Battery Energy Storage System Market Growth and Forecast by 2031

The battery energy storage system market size is projected to reach US$ 143.28 billion by 2031 from US$ 41.97 billion in 2024. The market is expected to register a CAGR of 17.91% during 2025–2031. The role of battery energy storage systems in energy transitions is likely to result in new key trends in the market in the coming years.

Battery Energy Storage System Market Analysis  

The rapid growth of the renewable energy industry, surge in demand for battery energy storage systems, and rise in government funding for utility-based renewable energy projects are the key factors fueling the battery energy storage system market. Moreover, the growing investment in renewable power generation across the globe is anticipated to create lucrative opportunities for the key companies operating in the market during the forecast period. Further, the role of battery energy storage systems in energy transitions is expected to be a key future trend in the market from 2025 to 2031.

Energy producers, transmission system operators, storage providers, and end users are stakeholders involved in the ecosystem of battery energy storage systems. Sources used to generate energy include natural gas, fossil fuels, and renewable resources (such as wind and solar). Power generation is followed by the process of transmission and storage. The energy storage process involves large-scale facilities and distributed power or energy storage systems. The final step consists of distributing the stored energy to end users or major application areas. End users of battery energy storage systems include power plants, commercial, residential, and utility sectors.

Battery Energy Storage System Market Overview

Battery energy storage systems (BESS) strengthen grid resilience and reliability. Moreover, the system eases electricity costs through arbitrage, mitigating the risk of curtailment by providing backup power. These benefits attract developers and governments in regions such as North America, Europe, and APAC, specifically in the US, Germany, the UK, Italy, China, India, Japan, and South Korea, to focus more on battery energy storage infrastructure. For example, state governments are increasingly incentivizing the integration of energy storage with solar. In the US, the Inflation Reduction Act (IRA) offers tax credits for installing solar-plus-storage systems and standalone battery energy storage systems, which benefits the battery energy storage system market in the country.

The government of India introduced the Production Linked Incentive scheme for Advanced Chemistry Cell in May 2021 with the aim of decreasing dependency on imported cells and promoting industrial development in the country. The scheme seeks to increase India's manufacturing capacities in the energy storage segment through financial incentives. The government of India authorized a Viability Gap Funding (VGF) Scheme for setting up 4,000 MWh of battery energy storage system in 2023. The scheme has provision for VGF to the extent of up to ~40% of capital expenditure for BESS, which will bring down the expense of electricity obtained from BESS.

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Battery Energy Storage System Market: Strategic Insights

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Battery Energy Storage System Market Drivers and Opportunities

Mounting Demand for Energy Favors Battery Energy Storage System Market

Rising population and growing urbanization are a few factors steering the use of energy globally, specifically in countries such as the US, China, India, and Japan. As per the US Energy Information Administration (EIA), US energy consumption is anticipated to grow by 2050 owing to economic and population growth. EIA also reported that US electricity end-use consumption was ~3.2% higher in 2022 than in 2021. It further predicted that power consumption would rise by 0.7% in 2025. Battery energy storage has the potential application in times of crisis or in remote or distant locations where power networks are not available. Furthermore, due to the increasing energy uncertainties worldwide, the US government is incentivizing the application of battery energy storage systems. For instance, in May 2024, Plus Power secured a US$ 82 million tax equity investment from bank Morgan Stanley for the Arizona-based 90 MW/360 MWh Superstition BESS project, which is anticipated to be operational in June 2024. In February 2024, RWE completed the construction of three new battery energy storage systems, totaling 190 MW (361 MWh), in Texas and Arizona.

The growing energy demand in Canada is also boosting the growth of the battery energy storage market. For instance, SolarBank Corporation is planning to commence the construction of its first battery energy storage system project in Ontario in the second half of February 2025. The Royal Bank of Canada is set to finance the construction of this 4.99 MW BESS Project with the provision of US$ 25.8 million in funds.

Growing Investments in Renewable Power Generation to Generate Growth Opportunities

The US government is focusing on reducing its carbon footprints, driving a transition toward clean energy across the country. As a result, the government is encouraging investments in green energy production. Power generation using fossil fuels is a key contributor to greenhouse gas (GHG) emissions that lead to climate change. The utilization of solar and wind energy is increasing due to rising focus on using clean and green energy, growing climate change concerns, and government initiatives toward encouraging the usage of renewable energy across the US. By 2030, the US government targets to decrease net GHG emissions by ~50–52% compared to 2005 levels and achieve net zero emissions by 2050. Thus, rising concerns regarding greenhouse gas emissions are urging investments in renewable power generation, which is anticipated to offer lucrative opportunities for the development of the battery energy storage system market over the forecast period.

