Wind + storage development capacity in 2019 was 227MWh. The global energy storage deployment capacity forecast for 2020 was lowered by 19%.

Affected by the COVID-19 pandemic, most companies around the world are temporarily shut down. If the economy and production activities do not return to normal in the second quarter, coupled with the impact of the economic downturn, Wood Mackenzie expects the global energy storage system deployment capacity forecast for 2020 to be reduced by 19%, or 3GWh.

Even so, it’s worth noting that 2020 will still be a record-breaking year for new energy storage system capacity, with new capacity expected to reach 12.6 GWh.

Resumption of work and production

According to preliminary statistics from Wood Mackenzie, lithium-ion battery supply will decrease by 10%, mainly due to China's previous shutdown. Senior research consultant Dr. Xu Le said: "When China initially stopped production and stopped work, battery production in Japan and South Korea accelerated, intending to fill this market supply gap. At present, domestic production and work have resumed in an orderly manner, and China's production level has recovered to 60% to 70% of the pre-epidemic level."

The main risk of battery supply has been alleviated, which will accelerate the production and transformation of the battery supply chain. This will have a profound impact not only on the energy storage sector, but also on the global economy.

Demand for energy storage systems plummets

A recession seems imminent in 2020. Energy storage deployment will not be as strong as expected, and consumer demand for high-cost storage will also drop sharply, especially for residential storage.

Rory McCarthy, chief research consultant at Wood Mackenzie, said: “Energy storage, as a large-scale project, still relies on commercial operation, and financiers’ interest in such assets has declined. Only when the risk-return ratio of energy storage systems as an investment reaches a satisfactory level will they make a final project investment decision.

But on the other hand, bank interest rates have been cut to a historic low. From a financial perspective, this is good news. This is especially significant for commercial projects that are currently seeking financing and have large investments. ”

The newly deployed capacity of the global energy storage market declined for the first time in 2019, from 6.2 GWh in 2018 to 5.3 GWh in 2019. Wood Mackenzie analyzed that the market shrinkage was mainly due to the decline in capacity in South Korea, China, the United Kingdom and Canada.

Despite the slowdown in market development and the impact of the epidemic, we expect the energy storage industry to resume growth momentum in 2020.

In 2018, the Korean market achieved amazing results, but market risks are also coming at any time. A total of 28 fire accidents were reported in South Korea, and the newly deployed capacity fell by 70% year-on-year. The newly deployed capacity in 2019 decreased by 1GWh, and the market development speed slowed down significantly.

Develop into a 100 billion USD investment industry within five years

Looking ahead to the next five years, the global energy storage industry will flourish due to the opportunities brought by energy transformation. Wood Mackenzie expects that by 2025, the global market will grow 13 times to 230GWh. In addition, total energy storage investment is expected to increase from US$18 billion in 2019 to US$100 billion in 2025. The Chinese, Australian and American markets will become the three markets with the strongest development momentum in the next five years, and GW-level energy storage systems will be deployed annually before 2025.

In the US market, as utility companies increase their purchases of energy storage systems, especially with the recent expiration of the ITC (Investment Tax Credit) policy, the PV + energy storage system model has driven large-scale development, making the US market a leader in development. In addition, user-side energy storage projects will also benefit from existing US policy incentives and develop.

Looking ahead, the hybrid development model of energy storage and other equipment will become a development highlight in 2020.

We found that in 2018, the capacity of photovoltaic + energy storage reached 582MWh, while that of wind power + energy storage was only 57MWh. In 2019, the development capacity of the supporting systems of these two power generation technologies and energy storage was comparable, at about 227MWh respectively.

We expect that in the next few years, the hybrid development model of photovoltaics + energy storage will become a more popular choice due to its cost advantages.