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The global battery energy storage market is expected to reach $4.4 billion in 2022

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The world market for battery energy storage systems is expected to reach $4.4 billion in 2022, according to global market research firm Markets and Markets, and is expected to grow to $15.1 billion by the end of the 2027, the compound annual growth rate was 27.9 percent.

The rapid growth of the market has been driven by the increasing demand for grid energy storage systems as a result of the ongoing modernization of the power grid and by the significant growth in renewable energy as a result of the energy transition.

Solar and wind power are the most prominent types of renewable energy stored in the grid. However, when the sun is blocked by clouds or fluctuating wind currents, the energy production process changes. This fluctuation creates a need for flexible grid systems for storing energy. Battery Energy Storage System is becoming an integral part of power grid modernization.

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These systems can help grid operators save electricity when generating more than they need. The introduction of battery-based energy storage systems also contributes to the reliability and flexibility of power supply systems in generating, transmitting and distributing electricity.

However, the high capital expenditure required to install battery storage systems is holding back market growth. On the other hand, the number of Rural electrification projects around the world has surged, and the growth in the number of data centres has led to an increase in the demand for continuous power supply and a decrease in the price of lithium-ion battery goods, it is expected to create great opportunities for battery applications in energy storage systems in the coming years. In addition, battery energy storage system manufacturers face challenges due to the complexity of installing battery energy storage systems on islands or in remote areas, overheating of lithium-ion battery and ageing of lithium-ion battery.

However, the COVID-19 pandemic that swept the world in early 2020 has severely affected the global economy and all industries. The comprehensive closures imposed by states in the early stages of the epidemic have seriously affected the livelihoods and quality of life of the population.

This has led to disruptions in global supply chains. Economies around the world have slumped as demand for their products has plummeted. Production in all industries has been restricted by the pandemic, which has led to a shortage of raw materials. The decline in exports and supply chain disruptions were the main factors contributing to the decline in production.

The sudden outbreak of a new coronavirus has had an adverse impact on the growth of utility use. There has been a decrease in the number of battery energy storage systems installed in various 2021 projects. However, the increasing installation of battery energy storage systems in operational projects and the increasing emphasis placed by the government on the modernization of the power sector are expected to increase the adoption of batteries and thus the demand for battery energy storage systems. However, the market value may have to 2027 to reach pre-COVID-19 levels.

The high investment cost is the main factor that restricts the market growth. Battery energy storage technologies, including lithium-ion battery, flow and lead-acid batteries, require additional installation investment due to their high energy density and improved performance. Lithium-ion battery are expensive because they provide high energy density, low self-discharge rate and require less maintenance.

However, the cost of future lithium-ion battery is expected to fall. These batteries are also used in electric vehicles (evs) because they are lightweight, compact and have a large capacity. In addition, the high initial investment cost of flow battery manufacturing is also a major constraint to market growth

Rural electrification is the process of supplying electricity in rural or remote areas. The battery energy storage system works on the Rural electrification. Countries around the world are working to develop remote areas, such as remote rural and peri-urban areas, particularly in developing countries, as well as small islands separated from national power grids.

Therefore, they need to use renewable and conventional sources of energy to provide reliable and uninterrupted power in order to improve overall system efficiency and ensure economic savings throughout the life cycle of the system. The installation of battery energy storage systems in rural areas would be a solution to provide a reliable and safe supply of electricity to businesses and local communities.

However, battery energy storage systems will face many challenges when deployed on islands or in remote areas, especially in relation to environmental conditions, examples include changes in daytime and nighttime temperatures, high maintenance costs due to commuting difficulties to these locations and lack of equipment installation infrastructure.

In terms of battery types, 2021 lithium-ion battery have the largest share of the battery energy storage system market and are expected to remain unchanged over the forecast period. The growth of this segment is due to the advantages of batteries, such as high energy and power density, which result in low standby loss and high life expectancy of about 5-15 years and 98% efficiency. In addition, the lithium-ion sulfur battery energy storage system supports frequency regulation, reduced demand charging, grid buffering and renewable energy integration for grid-connected connections.

Grid-connected systems, which account for the largest share of the 2021 market in terms of installation, are expected to maintain a significant compound annual growth rate over the forecast period. The upfront cost of grid-connected connections is lower than that of off-grid systems because the excess energy is sent to the grid and can be used later on in a measured manner.

The growth of this segment is expected to be driven by lower energy bills for customers who rely on the public grid. Demand from renewable energy suppliers for grid modernisation and new regulations in the energy sector have also driven growth in the utility grid-connected battery energy storage market.

From the developers’ perspective, utility applications will maintain the largest growth rate in the battery energy storage market in the 2027. Utilities dominate the 2021 market. Meeting Peak demand is a major driver of utility market growth.

Utility Bess provides power quality, frequency and voltage control services in case of sudden fluctuations in energy supply. Battery-based energy storage systems allow grid operators to save electricity when there is a glut of renewable energy. The increasing demand for reliable and efficient electricity supply in most regions, as well as the growing demand for renewable energy sources, account for the high demand for battery-based energy storage systems in the utility sector.

In terms of regional markets, battery energy storage systems in the asia-pacific region are expected to grow at the highest CAGR during the forecast period. The asia-pacific region is at the heart of the battery energy storage industry. The asia-pacific region is expected to witness electrification plans in remote areas.

Investment in energy storage in the asia-pacific region is expected to increase significantly as governments in developing economies develop new policies to improve the reliability and quality of electricity distribution facilities for residential customers. Governments in the region are working to minimize the adverse environmental impacts of the energy sector. These factors have led to increased deployment of battery-based energy storage systems in residential and utility applications.

According to service providers, BYD (China) , SmartPropel (China),Samsung SDI (Korea) , LG Energy (Korea) and Matsushita (Japan) are major players in the market, market dominance is expected to continue during the forecast period.