According to BloombergNEF Report released last month, by the end of 2030, the energy storage industry will have installed a total of 358 gigawatts (GW) / 1,028 gigawatt hours (GWh), exceeding the threshold of 1 terawatt (TW). This boom will attract more than $ 262 billion to the market, according to experts. There is much to celebrate in energy storage as the New Year dawns, and we’re excited to see that 2022 is expected to bring continued growth at an even faster rate. I have a few thoughts on the trends we’ll see as a result.
All data suggests that continued advancements in materials and manufacturing are boosting lower battery storage costs for the next few years, which makes it more and more competitive with the storage technologies in place. This will be particularly the case in the United States with the approval of key federal funds for national energy infrastructure from President Biden’s Infrastructure Investment and Jobs Act. We are particularly encouraged to see priority investments in transmission infrastructure, which will provide essential capacity on the grid for more renewable production, requiring additional energy storage capacity.
That said, there is a lot of room for regulatory improvements. Market growth will be particularly promising in 2022 in the United States if Congress passes the Build Back Better framework, which includes an investment tax credit for off-grid energy storage. At the state level, we expect that more storage systems will be needed for frequency regulation as more renewables are deployed, and we hope to see changes in the regulatory framework that reflect the time limitation in the context of a portfolio so that asset owners can earn capacity credits or resource adequacy payments for network services.
As the demand for renewable energy continues, we will also see long-term storage become more critical. We are preparing for the average system duration to increase by more than 2 hours this year with these 4 hour systems. This breakthrough is already underway in US markets, and we expect global markets to follow this trend in 2022. Over the past year, we have deployed more than 16 projects using multi-time systems in Australia, in the Philippines, Taiwan and the United States. and the United Kingdom. In the United States, we will see more and more 4 hour systems associated with renewables and we are planning to develop several 2 hour systems in Australia. In the meantime, we find that gas-fired power plants remain the best solution for on-demand backup and peak power for longer durations. We are working hard to make gas plants more sustainable by incorporating green hydrogen and “fuels of the future” instead of natural gas, while long-life battery storage technologies are catching up.
Along with explosive growth, we expect to see growing pains. All over the world and in all sectors, labor shortage threaten further growth. This is especially true in the energy storage industry, where skills are scarce and often require advanced technical training. Some strive to provide training and workforce development programs for workers in the fossil fuel industry, but the industry in general faces challenges in changing mindsets, hiring, training and retain new talent. We have implemented a three-pronged career development approach at Wärtsilä to overcome these barriers and support the incoming workforce. This includes a 100-day self-paced onboarding program for new hires, bootcamp sessions that address specific leadership topics, and skill assessments to fill skill gaps.
Battery and lithium bottlenecks and supply imbalance will remain a challenge in the short term. Demand for low-cost lithium-ion is already record high, especially as the demand for electric vehicles (EVs) grows. Recent reports indicate that the global lithium-ion battery market is expected to grow from $ 41.1 billion in 2021 to $ 116.6 billion by 2030. There are no easy fixes here, and there is always the potential for shocks in lithium-ion markets due to the sheer scale of demand.
The continued adoption of electric vehicles will also intensify pressure on energy providers next year, creating challenges for utilities and storage opportunities. Research indicates that by 2050, electric vehicles could contribute to a 33% increase in energy consumption during peaks in electric demand. In the works, we see EV charging co-optimized with large on-site energy storage being used to relieve pressure on the grid and provide essential capacity for rapid EV charging. My team has partnered with Pivot Power in England develop a nationwide network of grid-wide batteries and high-volume electrical connections for rapid recharging of electric vehicles along UK motorways. I’m especially excited to bring our experience of large-scale storage and electric vehicle charging to the United States and to see this setup become more popular in the years to come.
Ultimately, I look forward to moving this industry forward, as large-scale energy storage is key to accelerating the transition to low-carbon energy infrastructure. We published a report last month modeling pathways to a 100% renewable grid that has found the deployment of renewable energies “ahead” can reduce global energy costs. We work with industry leaders eager to strategically support the transition, deploying the technologies needed to balance the intermittency of renewables, such as energy storage. Energy storage is essential to prepare for and derive more value from the increasing penetration of intermittent resources, while effectively supporting system reliability. Let’s start the New Year with a readiness to collaborate across sectors to accelerate our transition to a clean energy future.