The U.S. firm Tesla and South Korea’s LG Chem are tipped to dominate the U.S. battery storage market, which is expected to be worth as much as $50 billion by 2020.
Analysts at investment bank Morgan Stanley suggest Tesla and LG Chem are best positioned to take big market shares in a market that it predicts will grow faster than most others expect.
Morgan Stanley says the “addressable” battery storage market in the US is 85 GWh, or around $30 billion. But if regulators come on board and allow it to compete in deregulated power markets, then that forecast is nearly doubled to 140 GWh or more than $50 billion.
The analysts predict that Tesla and LG Chem are likely to snaffle 30% of this market each, although it doesn’t rule out that either party could gather a 50% share. In the former, it depends on the success of its Gigafactory. For the latter, it would require its own U.S. manufacturing base.
The US market, however, will be just a fraction of the global market – which the Morgan Stanley analysts expect will be 7 to 8 times bigger. China alone is expected to have double the market size of the U.S. in battery storage.
This report – Energy Storage: An Underappreciated Disruptor – says the US market will be focused mainly at the utility level, where power companies and developers will see value in providing grid stability such as ancillary services, and to meet peak demand and supply variations.
In regional grids such as California, with a heavy reliance on storage, this is likely to make mattes difficult for gas generators, who are unlikely to be able to compete on cost or flexibility. In some markets, such as the PJIM, battery storage is already accounting for most of the grid stability market.
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