The governments of different countries across Asia Pacific have targeted to increase renewable power generation installations. In 2023, the government of India released a notification of bids for 50 GW of renewable energy capacity annually for the next 5 years to reach a target of 300 GW by the end of 2030. Similarly, the government of Japan targets to increase its offshore wind capacity from 0.14 GW in 2022 to 10 GW by the end of 2030. Further, China is 6 years ahead of its 2030 renewable energy targets by completing installations of these systems in 2023. Thus, growing investments in renewable power generation to generate growth opportunities in the battery energy storage systems market during the forecast period.

Battery Energy Storage System Market Report Segmentation Analysis

Key segments that contributed to the derivation of the battery energy storage system market analysis are type, connection type, and end user.

• In terms of type, the market is bifurcated into lithium-ion and others. The lithium-ion segment held a larger share of the market in 2024.
• Based on connection type, the battery energy storage system market is bifurcated into on-grid and off-grid. The on-grid segment dominated the market in 2024.
• By end user, the battery energy storage system market is categorized into commercial, utilities, and residential. The utilities segment held the largest market share in 2024.

Battery Energy Storage System Market Share Analysis by Geography

The geographic scope of the battery energy storage system market report offers a detailed global, regional, and country analysis. North America, Europe, and Asia Pacific are major regions contributing significantly to the market growth. North America dominated the battery energy storage system market in 2024 with a share of 47.8%; it is likely to continue to dominate the market during the forecast period as well. Europe is the second-largest contributor to the battery energy storage system market, followed by Asia Pacific. The US and China are major countries witnessing significant growth in the battery energy storage system market owing to the rise in government initiatives and investments in renewable power generation, along with the expansion of microgrids and battery energy storage system capacity. The rising awareness regarding adopting renewable energy and increasing investments in solar and wind energy projects are propelling the demand for lithium-ion batteries for energy storage in the US. In 2023, the US witnessed ~37% growth in renewables installation compared to 2021 and a 51% increase compared to 2022 installations.

A rise in demand for backup power during power outages or limited grid access in some regions is expected to underline the need for BESS in the US. In addition, the usage of battery energy storage systems has increased in microgrids and off-grid systems across the US to ensure stable and reliable power supply. Moreover, investments and initiatives toward the development of solar and wind power projects across the country are anticipated to fuel the battery energy storage system market growth in the coming years. In 2023, Texas installed around 6,500 MW of solar energy systems across the region, surpassing California to become the largest renewable installed state across the US.

Battery Energy Storage System Market Report Coverage and Deliverables

The "Battery Energy Storage System Market Size and Forecast (2021–2031)" report provides a detailed analysis of the market covering below areas:

• Battery energy storage system market size and forecast at country levels for all the key market segments covered under the scope
• Battery energy storage system market trends, as well as market dynamics such as drivers, restraints, and key opportunities
• Detailed PEST and SWOT analysis
• Battery energy storage system market analysis covering key market trends, country framework, major players, regulations, and recent market developments
• Industry landscape and competition analysis covering market concentration, heat map analysis, prominent players, and recent developments for the battery energy storage system market
• Detailed company profiles

Report Scope

Battery Energy Storage System Market Regional Insights

The regional trends and factors influencing the Battery Energy Storage System Market throughout the forecast period have been thoroughly explained by the analysts at Insight Partners. This section also discusses Battery Energy Storage System Market segments and geography across North America, Europe, Asia Pacific, Middle East and Africa, and South and Central America.

Battery Energy Storage System Market Report Scope

Battery Energy Storage System Market Players Density: Understanding Its Impact on Business Dynamics

The Battery Energy Storage System Market market is growing rapidly, driven by increasing end-user demand due to factors such as evolving consumer preferences, technological advancements, and greater awareness of the product's benefits. As demand rises, businesses are expanding their offerings, innovating to meet consumer needs, and capitalizing on emerging trends, which further fuels market growth.

Market players density refers to the distribution of firms or companies operating within a particular market or industry. It indicates how many competitors (market players) are present in a given market space relative to its size or total market value.

Major Companies operating in the Battery Energy Storage System Market are:

1. BYD Co. Ltd
2. Saft America Inc.
3. CATL
4. Tesla Inc.
5. Samsung SDI Co Ltd
6. Panasonic Holdings Corp

Disclaimer: The companies listed above are not ranked in any particular order.