As energy generation continues to diversify, storage technology is playing an increasingly vital role. Batteries remain one of the most popular forms of storage, and demand for this technology is on the rise.
A white paper published in November 2023 by the Solar Energy Industry Association (SEIA) projects demand for battery storage systems in the United States to increase by a factor of six over the next six years.
“Energizing American Battery Storage Manufacturing” examines a number of factors affecting the U.S. battery manufacturing industry, including supply chain logistics, demand, capacity, cost competitiveness and others. The conclusions are favorable for the industry.
The paper finds that demand for battery storage is increasing globally. Most of this is coming from growth in the renewable energy sector where batteries are primarily needed to compensate for the variability of the source.
SEIA projects total global demand for battery energy storage systems (BESS), which are primarily used in renewable energy projects, to increase from 60 gigawatt-hours (GWh) in 2022 to approximately 840 GWh by 2030. In the United States, SEIA projects demand for BESS to increase from 18 GWh to 119 GWh during the same time frame.
A number of factors are contributing to this upward trend. The paper notes that a combination of positive factors, including benefits, incentives and improving costs, have quickly made battery storage “integral to solar deployment in all segments.”
Foremost among these is the Inflation Reduction Act. It includes tax credits, loans and other incentives to significantly lower costs for the domestic production of battery systems and their components, making them more cost-competitive with products produced in China and elsewhere.
Other factors contributing to the growth in production are the recognition by utilities and grid system operators that BESS improve grid reliability and resilience. They can help smooth electricity, provide backup power and provide other benefits.
Finally, the growth of electric vehicles is also a major contributor to the growth in production of battery technology. According to SEIA, nearly 90% of the demand for battery capacity in the United States in 2030 will be for EVs.