In order to combat the devastating effects of climate change and ensure a clean future for coming generations, massive investments and research are being undertaken in renewable energy solutions. Arguably, numerous advances have been made in solar and wind power – but these systems have a major drawback: they are most effectively used when the sun is shining or the wind is blowing.

This brings us to the biggest challenge the sector has to tackle: effective ways to store that energy for longer, so it can be used when the sun and wind are not available. Mass-scale energy storage does exist, but it is dominated by just one technology: pumped hydro, where excess electricity is used to pump water into a reservoir, and that stored water is in turn used to run turbines to generate extra power when needed. There are other technologies, such as batteries, electrochemical storage, etc., but these make up a small percentage of total capacity (less than 5% of the total, according to policy group REN21).

This gap hasn’t gone unnoticed: some of the biggest companies and several top investors are funneling money into research on mass-scale energy storage. And this is a market that will continue to grow as renewable energy as well as battery costs are set to drop further in coming years.

Powering the world

Growing concerns about dangerous levels of vehicular pollution are necessitating a global move to encourage less polluting forms of private and public transport, giving a major boost to electric vehicle technology—which depends massively on batteries. This in turn has boosted research and sales of energy storage systems.

But it’s not just cars that will need better and more effective storage. Residential, commercial and industrial establishments also have an urgent need for better storage, thus providing another driver to the sector.

To this end, many countries around the world have already seen major growth in the energy storage systems market. Key regions are Asia Pacific, North America, Europe and the Middle East and Africa. Asia Pacific retains the biggest share, with China’s potential as a battery manufacturing hub being the prime driver of growth.

Winds of change

According to a recent projection by IHS Markit, the installed capacity of the global grid-connected energy storage market is set to grow from only three gigawatts (GW) in 2016 to a whopping 28 GW by 2022. IHS also predicts that the cost of lithium-ion batteries will plummet further, setting the stage for increased expansion.

Meanwhile, global consulting major McKinsey has noted that multiple factors are to thank for the plummeting prices of energy storage systems, primary among which are the increasing global demand for electric vehicles and consumer electronics, as well as improvements in EPC (engineering, procurement and construction) costs as major players in the sector have gained valuable experience and streamlined operations.

However, the sheer number of players that have entered the market presents another problem: increasing competition. This means clever players should look towards product development as well as astute M&As to stay on top.

Experts keenly watching this space have reason to rejoice thanks to several developments that made the headlines recently, including Tesla’s completion of a 100MW lithium-ion storage facility in South Australia, the UK’s introduction of a first-of-its-kind liquid air energy storage system and the news that AES India, a subsidiary of AES Corporation, will build India’s first large-scale battery-based energy storage project.

With major investments being made in the sector and technological advances coming faster and faster, it’s clear that energy storage won’t be such a big problem for long.