Monday Feb 06, 2023

Short- And Long-Duration Energy Storage Essential To The Clean Energy Transition – Seeking Alpha

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The adoption of renewable energy is accelerating globally, particularly wind and solar power, as governments and corporations work towards meeting climate change-related emissions reduction targets and boosting energy security. The International Energy Agency (IEA) forecasts renewables capacity growth will be 50% higher from 2021–2026 than 2015–2020.1 Despite this strong outlook, even faster renewable energy development will be required to reach global net-zero emissions by mid-century and keep global warming under 1.5˚C by 2100.2 In our view, the widespread adoption of energy storage systems is key to reaching the high levels of renewable energy generation required to reduce emissions within the power sector.

In this report, we explore how the global proliferation of renewable energy can drive rapid growth in energy storage over the coming years, with both short- and long-duration energy storage systems essential to the green energy transition.

Key Takeaways

  • Energy storage capacity and generation are set to grow rapidly over the coming years, driven by the global proliferation of renewable energy, grid supply challenges, government support, and lower technology prices.
  • We expect the rapid adoption of short-duration battery energy storage systems to create investment opportunities across the renewables and battery value chains, including renewables developers, storage system manufacturers, and miners of critical minerals.
  • Growing government support for long-duration energy storage systems could support power grids while accelerating wind, solar, and hydrogen power development significantly. To reach net-zero power sector targets, the growth of these systems could represent a $1.5–3.0 trillion investment opportunity.3

A Successful Clean Energy Transition Requires Energy Storage Solutions

In 2021, renewable energy generation capacity grew by 9.1% to just under 3,065 gigawatts (GW).4 Globally, renewables accounted for 81% of all new capacity additions last year, driven by the wind and solar power sectors.5 We expect robust renewables’ growth to continue, with forecasts for capacity to reach 4,800GW by 2026.6 For context, 4,800GW is roughly equivalent to global fossil fuel and nuclear power capacity combined.7 In total, renewables are forecasted to account for 95% of all power capacity growth between 2022 and 2026.8

The robust growth outlook for renewable energy is due to several factors. Many governments are ramping up climate change mitigation efforts, including support for renewable energy adoption through tax credits, subsidies, and renewable project tenders and auctions. In the U.S., President Biden set a target for reaching a carbon pollution-free power sector by 2035.9 Also, corporations are seeking their own renewable energy supply to meet sustainability targets. In 2021, corporations procured 31.1GW of renewable energy globally via power purchase agreements (PPAs).10 The top three corporate clean energy buyers last year were Amazon, Microsoft, and Meta.11

In addition, technological advancements, including to wind turbines and solar modules, make wind and solar power increasingly cost-competitive with traditional power sources while boosting overall performance and efficiencies. Critically, energy storage system technologies are also improving and becoming more cost-competitive due to falling battery costs and increased government support in many countries, including the U.S. and China.12 Global energy storage is forecast to explode from 17GW/34 gigawatt hour (GWh) in 2020 to 358GW/1,028GWh in 2030, according to BloombergNEF.13 The U.S. and China appear set to be the largest energy storage …….

Source: https://seekingalpha.com/article/4520098-short-and-long-duration-energy-storage-essential-to-the-clean-energy-transition

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