Distributed Energy Storage System Market Size & Share, by Capacity Type (Single-Phase Type, Three-Phase Type, Double-Phase Fire Line Type), Battery (Nickel-Cadmium, Lead Acid, Lithium-Ion), Application (Transportation, Grid Storage, Renewable Energy Storage), End-user (Commercial, Residential) - Global Supply & Demand Analysis, Growth Forecasts, Statistics Report 2025-2037

Growth Drivers

• Increasing Deployment of Micro Grids – A microgrid is a network of interconnected loads and distributed sources of energy that operate as a unified controlled entity in regarding the grid. It can connect to and disconnect from the grid, allowing it to function in either grid-connected or island mode. The deployment of microgrids has increased as these grids can increase customer dependability and robustness to grid outages. Advanced microgrids allow local power generation assets, such as traditional generators, renewables, and storage, to maintain the local grid operational even when the main grid is disrupted. Moreover, by the integration of various renewable energy sources comprising wind, solar, and hydro, these grids have been lowering greenhouse gas emissions to a great extent. Hence, the surge in the deployment of microgrids is anticipated to spur market growth in the coming years. For instance, the installation count of operational microgrids in the United States has extended to around 465 that generate nearly 3.5 gigawatts of reliable electricity.

• Rising Fossil Fuel Prices - The price of oil and gas has recently surged as a result of rising global demand. Prices had increased as a result of Russia's intrusion into Ukraine. Furthermore, the global decline in nuclear power output has led to a rise in the utilization of coal and oil for electricity generation. Hence, this factor is also estimated to boost the market further throughout the forecast period. For instance, in the United Kingdom, it cost more than USD 121 to fill up a normal family car with petrol in 2022.

• Escalating Government Policies to Mitigate Carbon Emissions - It is feasible to enhance air quality and save lives by decreasing emissions of greenhouse gases. Reducing greenhouse gas emissions could save millions of premature deaths caused by air pollution over the course of the next century. The government of developed and developing nations has been prioritizing policies on a larger scale to mitigate carbon emissions. Thus, this factor is also projected to spur the growth of the global distributed energy storage system market in the coming years. As per the statistics provided by the Government of the Netherlands, the Climate Act of Dutch government targets for around 47% decrease in greenhouse gas emissions by 2030 and a 96% reduction by 2050 in the Netherlands.

• Growing Investments in Green Energy - Green energy derived from renewable resources such as the sun and wind offer the greatest environmental advantages. The environment is not harmed by green energy, thus investments in green energy have been surging at a huge level. According to the International Energy Agency (IEA), worldwide investment in green energy was anticipated to reach USD 1.4 trillion in 2022.

• Worldwide Upsurge in Smart Buildings – For instance, the count for smart buildings is anticipated to rise from around 44 million in 2022 to nearly 118 million in 2026, an increase of more than 152%.

Challenges

• Thermal Runaway Issue of Batteries - Thermal runaway of batteries is a major concern for Lithium-ion batteries, posing a significant barrier to the growth of distributed energy storage system market. Internal cell faults, mechanical failures or damage, or excess voltage are the primary causes of thermal runaway, which results in high temperatures, gas accumulation, and potentially catastrophic rupture of the battery cell, ending in fire or explosion. Thermal runaway can spread from one cell to the next if not disconnected, leading to further damage. Thus, this factor is anticipated to lower the growth of the market in the coming years.
• High Capital Investment in DES Systems
• Increasing Cost of Lithium