Energy Storage as a Service Market Is Estimated To Witness High Growth Owing To Increasing Demand for Cost-effective Energy Storage Solutions

The Energy Storage as a Service Market is estimated to be valued at US$ 1.81 Bn in 2024 and is expected to exhibit a CAGR of 10.8% over the forecast period 2024- 2031, as highlighted in a new report published by Coherent Market Insights’ The Energy Storage as a Service Market is driven by increasing demand for cost-effective energy storage solutions and favorable government policies and regulations regarding the deployment of renewable energy.

Energy storage provides viable solutions for grid stabilization and backup during power outages by time-shifting electricity from periods of low demand to periods of high demand. This helps in reducing energy costs as electricity can be purchased at off-peak hours and stored for use during peak hours. Additionally, growing investments by governments worldwide in the development of renewable energy infrastructure is also expected to fuel the demand for energy storage services over the forecast period.

Key Market Trends: Lithium-ion battery technology is expected to dominate the energy storage systems market owing to its property of high energy density and long lifespan. Lithium-ion battery technology offers modular design, flexible operation, and high round trip efficiency, which makes it suitable for electric grid stabilization and renewable energy storage applications. Moreover, technological advancements in lithium-ion batteries such as the use of lithium iron phosphate chemistry is helping increase their safety aspects.

Flow battery technology is also emerging as a viable energy storage solution for utility-scale applications. Flow batteries have features such as independent scaling of power and energy which provides design flexibility. They also have long operational lifespan of over 15 years with minimum degradation. Significant research is underway to reduce the overall cost of flow battery systems and increase their energy density, which will help drive their adoption over the forecast period.

Energy Storage as a Service Market Opportunities: By Type Segment: The energy storage as a service market by type is segmented into energy storage system service and software service. The energy storage system service segment accounts for the largest market share of around 70% in 2024. This is owing to the increasing deployment of behind-the-meter and front-of-the-meter energy storage systems across the globe. Various energy service companies are offering energy storage system services which include installation, operational management and maintenance of these storage assets over the contracted period.

By End User Segment: The energy storage as a service market by end user is segmented into industrial, commercial and utilities. The utilities segment holds the largest share of around 45% of the total market. This is owing to the increasing focus of utilities on deploying large front-of-the-meter energy storage projects for enhancing grid flexibility and resilience. Various utilities are partnering with energy service companies to develop virtual power plants using aggregated behind-the-meter storage assets.

Key Market Takeaways: The global energy storage as a service market is anticipated to witness a CAGR of 10.8% during the forecast period 2024-2031, owing to the increasing deployment of distributed energy resources and the focus toward decarbonization of energy systems. On the basis of type, the energy storage system service segment is expected to hold a dominant position, accounting for over 70% of the market share due to the rising contracts for operational management of utility-scale and front-of-the-meter energy storage projects.

On the basis of end user, the utilities segment is expected to hold the largest market share over the forecast period, accounting for around 45% of revenues. This is attributed to increasing investments of utilities in large grid-connected energy storage programs for enhancing grid resilience. Regionally, North America is expected to hold a dominant position over the forecast period, accounting for over 35% of the global revenue. This is owing to supportive government policies and increasing contracts for behind-the-meter and front-of-the-meter energy storage projects in the US.

Competitor Insights:Some of the prominent players operating in the energy storage as a service market include Swell Energy, Pivot Power, NEC Energy Solutions, Enel X, Sunverge, EDF Renewables, ABB, Fervo Energy, Greenwood Energy, Stem and Centrica Business Solutions. Key players are investing in strategic partnerships and offering enhanced services around energy management, thereby strengthening their presence across different end-user markets.

Recent Developments: in July 2023 directed grid operators to evaluate energy storage on a comparable basis to traditional generators. This opened the door for batteries to provide a wider range of ancillary services across all US markets. California also implemented new tariffs in August 2023 that established generous compensation levels for storage projects that can help integrate renewable resources. More information in full report.