COVID-19 Could Derail Storage Growth, but 2020 to be Record Year

COVID-19 Could Derail Storage Growth, but 2020 to be Record Year

According to a new analysis, the COVID-19 containment could derail storage growth but 2020 will still be a record-breaking year with 12.6 GWh deployed.

COVID-19 Storage 2020

According to a new analysis, if the coronavirus (COVID-19) containment measures continue to curtail the movement of goods and people through Q2 this year, alongside an economic downturn, the market impact could trim Wood Mackenzie’s 2020 global energy storage deployments forecast by 19 percent. This equates to a 3 GWh reduction over the year. However, this would still make 2020 a record-breaking year with 12.6 GWh deployed.

Wood Mackenzie’s early estimates indicated a 10 percent lithium-ion battery supply reduction, mainly due to China’s work restriction measures.

Le Xu, Wood Mackenzie Senior Research Analyst, said: “As this happened in China, Japanese and South Korean facilities ramped up to capitalise on the shortfall. As of March, restrictions have been lifted and production facilities in China are now at 60 to 70 percent of pre-virus levels.

“As such, the major risks to battery supply have been somewhat mitigated. A similar story has panned out for inverters where major supply risks have also, so far, been alleviated. However, mitigation efforts will likely see the battery supply chain accelerate. This will have far-reaching implications, not just for energy storage but for the global economy too.”

The analysis further added that a recession for 2020 is looking imminent and outside of installation restrictions there will be additional downward pressure on demand as consumers spend less on luxury high-cost items, such as residential energy storage.

“For large scale projects, particularly in markets where energy storage is predominantly a merchant play, financiers’ appetite for this type of asset is already being reduced. Final project investment decisions will be pushed further out to when market conditions make the risk-return-ratio for this asset class more palatable.

“On the other hand, interest rates are being slashed to record low levels. This may be a silver lining for financially borderline projects, with lower costs of capital available to help to tip them into the investable category. This will be of particular interest to merchant projects currently seeking finance that typically rely on high-cost equity capital” said Rory McCarthy, Wood Mackenzie Principal Analyst.

The global energy storage market contracted for the first time last year, falling from 6.2 GWh in 2018 to 5.3 GWh in 2019. This contraction was primarily due to market declines in South Korea, China, the UK and Canada. Despite slowdowns in key markets and this year’s coronavirus crisis, the industry should return to growth in 2020.

Looking ahead to the next five years, the global energy storage industry is set to thrive due to opportunities presented by the energy transition. The research agency expects the global market to grow 13-fold to 230 GWh by 2025. Additionally, the total energy storage investment pot is projected to increase from USD 18 billion in 2019 to USD 100 billion by 2025.

Looking ahead, one trend to keep an eye on post-2020 is hybrid energy storage. As noted in the analysis, one-third of all storage deployed in 2019 was part of a hybrid system. Although deployments of wind-paired projects were negligible in 2018, they tied with solar in 2019.

McCarthy added: “In 2018 and 2019, we began to see a more commercially viable hybrid storage market take off. Solar-paired storage was the clear winner in 2018, with 582 MWh deployed against wind-paired at 57 MWh. However, in 2019, these two technologies were deployed in equal amounts (227 MWh).

“We expect solar-paired storage to take over in the coming years, as decision-makers overseeing policy and procurement processes come to regard it as a lower-cost option versus wind-paired storage.”

"Want to be featured here or have news to share? Write to info[at]

Ayush Verma

Ayush is a staff writer at and writes on renewable energy with a special focus on solar and wind. Prior to this, as an engineering graduate trying to find his niche in the energy journalism segment, he worked as a correspondent for