How is Scarcity of Fossil Fuels Driving Energy Storage Market?

How is Scarcity of Fossil Fuels Driving Energy Storage Market?
The installed capacity of the global energy storage market was 6,275.4 megawatt (MW) in 2017 and is projected to reach 51,426.0 MW by 2023, witnessing a CAGR of 42.5% during the forecast period. The market growth is driven by rising energy cost and rising demand for unconventional sources of energy generation.

Over the years, due to increased consumption, the availability of fossil fuels has decreased significantly. The crude oil reserves are getting declined at the rate of 4 billion tonnes a year, and at this rate, it is predicted that the oil deposits will last until 2052. Attributed to this, and the ever-surging need for energy, there is a rising requirement for alternate ways of generating energy. In addition, the increased usage of fossil fuels for power generation has resulted in a severely degraded environment. Hence, the demand for pollution free and environmentally sustainable energy resources is growing. Furthermore, due to all these factors, the need for energy storage systems is also increasing.

Energy storage systems allow the effective integration of renewable energy and provide benefits of local generation and a resilient, clean energy supply. As per a report by P&S Intelligence, in 2017, the installed capacity of global energy storage market was 6,275.4 megawatt and is predicted to attain 51,426.0 MW in 2023, advancing at a 42.5% CAGR during the forecast period (2018–2023). The different types of energy storage systems are electrochemical, chemical, mechanical, thermal, and others (which include biological and fossil fuel storage). The largest demand during 2013–2017 was created for mechanical energy storage systems, as these systems can be installed on a large-scale in the utility systems and can further be utilized in high demand scenario.    

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There are several applications of energy storage systems including back-up supply, arbitrage, ancillary services, and fuel savings. Some other applications include running mills and air conditioning. Out of these, the highest demand for energy storage was created for the ancillary services application and the situation is projected to remain the same in the coming years as well. The reason for this is that energy storage has the capability to make grid more reliable and efficient. The fastest growth in demand during the forecast period is expected to be witnessed by the arbitrage application. 

Among all the regions, namely Asia-Pacific (APAC), North America, Europe, and Rest of the World, North America created the highest demand for energy storage during 2013–2017. In the region, the energy storage market in the U.S. was the largest during 2013–2017 and the situation is projected to remain the same during the forecast period as well. The reason for this is the low cost and favorable state policies which support the case for installing batteries in homes, power grid, and businesses. Out of all the regions, APAC is expected to witnessed the fastest growth in demand for energy storage.

The need for energy storage systems is further growing due to the increasing cost of energy. The requirement for energy is rising rapidly because of the surging population and swift urbanization, primarily in countries including India, China, and Brazil. Due to this, the power plants are running at full capacity, which, in turn, is resulting in the gradual rise in the power prices. Furthermore, the unavailability of fuel is leading in the volatility of prices. Ascribed to these factors, the adoption of energy conservation is increasing, thereby resulting in the growing utilization of energy storage systems.

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