We asked the Connected Energy team which key trends they think will most impact the battery energy storage industry in 2024.
As a new year begins, we asked some of our team what they thought would be some of the key trends that will influence the battery energy storage sector over the next twelve months.
From technological breakthroughs and increased energy density to grid integration and sustainable practices, the year 2024 promises to be a pivotal chapter in the evolution of energy storage solutions.
A number of factors mean that we predict significant market growth in the energy storage market over the coming years. Global energy instability, which could lead to further price increases and risk to security of supply, will stimulate an increased focus on local generation. We are seeing an accelerated rise of wind and solar power globally, which will also accelerate energy storage deployment to provide control and resilience. As renewable generation builds, longer-duration systems will become more and more important.
As society is doubling down on electrification and EVs, there will be a growing number of battery packs reaching their end of vehicle life and available for second life EV battery opportunities. This means a greater demand and interest in our capabilities. In the second half of 2023, we saw more OEMs reaching out to us with a problem to solve and I believe this will only increase in 2024. On the downstream side, as we get closer to the 2035 ICE ban in the UK and Europe, charging infrastructure will become the main focus – if not already – to achieve a successful rollout of EVs.
2024 will be the year that we’ll see battery energy storage playing a more pivotal role in addressing infrastructure challenges for EV charging. As demand for higher-powered charging increases with the launch of several electric truck and bus models, we’ll see energy storage offering an alternative to grid upgrades and becoming a more flexible solution to the growing needs of EV charging.
The emergence of Storage as a Service models are anticipated, allowing businesses to access the benefits of energy storage without upfront costs. This innovative financial model will allow manufacturers to retain ownership and full visibility of their batteries through the entire life cycle, ensuring compliance with their environmental obligations whilst still realising residual revenues from their use. On the customer side, they gain surety of storage capacity whilst removing an element of capital costs.
I think that the ability to generate revenue alongside EV charging and solar capture will be a game changer for the industry this year. Companies are bringing forward innovative flexible grid services revenues including demand flexibility, wholesale optimisation and constraint management. Being able to size a BESS to capture as much excess solar as possible for a renewable generation customer AND being able to generate additional revenue is a win-win for the industry.
Energy Storage deployment will continue to grow rapidly across Europe, in particular Germany and France, as new frequency and capacity services emerge. In the UK, balancing mechanism and wholesale energy trading will continue to dominate revenue, and deployment of systems colocated with non-dispatchable generation, especially solar, will accelerate.
We’ll also see system durations increasing to reflect the move from power to energy as a main source of revenue; as well as trading energy on a day-to-day basis, this will allow BESS to benefit from instability in both network management and hydrocarbon pricing. Whilst difficult to predict, such moments of instability are becoming an important part of the BESS revenue stack.
The EU requirement for all batteries to maintain a logged passport of their lifetime, owners, and location will open up opportunities for our second life EV battery product. This will also open up large ports of data for us – it gives us an opportunity to show how packs can be used to manage passports above and beyond the requirements. Data in general will play a large role in the future operations of BESS.
As sustainability gains prominence, the battery industry is expected to focus more on maximising the value gained from materials within the UK. This includes designing batteries with recyclability in mind and developing efficient processes for battery recycling, reducing environmental impact and promoting responsible end-of-life practices. The RECOVAS project, which Connected Energy is a proud partner of, will set-up the first of its kind UK-based battery recycling plant within the year, to ensure that we’re making the most of our resources locally and at-scale.
Due to our reliance on unstable/high risk regions for critical materials and components there will be an increased emphasis on accelerating the development of technologies with fewer ‘difficult to source’ materials and an increased focus on repurposing EV batteries.
The problem, and subsequent opportunity, seem to have become evident to many stakeholders in 2023 and the focus on second life is increasing with some major investments in the sector. We should expect to see some accelerated growth, perhaps some consolidation, and upstream/downstream integration/investment.
The biggest takeaway we can see is that 2024 will be a big year for second life EV batteries as a result of all of the above factors.
Get in touch with our team to discuss whether battery energy storage can work for your business, and how we can offer a free feasibility study.
