As demand for energy storage continues to rise and as battery costs fall and renewable energy proliferates, storage installations around the world will “multiply exponentially,” according to the Bloomberg New Energy Finance report, “Energy Storage Outlook 2019.”

Installations will rise 122-fold from 9 gigawatt/17 gigawatt-hour (GWh) in 2018, to 1,095 GW/2,850 GWh by 2040, BNEF forecasts. While it will take $662 billion in investments to make this happen, such a massive increase will be made possible by further sharp declines in the cost of lithium-ion batteries. This is on top of the 85% reduction in costs of the batteries from 2010 to 2018.

Indeed, BNEF predicts that lithium-ion battery costs per kilowatt-hour will be halved again by 2030, due mainly from increased demand from stationary storage and electric vehicles, as well as the global electric grid being “increasingly penetrated by low-cost wind and solar.”

Yayoi Sekine, BNEF’s energy storage analyst and co-author of the report, said that this year’s report contains two significant changes from 2018: the analysts raised their estimate of the investment that will go into energy storage by 2040 by more than $40 billion, and they now expect that the majority of new capacity will be utility-scale, rather than behind-the-meter at homes and businesses.

As battery costs continue to fall, they will be able to be used in increasingly more applications, according to the report. These include energy shifting—moving in time the dispatch of electricity to the grid, often from times of excess solar and wind generation; peaking in the bulk power system to deal with demand spikes; and customers buying electricity at cheap hours and using it later in order looking to save on their energy bills.

“In the near term, renewables-plus-storage, especially solar-plus-storage, has become a major driver for battery build,” said Logan Goldie-Scot, BNEF’s head of energy storage. “This is a new era of dispatchable renewables, based on new contract structures between developer and grid.”

Nearly three quarters of the global market in gigawatt terms will be represented by just 10 markets, according to the report. Currently South Korea leads, “but will soon cede that position,” to be far eclipsed by China and the U.S. by 2040. The remaining significant markets include India, Germany, Latin America, Southeast Asia, France, Australia and the United Kingdom.

“There is a fundamental transition developing in the power system and transportation sector,” the authors write. “Falling wind, solar and battery costs mean wind and solar are set to make up almost 40 percent of world electricity in 2040, up from 7 percent today.”

At the same time, passenger electric vehicles could become a third of the global passenger vehicle fleet by 2040, up from less than half a percent today, “adding huge scale to the battery manufacturing sector.”

“Demand for storage will increase to balance the higher proportion of variable, renewable generation in the electricity system,” the authors write. “Batteries will increasingly be chosen to manage this dynamic supply and demand mix.”

Energy storage will become a practical alternative to new-build electricity generation or network reinforcement, according to the report. Behind-the-meter storage will also increasingly be used to provide system services on top of customer applications.

The total demand for batteries from the stationary storage and electric transport sectors is forecast to be 4,584 GWh by 2040, “providing a major opportunity for battery makers and miners of component metals such as lithium, cobalt and nickel,” the authors write.