Commenting on the report, Ravi Manghani, Wood Mackenzie Power & Renewables Research Director, said: “From 2013 to 2018, we saw fledgling market growth. This was reflected in a global GWh compound annual growth rate (CAGR) of 74%, although we did observe relatively small deployment totals of 7GW/12GWh for the period.

“Nevertheless, these developments have shifted the minds of global regulators, policy makers, grid operators, asset operators and developers, in terms of how energy systems can be balanced. Market structures have generally struggled to keep up with the pace of this technology, illustrated by the limited number of revenue streams available to appropriately compensate storage. More than half of the GWh during this period came online in 2018 alone, beckoning an inflection in storage demand.”

2018 was a record-breaking year

As noted in the Wood Mackenzie Power & Renewables report, 2018 saw 140% YoY growth in GWh terms – with a total of 3.3 GW/6GWh deployed globally.

“Half of this GW capacity was front-of-the meter (FTM), driven by accessible ancillary service revenues in key markets. There was also a notable trend for solar-plus-storage projects providing semi-dispatchable renewable capacity.

“In terms of residential storage, state incentives, reduction in solar export tariffs and the need for backup facilitated storage deployment. Due to rapid system cost reductions, we expect sustainable growth to continue in markets where subsidies are being curtailed. With or without a subsidy, consumers are willing to pay a premium to increase their use of rooftop solar power and, in the process, mitigate the risk of electricity bill increases.

“The non-residential segment overtook the residential segment for the first time helped by subsidy and growth in South Korea. However it continues to be the most complicated proposition in several markets where it will take more time to de-risk, attract financing and become scalable,” added Le Xu, Wood Mackenzie Power & Renewables Senior Research Analyst.