The Australia energy storage systems market is expected to register a CAGR of greater than 4.5% during the forecast period of 2021 - 2026. The COVID-19 pandemic has created uncertainties and risk for the 4.6GWh of announced front-of-the-meter (FTM) projects that are planned till 2025. With coronavirus-led restrictions like lockdowns and economic downturn leading to delays or cancellations of these announced projects are expected to create negative impact on the market in Australia. Factors such as growing renewable energy sector due to the government assistance, increasing demand for reliable and uninterrupted power supply is expected to drive the energy storage systems market in Australia during the forecast period. However, the high initial investment required for the installation of the energy storage system is expected to hinder the growth of the market studied.
- Battery energy storage system (BESS) type is expected to witness significant growth during the forecast period, owing to the rising demand for grid-connected solutions and the increasing adoption of lithium-ion batteries in the renewable energy industry.
- The commercial and industrial (C&I) sector is increasingly adopting renewable power generation sources, such as solar and wind energy, for self-consumption. But renewable energy is an intermittent power source and the C&I sector is failing to utilize these resources to its fullest potential. Therefore, to increase the utilization rate of renewable power sources, the C&I sector is expected to increasingly adopt the energy storage systems which in, turn, creates significant opportunities to the Australian ESS providers in the future.
- The growing renewable energy sector is one of the primary drivers of energy storage systems in Australia. This is due to the increasing demand of solar and wind energy sources, accounting for over 70% of the power generation as of 2020.
Key Market Trends
Battery Energy Storage Systems (BESS) Expected to Witness Significant Demand
- Battery Energy Storage Systems (BESS) is considered as a critical technology in transitioning to a sustainable energy system. The battery energy storage systems regulate voltage and frequency, reduce peak demand charges, integrate renewable sources, and provide a backup power supply. Batteries play a crucial part in energy storage systems and are responsible for around 60% of the system's total cost.
- According to Clean Energy Council, there were 16 large-scale BESS projects under construction by the end of 2020, which represented more than 595 MW of new storage capacity. Furthermore, in 2020, announcements were made regarding utility-scale battery projects and initiatives such as the New South Wales Government's commitment in building four new large-scale battery projects under the Emerging Renewables program. Similarly, AGL also plans to build several big battery projects on the sites of its existing fossil fuel power station assets. Also, the Western Australian Government is also tendering for a 100 MW battery, the first to be built upon the state's main grid. All these projects are expected to increase the demand for batteries segment in energy storage systems during the forecast period.
- Due to their declining prices, Australian lithium-ion batteries have been witnessing a massive demand in the battery energy storage market. Additionally, lithium-ion batteries are expected to hold the most significant share in the battery energy storage market, as they require less maintenance, light-weight, have a reliable cycle life, and high energy density regarding the volume and high charge/discharge efficiency.
- Although most batteries in the energy storage market are lithium-ion (Li-ion), other battery chemistries, such as sodium-sulfur, lead-acid, and flow batteries, are expected to provide additional benefits, such as increased durability or higher energy capacity for longer-term storage or other specific applications.
- Additionally, in August 2021, Wartsila is likely to supply a battery energy storage system (BESS) to AGL Energy, one of Australia's leading integrated energy companies. The 250 MW / 250 MWh system will be installed at the Torrens Island in South Australia. When installed, the system is expected to support a broad portfolio of generating assets, both thermal and renewable, and help Australia to decarbonize and transition towards 100% renewable energy future.
- Therefore, based on the above-mentioned factors, battery energy storage systems (BESS) is expected to witness significant demand in the country during the forecast period.
Growing Renewable Energy Sector Driving the Market Demand
- Renewable power is an intermittent energy source. Therefore, to maintain the constant power distribution of generated renewable power, storage of electricity is essential. Thus, compared to conventional electricity generation sources, renewable power has a higher need for energy storage.
- Over the past decade, renewable energy usage in Australia has increased much faster than non-renewable fossil fuel sources. The most widely deployed renewable energy source in Australia are solar and wind power sources, contributing to more than 90% of the renewable energy in 2020.
- In Australia, since 2014, electricity generation from renewable energy sources has almost doubled by 2020. Moreover, as of 2020, renewable energy accounts for over 27% of the total electricity generation mix, with the wind having the largest share, followed by solar power.
- In 2020, Australia's total installed solar capacity was 17,625 Megawatts (MW) compared to 13,564 MW in 2019, witnessing a significant growth rate of 30%. The total installed wind capacity in 2020 was 9,457 MW compared to 7,133 MW in 2019. The growing concerns about the environmental impacts of the usage of fossil fuels have driven the rapid growth of the renewable energy market, which is expected to continue during the forecast period.
- Furthermore, Australia introduced regulatory mandates and government support in the form of financial incentives that enabled renewable power, particularly solar and wind power, to grow rapidly. The country has separate targets for large-scale renewables and small-scale renewables.
- Therefore, based on the above-mentioned factors, growing renewable energy sector with government assistance is expected to drive the energy storage systems market during the forecast period.
The Australia energy storage systems (ESS) market is moderately fragmented. Some of the major players include Pacific Green Technologies Group, LG Energy Solution Ltd, Tesla Inc., GS Yuasa Corporation, and EVO Power Pty Ltd.
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