develop energy management systems and software solutions for grid optimization and trading.
We expect utility-scale BESS, which already accounts for the bulk of new annual capacity, to grow around 29 percent per year for the rest of this decade—the fastest of the three segments. The 450 to 620 gigawatt-hours (GWh) in annual utility- scale installations forecast for 2030 would give utility-scale BESS a share of up to 90 percent of the total market in that year (Exhibit 2). Customers of FTM installations are primarily utilities, grid operators, and renewable developers looking to balance the intermittency of renewables, provide grid stability services, or defer costly investments to their grid. The BESS providers in this segment generally are vertically integrated battery producers or large system integrators. They will differentiate themselves on the basis of cost and scale, reliability, project management track record, and ability to
BESS deployments are already happening on a very large scale. One US energy company is working on a BESS project that could eventually have a capacity of six GWh. Another US company, with business interests inside and outside of energy, has already surpassed that, having reached 6.5 GWh in BESS deployments in 2022. Much of the money pouring into BESS now is going toward services that increase energy providers’ flexibility—for instance, through firm frequency response. In the long run, BESS growth will stem more from the build-out of solar parks and wind farms, which will need batteries to handle their short-duration storage needs.
Exhibit 2 Battery energy storage system capacity is likely to quintuple between now and 2030.
Annual added battery energy storage system (BESS) capacity, %
Commercial and industrial
Residential
Utility
CAGR, 2023–30 110–140 140–180 175–230 215–290 275–370 350–470 440–580 520–700
100% in GWh =
14%
4
13%
10
4
11
4
13
5
29%
86
5
14
85
6
16
7
83
18
7
19
81
78
21 72
76
74
2023
2024
2025
2026
2027
2028
2029
2030
Market size, $ billion
44–55
50–65
60–75
65–85
75–100
90–115
105–135 120–150
Note: Figures may not sum to 100%, because of rounding. Source: McKinsey Energy Storage Insights BESS market model
McKinsey & Company
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