As the air in some Chinese cities approaches the consistency of egg-drop soup, the country’s government is pushing electrified vehicles and renewable energy in a big way, and this is driving huge growth in the energy storage market, which will be worth $8.7 billion in 2025, more than four times the current $1.7 billion, according to a new report from Lux Research.
In “Clearing the Haze: Demystifying Energy Storage Opportunities in China,” Lux predicts that transport applications will dominate the storage scene with an 85% share of revenues, while stationary applications will account for the rest. Revenues will grow more slowly than volumes, because of continually falling battery prices.
Total demand for energy storage will grow to 31 GWh per year in 2025, Lux predicts. Transportation’s share of the market will be 29 GWh. The stationary market, at 2.3 GWh, will be smaller, but will grow at a faster 30% compound annual growth rate (CAGR).
Following a surge in sales of new energy vehicles in 2014, Lux expects this sector to slow down, held back by inadequate charging infrastructure. Still, it predicts that the market will grow at a 19% CAGR, reaching 500,000 units in 2025, including passenger and heavy vehicles.
“Besides understanding the market dynamics and producing cost-competitive products, most players in these markets will require strong partnerships to succeed,” said Lux Research Associate Lilia Xie. “Early leaders such as BYD will try their best to hold onto their positions, but the diversification of the market will gradually create promising opportunities for those who operate with patience and savvy.”