The global demand for battery storage is well and truly on the rise. This upwards trend is largely being driven by two main factors:
- Country-level transitions away from fossil fuels and into clean, renewable energy systemsÂ
- Electrification of transportation, like electric vehicles (EV)
In the UK, batteries are set to play a key role to achieve the government’s target of net zero emissions by 2050.
Previously, the high cost of battery energy storage systems (BESS) was a limiting factor for growth, but the expanding adoption has driven down, and continues to drive down, the costs associated with modern lithium-ion batteries. This in turn will stimulate further growth for battery storage.
This article will look at battery storage market trends, assess the current scene and look at future trends both in the UK and on a global scale. At the end, we’ll also make five predictions for the future of battery storage.
What is battery storage?
Battery storage are clever pieces of technology that allow us to store electrical energy to use at a later point in time.
They’re essential when it comes to greener energy systems as they present a solution for the intermittent nature of renewable energy sources, like solar and wind power, which aren’t always consistent with their energy generation.
One of the primary benefits of battery energy storage is that they can operate flexibly over wide-ranging scales. From grid-wide installations providing huge amounts of energy to smaller units designed to power a single home. They can also cover everything in between to support business and industrial use. This makes battery storage technology very useful for a lot of people.
Based on scales, BESS projects can be classified into two main categories:
- Front-of-metre (FOM) – Also known as grid-scale or utility-scale, are the largest segment of the BESS market and provide power to the grid or off-site locations.
- Behind-the-metre (BTM) – Supply power to on-site locations, such as houses or businesses, without passing through the metre.Â
The significance of BESS in the UK’s energy landscape cannot be overstated. And this role is expected to grow over time.
Firstly, BESS is essential in supporting the transition towards greener energy systems thanks to their compatibility with renewable energy sources and integrating these into the national grid. This is why many BESS are linked to solar panel farms and wind farms.
In 2022, the UK obtained just 20.7% of its primary energy from low-carbon sources, with bioenergy, nuclear and wind being the main contributors. Fossil fuels still provide around 40% of the energy mix the majority of which is imported from abroad. Large batteries and investment into renewables can help shift these percentages to favour more low-carbon sources.
Secondly, rather than firing up a generator, BESS can quickly supply energy to meet power demand, maintaining grid stability and ensuring a reliable power supply to consumers.
What does the battery storage market currently look like in the UK?
The UK has witnessed a substantial growth in the capacity of BESS in recent years, with energy storage projects rapidly on the rise. It’s now one of the active battery storage markets in the world.
In one year from 2022 to 2023, there was 68% increase in planned battery storage project work. At the end of 2023, the UK had 3.5GW of operational battery storage capacity, mostly coming from larger scale FOMs as opposed to domestic and business BTM installations. To put this into perspective, the average home uses around 0.00001GW of electricity per day.
Although 3.5GW is a small figure on a nationwide level, this is set to escalate quickly in the near future. There’s around 80GW of planned pipeline work, split between different phases:
- Under construction – 3.8GW
- Consented – 24.5GW
- Planning – 27.4GW
- Pre-development – 25.7GWÂ Â
There’s a government database that tracks the progress of UK renewable energy schemes over 150kW through the planning system. In total there are 1,362 large battery projects (sized at or above 150kW) either underway or finished in the UK.
The movement towards battery storage highlights the UK’s commitment to integrating more renewables into the grid.Â
What does future battery storage look like?
The future of battery storage in the UK looks promising. The government has set an ambitious target of achieving 30GW of operational capacity by 2030 to ensure a stable and reliable electricity supply. This is just under 9-times the UK’s current capacity.
Grid-scale BESS projects, which are often paired with offshore wind or solar farms, will play a crucial role in meeting the government’s net-zero targets. You can read more on the benefits of solar battery storage here. These projects are expected to account for 75% of installations by 2030, with the remaining 25% coming from behind-the-metre commercial and residential projects.
To fully transition to electric heating, transport and business, it’s estimated that the UK will require an astonishing 100,000 GW (100TW) of energy storage capacity by 2050. Despite the magnitude of this challenge, there’s significant appetite and necessity for BESS in the UK energy market.
Lithium-ion batteries, particularly lithium-iron-phosphate (LFP) batteries, are expected to dominate the BESS landscape. LFP batteries currently hold around 60% of the BESS market, and their share is anticipated to expand further. Other types of battery technologies, such as flow batteries and sodium-ion batteries, are also expected to gain traction, with projected market shares of 6% and 7%, respectively, by 2040.
