Dive Brief:

• Global energy storage deployment is expected to increase 122-fold over the next two decades to 1,095 GW/2,850 GWh by 2040, according to a new BloombergNEF (BNEF) report, published Wednesday.
• BNEF estimates this storage boom will require $662 billion of investment, even though the cost of lithium-ion batteries is expected to fall by 50% over the next decade.
• The research company also forecasts that renewables will account for almost 40% of the world's electricity by 2040, up from 7% today, due to falling prices.

Dive Insight:

The global transformation of the power grid toward renewable energy sources is expected to catapult the deployment of energy storage systems to new heights, while the anticipated electrification of the transportation sector and the power demand from that will help further reduce costs.

BNEF pointed to the stationary storage and electric vehicle markets as the main drivers of the upcoming battery boom. 

"Two big changes this year are that we have raised our estimate of the investment that will go into energy storage by 2040 by more than $40 billion, and that we now think the majority of new capacity will be utility-scale, rather than behind-the-meter at homes and businesses," Yayoi Sekine, energy storage analyst for BNEF and co-author of the report, said in a news release. 

BNEF researchers expect batteries to be used more as prices fall. Applications include load shifting; addressing peaking in the bulk power system; and residential customers looking to save on their energy bills by buying electricity at cheap hours and using it later, the report said. 

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

BNEF said 10 countries will account for almost three quarters of the global energy storage market in terms gigawatts. The biggest three will be South Korea, China and the United States. While South Korea is the leading market in 2019, BNEF expects China and the U.S. will be the clear leaders by 2040.

The total demand for batteries from stationary storage and electric transportation is forecast to be 4,584 GWh by 2040. This demand will provide big opportunities for battery manufactures and miners of battery components, such as lithium, cobalt and nickel, the report said. 

A separate report released Tuesday from S&P Global Platts Analytics predicted that almost 10 GW of utility-scale and grid-connected battery storage will be operating in the U.S. by 2023. Annual storage investments are set to increase from less than $300 million this year to around $3 billion in 2023, according to the report, citing a combination of falling costs and diversifying application of the technology. 

State polices will also play a key role in the deployment of storage resources in the coming years, according to S&P. New Jersey and New York have the most ambitious storage targets, with 2 GW by 2030 and 3 GW by 2030, respectively.

Despite this positive outlook for the storage industry, S&P identified raw material prices, fire protection and potential import tariffs as potential risks to future price reductions.