Battery Energy Storage Market Trends

Growth Drivers

• Rapid expansion of renewable energy: The fundamental driver for the battery energy storage market is the increasing deployment of solar and wind power across almost all nations. Solar only produces during daylight, and battery storage is needed to store excess energy and release it when demand is high or generation is low. In this context, ENGIE in January 2026 announced that it was awarded its first hybrid solar-plus-storage project in India by combining 200 MW of solar PV with a 100 MW/600 MWh battery energy storage system that is capable of supplying up to six hours of stored renewable energy. This project, awarded under SECI’s national tender, supports the country’s goal of round-the-clock clean power by storing excess solar output and releasing it when generation is low or demand is high. The commissioning is expected in 2028, and the project strengthens grid resilience and ENGIE’s role in expanding renewable and flexible energy solutions.
• Grid modernization and reliability needs: Utilities and grid operators are continuously making investments in modern, flexible power systems to handle demand fluctuations, frequency regulation, peak load management, and blackouts. Battery energy storage systems help meet these grid flexibility and resilience requirements, driving consistent adoption in the market. In February 2025, Sarawak Energy reported that it had commissioned Malaysia’s first-ever utility-scale 60 MW/82 MWh battery energy storage system at the Sejingkat Power Plant in Kuching, providing essential grid services as voltage and frequency regulation, primary spinning reserve, and peak demand management. Besides this, BESS enhances grid reliability and resilience, supports integration of intermittent renewable energy, and helps meet rising electricity demand across Sarawak, hence denoting a positive market outlook.
• Supportive government policies & incentives: Most of the countries have introduced policy frameworks, subsidies, tax credits, and clean energy mandates that encourage investment in the market.  Testifying this, the U.S. Residential Clean Energy Credit allowed homeowners to claim 30% of the costs for installing qualified clean energy property, including battery storage systems (≥3 kWh), which began in 2023, on their primary residence through 31 December 2025. The credit covered both the equipment and installation costs, thereby reducing upfront investment and encouraging the adoption of renewable energy and storage technologies. Therefore, such policies provide a direct financial incentive to expand residential battery storage and other clean energy solutions, increasing adoption in this field. Furthermore, global energy storage projects also create encouraging opportunities for cost savings, energy efficiency, and long-term clean energy investments.

Key Battery Energy Storage Projects 2025 and Market Opportunities

Source: Company Official Press Releases

Challenges

• High capital costs: The battery energy storage systems necessitate huge investments in terms of battery cells, inverters, power electronics, and installation. The operational expenses in the market are considerably low, whereas the initial capital outlay can deter utilities, commercial operators, and residential users, particularly in emerging markets. Similarly, the aspect of large-scale projects often requires financing structures, subsidies, or long-term contracts to ensure economic viability. On the other hand, despite declining lithium-ion costs, BESS is costly when compared to conventional peaking power or fossil fuel-based storage alternatives. Therefore, developers must balance system sizing, technology selection, and project lifespan to ensure cost-effectiveness, which can limit constant deployment and adoption in price-sensitive regions.
• Battery technology limitations: The BESS technologies, primarily lithium-ion, face limitations in terms of energy density, cycle life, thermal stability, and degradation over time. Also, the aspect of high energy demands or prolonged discharge periods can accelerate performance decline, negatively impacting system efficiency and reliability. The alternative chemistries, such as flow batteries or solid-state solutions, are still in early commercial stages, representing high costs and limited manufacturing capacity. In addition, factors such as thermal management, fire safety, and recycling challenges also pose technological barriers in the battery energy storage market. As a result, developers must carefully match battery chemistry with application requirements, and ongoing R&D is highly essential to overcoming limitations in the in industrial use.