UK battery storage industry
Currently, the UK relies heavily on imports to meet its domestic battery and component needs. The supply chains are complex and there’s a strong reliance on East Asia.
However, the UK is making strides in developing its own battery supply chain. There are plans to use minerals – such as lithium, cobalt, nickel and graphite – that are sourced and processed in regions all over the UK, including Cornwall and Lincolnshire. This new battery industry is expected to be a significant source of jobs and economic growth, potentially employing 100,000 people by 2040.
There have been numerous recent developments and announcements of new ‘gigafactories’. This is a generic term for large factories making products and components associated with battery storage and electrification of systems.
The construction of the AESC Group gigafactory in Sunderland and Tata’s announcement of a new gigafactory are already creating over 5,000 jobs and increasing the UK’s future annual production capacity to an estimated 52GWh. Additionally, NatPower has announced plans to build over £10bn worth of battery storage, amounting to around 15-20% of the UK’s needs by 2040. This will have an initial capacity of over 60GWh linked to solar and wind projects.
What does the global scene for battery storage look like?
Just like the UK market, the global battery storage market is on the cusp of huge growth.
It’s thought that the lithium-ion (Li-ion) battery supply chain will experience 30% growth every year from 2022 to 2030. According to a 2023 analysis by McKinsey, the entire Li-ion battery value chain could reach $400 billion in value and a market size of 4.7 TWh by 2030. This would represent a 6-fold increase in capacity from 700GWh in 2022.
The majority of this demand will be driven by transport and the transition to EVs, which in turn is being led by regulatory changes (such as banning of combustion engine cars), changing consumer habits and a focus on greener technologies to hit emission-reduction targets.
China is expected to dominate the global Li-ion battery market, accounting for 45% of total demand in 2025 and 40% in 2030. However, the highest growth rates are anticipated in the European Union and the United States.
The increasing demand for li-ion batteries will have a profound impact on the lithium mining industry. Currently, just short of 60% of lithium is mined for battery-related reasons, and this figure could reach 95% by 2030. While lithium reserves are well distributed and sufficient to meet battery demand, the highest quality deposits are linked to Argentina, Australia, Chile and China.
To make sure the world doesn’t step from one fossil-fuel burning crisis to a new mining-linked ecological disaster, sustainability needs to be at the core of the mining of this essential mineral.
5 predictions for battery storage in the future
Here are five predictions for the future of the battery storage market.
1. Rapid growth in installed capacity
The battery storage market is still in its infancy and is only just getting going. As renewable energy adoption increases and costs continue to decline, the demand for battery storage solutions will surge. We’re expecting significant hockey-curve style growth in the coming years and decades.
We think battery storage will see a rapid expansion in both front-of-metre (FOM) and behind-the-metre (BTM) installations. We’re fully expecting solar panels and battery storage – alongside heat pumps – to be the ideal renewable energy combination for all new houses.
2. Dominance of lithium-ion batteries with a shift towards LFP
Lithium-ion batteries are likely to maintain their dominance in the battery storage market. This is thanks to their high energy density, declining costs and efficient, longer-lasting performance.
However, within the lithium-ion battery field, we may see a shift towards lithium-iron-phosphate (LFP) batteries. LFP batteries offer improved safety, longer cycle life and lower cost compared to other lithium-ion chemistries, making them an increasingly attractive option for battery storage.
3. Emergence of alternative battery technologies
While lithium-ion batteries will continue to lead the market, alternative battery technologies such as flow batteries and sodium-ion batteries are expected to gain traction.
These technologies offer unique advantages, such as longer duration storage, which could make them suitable for specific applications. As research and development efforts continue, we’re likely to see these alternative technologies capture a growing share of the battery storage market.
4. Increased integration with renewable energy projects
Battery storage will play a crucial role in the integration of renewable energy sources into the national grid.
As the share of renewables in the energy mix grows, battery storage will become increasingly important for balancing supply and demand, ensuring grid stability, and reducing downtime.
We can expect to see more battery storage projects linked directly to renewable energy, as well as the development of hybrid power plants that combine multiple renewable sources with storage. The UK is already a world-leader in wind energy, so it makes sense to use battery storage to increase efficiency and performance.
5. Growing impact of electric vehicles on the battery storage market
The rapid adoption of EVs will have a significant impact on the battery storage market.
As EV sales continue to grow, the demand for batteries will skyrocket.
This increased demand will drive further improvements in battery technology, leading to higher energy densities and lower costs. Additionally, the development of vehicle-to-grid technology may even allow EVs to act as distributed energy storage resources, providing grid services and supporting the integration of renewables.
