-in tariffs, and legal frameworks. Political support and stable regulatory environments are crucial for creating investment security and accelerating the market ramp-up of battery storage. Support programs and clear political signals send important signals to investors and companies, driving market development.

Market shares compared: Europe vs. China – A differentiated analysis

A comparison of market shares between Europe and China reveals a differentiated picture. While Europe, and Germany in particular, plays a leading role in the field of home energy storage systems, China dominates the overall global market for battery storage and cells.

Europe: Leader in home storage systems, but needs to catch up in large-scale storage systems and battery cells

Europe, and Germany in particular, has long been the dominant market for home energy storage systems. In 2020, an estimated 70% of all home energy storage systems installed in Europe were located in Germany. Leading manufacturers in this segment include European companies such as Sonnen, SENEC, and E3/DC, as well as Asian companies like BYD. These companies covered a large portion of the German market in 2021 and 2022. Besides Germany, Italy, the UK, Austria, and Switzerland are also important markets for home energy storage in Europe. Together, these five countries account for a significant share of all home energy storage systems installed in Europe.

In the area of ​​large-scale energy storage and battery cell production, however, Europe lags behind China and Asia. While European companies are strong in system integration and niche areas such as specialized battery technologies, Asian manufacturers dominate the mass market for battery cells and large-scale storage systems. Nevertheless, Europe is making significant efforts to strengthen its domestic battery industry and reduce its dependence on Asian supply chains. Initiatives such as the European Battery Alliance and massive investments in research and development aim to establish Europe as a key location for battery production.

China: Global dominance in the battery cell market and on the path to leadership in energy storage

China impressively dominates the global market for battery energy storage systems. Chinese battery manufacturers control a significant share of the battery cell market, and Chinese companies are also gaining increasing importance in the energy storage sector. CATL, a Chinese company, has risen to become a global market leader and holds a substantial market share in energy storage systems for electric vehicles and other energy storage applications. Other leading Chinese manufacturers, such as BYD, Ganfeng Lithium, CALB, and EVE Energy, also play a significant role in the global battery market.

Chinese companies account for a large share of the global battery cell market. CATL and BYD are the leading manufacturers, together controlling a significant portion of the worldwide market. When other Chinese companies are included in the top 10, the share of Chinese manufacturers in the global battery cell market increases even further. This dominance extends across the entire value chain, from raw material extraction to battery cell manufacturing and system integration. CATL is the undisputed market leader, followed by BYD. This dominance is supported by the strong demand for lithium iron phosphate (LFP) batteries and China's comprehensive control of the value chain.

Technology and demand: Battery storage as a key to the energy transition

The global battery storage market is experiencing dynamic growth. While Europe, and Germany in particular, holds a leading position in home storage systems, China is the dominant player in global battery production and is expected to further extend its lead. Asian dominance in the battery market is underscored by the fact that no European company is currently among the top 10 global battery manufacturers. This highlights the challenges facing Europe in keeping pace with global competition and developing its own strong battery industry.

Technological advancements, political frameworks, and the increasing demand for renewable energy will further drive the expansion of the battery storage market in the coming years. In an increasingly electrified world, efficient and high-performance storage systems will be a cornerstone of the energy transition. Battery storage is not only a tool for grid stabilization and efficiency improvement, but also a key factor in decarbonizing the energy sector and achieving climate targets. Its ability to integrate renewable energies, reduce peak loads, and provide grid support makes it an indispensable technology for a sustainable and resilient energy future. The continuous development of battery technology and decreasing costs will make the use of battery storage economically attractive in more and more applications and further strengthen its role in the energy system.

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