Technavio has added its latest research report, "Battery For Energy Storage Systems (ESS) Market" to its offerings. The global battery for energy storage systems (ESS) market size is estimated to grow by USD 22.18 billion from 2025-2029, according to Technavio. The market is estimated to grow at a CAGR of 23.8% during the forecast period. Changing energy mix from fossil fuels to sustainable and renewable energy resources is driving market growth, with a trend towards increased adoption of microgrids.

However, the widening demand-supply disparity concerning lithium poses a challenge. Key market players include ABB, AEG Power Solutions, Corvus Energy, dSPACE GmbH, East Penn Manufacturing Co. Inc., Exergonix Inc., General Electric Co., Hitachi, LG Corp., Mitsubishi Heavy Industries Ltd., NEC Corp., Panasonic, Philadelphia Scientific LLC, Samsung, Siemens Energy, SolarEdge Technologies, TDK, Tesla Inc., The AES Corp., and Toshiba.

Key insights of the research report

Key market trends fueling growth

The Energy Storage Systems (ESS) market is experiencing significant growth, with lithium-ion batteries leading the trend due to their high energy density and long cycle life. Grid modernization initiatives and the increasing use of renewable energy sources are driving the demand for reliable power sources. Grid operators are turning to ESS to manage power quality and ensure grid stability. Flow batteries and lead-acid batteries are also popular choices for their cost-effectiveness and long lifespan. Manufacturers are focusing on economies of scale and manufacturing efficiency to make these technologies more affordable and accessible. Grid power outages and the need for backup power are also key factors driving the market. Utility-scale applications, such as solar and wind farms, are the largest share of the market, with above 500 MWh capacity installations becoming increasingly common. Input energy sources are primarily renewable, with raw materials like lithium, cobalt, and copper in high demand. Utilities, battery producers, and system integrators are investing heavily in this sector, with reliability and energy management systems being crucial. The market is expanding geographically, with initiatives like France Territoire Solaire and the Pillswood project leading the way. Revenue models include peak shaving, self-consumption optimization, and ancillary services like firm frequency response. ESS is being used in various sectors, from telecommunication towers and data centers to uninterruptible power supply systems and diesel generators. Lithium-ion BESS products are popular for residential installations, rooftop solar, and factories, with excess energy being stored for later use. Maintenance activities and safety measures are essential considerations, especially in harsh environmental conditions. Performance and lifespan are critical factors, with regulations and incentive programs playing a role in driving adoption. Distributed energy resources and renewable power sources are becoming increasingly important, with microgrids and self-sufficiency being key trends. 

Microgrids are self-contained electricity systems that integrate local generation and energy storage resources. They can function independently or in collaboration with other small power grids, referred to as hybrid microgrids. Microgrids can switch between grid-connected and island modes, operating autonomously during power grid outages or when renewable energy sources, such as solar and wind power, are prioritized. By utilizing renewable energy sources, microgrids contribute to reducing reliance on fossil fuels, making them an essential component of sustainable energy solutions. 

Key market challenges

• The Battery for Energy Storage Systems (ESS) market is experiencing significant growth due to grid modernization initiatives and the increasing use of renewable energy sources. Grid operators seek reliable power sources to manage the variability of renewable energy and ensure power quality. Lithium-ion batteries have the highest energy density and power conversion efficiency, making them popular for utility-scale applications above 500 MWh capacity. However, challenges such as safety measures, thermal management systems, and economies of scale persist. Flow batteries and lead-acid batteries offer alternatives with longer cycle life and lower cost. Grid power outages and the need for backup power, especially in the residential sector, drive demand for affordable and accessible energy storage solutions. Manufacturing efficiency and raw material availability, particularly for lithium, cobalt, and copper, impact battery prices. Utility-scale applications, such as solar parks and wind farms, require firm frequency response, ancillary services, and revenue models like arbitrage and capacity auctions. Harsh environmental conditions, maintenance activities, and regulations also pose challenges. 
• Lithium-ion batteries have emerged as the dominant technology in the energy storage systems (ESS) market, accounting for over 75% of the global electrochemical energy storage capacity in 2023. The transportation sector, specifically electric vehicles (EVs), has been a major driver of this growth. Li-ion batteries are preferred in EVs due to their advantages such as high energy and power density, safety, cost-effectiveness, and long cycle life. In addition to consumer electronics like laptops and smartphones, Li-ion batteries are increasingly being used in EVs for larger batteries and stationary storage applications. The automotive industry's shift towards electrification is expected to further boost the demand for Li-ion batteries in the coming years.

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