The energy storage deployment is expected to grow more than 100 times over the next 30 years and to represent a market worth more than USD 100 billion.
George Manahilov, Co-Head of Energy Storage
Many factors have contributed to making entering this sector particularly interesting. The increased growth of the electric vehicle sector led to a broader global manufacturing capacity, which resulted in decreasing batteries costs. This has made the use of energy storage cost-competitive for the first time.
Renewable energy and energy storage can work in synergy towards decarbonization. Energy storage has been classified as an activity contributing to climate mitigation in the EU Sustainable Finance Disclosure Regulation Taxonomy (SFDR), meaning there’s a strong ESG component laying at the basis of this sector.
But what makes energy storage a critical grid infrastructure?
But what makes energy storage a critical grid infrastructure?
The ability to control when batteries generate power helps to ensure the energy stored in them is used at the right times. For their fast-responding and bi-directional features, batteries are considered key grid firming (the ability to maintain the output from an intermittent power source for a required length of time) services, which helps to ensure the grid operates smoothly.
Energy storage is still at an early stage, but the sector is already showing high-growth potential for investors entering this market with a well-thought approach. Multiple variables need to be considered, such as finding the right storage locations and deploying effective revenue generation approaches, project implementation and execution, among others. Deep market, technical and operational expertise is a must, as well as market research and analysis.
The future looks bright, and we expect more efficient commercial structures, and increased acceptance by capital markets compressing capital costs. Energy storage is also attractive in an inflationary environment due to its higher return potential, as long as it retains upside exposure. As witnessed this year, the current inflationary environment is actually adding to the energy price volatility. As a result, there are peaks and troughs in power prices that are positive for energy storage, especially those more exposed to market prices.
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