reduce reliance on less environmentally friendly diesel generators and can be integrated with renewable sources such as rooftop solar. In certain cases, excess energy stored on a battery may allow organizations to generate revenues through grid services. Several telecommunication players and data center owners are already switching to BESS as their uninterruptible power supply solution and for the additional benefits BESS provides. The third subsegment is public infrastructure, commercial buildings, and factories. This subsegment will mostly use energy storage systems to help with peak shaving, integration with on-site renewables, self-consumption optimization, backup applications, and the provision of grid services. We believe BESS has the potential to reduce energy costs in these areas by up to 80 percent. The argument for BESS is especially strong in places such as Germany, North America, and the United Kingdom, where demand charges are often applied. The final C&I subsegment consists of harsh environments—applications for mining, construction, oil and gas exploration, and events such as outdoor festivals. The source of the growth will be customers moving away from diesel or gas generators in favor of low-emission solutions such as BESS and hybrid generators. A main factor driving adoption in this segment is upcoming regulations (including the European Commission’s sustainability-focused Big Buyers initiative and Oslo’s plan for net zero on construction sites by 2025). Many of the companies that make the switch will start by converting to hybrid genset solutions rather than immediately moving completely to BESS. What about the BESS residential consumer play? Residential installations—headed for about 20 GWh in 2030—represent the smallest BESS segment. But residential is an attractive segment given the opportunity for innovation and differentiation in areas ranging from traditional home storage to the creation of microgrids in remote communities. From a sales perspective, BESS can be bundled with photovoltaic panels or integrated into smart homes or home EV charging
Revenue models for FTM utility-scale BESS depend heavily on the dynamics of the regions that providers are entering. Most utility-scale BESS players pursue a strategy of revenue stacking, or assembling revenues from a variety of sources. They might participate in ancillary services, arbitrage, and capacity auctions. For instance, many BESS installations in the United Kingdom currently revolve around ancillary services such as frequency control. Italy has BESS players that have broken through by winning one of the country’s renewables-focused capacity auctions. The opportunities in Germany revolve more around avoiding costly grid upgrades. The BESS players that have gotten traction in the FTM utility segment have understood the value of responding individually to countries and their regulations versus using one monolithic strategy. Where is the value in the commercial and industrial segment? Commercial and industrial (C&I) is the second- largest segment, and the 13 percent CAGR we forecast for it should allow C&I to reach between 52 and 70 GWh in annual additions by 2030. C&I has four subsegments. The first is electric vehicle charging infrastructure (EVCI). EVs will jump from about 23 percent of all global vehicle sales in 2025 to 45 percent in 2030, according to the McKinsey Center for Future Mobility. This growth will require rapid expansion of regular charging stations and super chargers, putting pressure on the current grid infrastructure and necessitating costly, time-consuming upgrades. To avoid this, charging station companies and owners may opt to put a BESS on their properties. Partnerships have already formed between BESS players and EV producers to build more EVCI, including in remote locations. The next subsegment of C&I is critical infrastructure such as telecommunication towers, data centers, and hospitals. In this subsegment, lead-acid batteries usually provide temporary backup through an uninterruptible power supply during outages until power resumes or diesel generators are turned on. In addition to replacing lead-acid batteries, lithium-ion BESS products can also be used to
Accelerating the journey to net zero
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