Asia to overtake US as storage leader

• ‍Asia to overtake US as biggest deployer of energy storage by 2030
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• ‍US solar & wind slowdown and interconnection problems slowing storage deployment
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• ‍China and India will fuel much of Asia’s storage growth

By the end of this decade, Asia will become the biggest deployer of energy storage systems, installing more gigawatts of storage than the rest of the world combined. At present, Asia installs less than half of all the market battery storage deployed each year – in 2022, a total of 25GW of battery energy storage was installed around the world, with Asia responsible for around 40 per cent of that, according to data from Rystad Energy. Interestingly, Asia’s share of global market battery storage deployment is actually expected to fall this year – in 2023, it is anticipated that 29GW of storage will be installed around the world with the US being the dominant force, accounting for 45 per cent of the total (see chart below).

However, towards the end of the decade, the picture will have changed dramatically. By 2028, the majority of battery deployments will be taking place in Asia, and by 2030, Asia will account for 58 per cent of total global deployments.

So, the US is about to lose its leading position in energy storage deployment, why is this? Data shows that US energy storage installations are already in decline. The American Clean Power Association (ACP) and Wood Mackenzie’s latest US Energy Storage Monitor report shows that grid-scale energy storage deployments fell 33 per cent year-on-year in the first quarter of 2023. In Q1 2022, the US deployed 2,333GWh of grid-scale storage, but this dropped to 1,553GWh in Q1 2023. One of the reasons for the decline is that energy storage installations often go hand-in-hand with new solar and wind projects – and the installation of both these types of renewables projects is currently decreasing in the US. The ACP reported that, in the first three months of this year, wind installations fell 50 per cent year on year, while solar installations fell by 23 per cent.

It’s solar installations that are subject to the most delays, largely because of a supply chain crisis that was partly caused by the US Department of Commerce’s (DOC) investigation into imports of solar panels assembled in Southeast Asia. The probe was launched amid allegations that imports were circumventing duties intended to limit imports of solar cells and panels from China. This resulted in some suppliers deciding to halt shipments altogether pending the results of the DOC investigation. Furthermore, solar modules were detained by US Customs and Border Protection, which then took considerable time to release them, further delaying deliveries to a number of major projects.

Meanwhile, interconnection problems are also stifling the deployment of energy storage in the US. Statistics show that, not only do the overwhelming majority – more than three-quarters – of renewables and storage projects seeking interconnection fail to actually get built, but interconnection wait times are also increasing. The typical duration from connection request to commercial operation in the US increased from around 2.1 years for projects built in 2000-2010 to approximately 3.7 years for those built during the period 2011 to 2021.

Such obstacles in the US explain why Asia is set to race into the lead when it comes to energy storage deployment. One particular market segment in which Asia is going to rise to prominence by the end of the decade is residential battery storage installations. This is a market currently dominated by Europe and the Americas, which accounted for around 80 per cent of the 4GWh of residential battery storage installed in 2022. However, by 2030, a total of 41GWh of residential battery storage will be installed around the world, with Asia the region accounting for the most, contributing approximately half of installations.

China will drive much of the Asian storage surge. Demand will be high in the country given its plan to get 50 per cent of its electricity generation from renewable power by 2025, which would represent a 42 per cent increase on 2022 levels – as of April 2022, China’s installed power generation capacity was about 2.41 billion kilowatts. That said, there have been warnings that renewable energy policy uncertainties in China could undermine domestic investor confidence in energy storage technologies, while insufficient economic incentives may jeopardise private sector participation. In order to address this issue, some economists have called on China to advance a carbon pricing agenda that incentivises energy storage investments in China, while also scaling up energy storage supply chains in Belt and Road Initiative countries through “multilateral cooperation”.

There is also expected to be a surge in storage deployment in India. Earlier this month, it was revealed that the Indian government will make available 37.6 billion rupees ($455.2 million) in incentives to companies setting up battery storage projects. The incentives form part of the country’s plan to expand its renewable energy capacity to 500GW by 2030. The Indian government expects the scheme to also generate 56 billion rupees ($684 million) of private investment.

Indeed, the expectation is that, by 2040, India will have more storage capacity than any other nation in the world, with the International Energy Agency predicting total capacity of 140-200 GW in the country by that time.