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    Ancillary Services for Battery Energy Storage Systems Market

    ID: MRFR/E&P/20573-CR
    128 Pages
    Sakshi Gupta
    June 2024

    Ancillary Services for Battery Energy Storage Systems Market Research Report Information by Type (Frequency Regulation (and Balancing), Congestion relief, Voltage support, Power smoothing, Peak shaving, Backup Power, Solar Plus Storage , Grid Reliability & Microgrid Capability, Others) By Battery Energy Storage System Type (Lead acid, Lithium-ion, Flow batteries, Nickel-based batteries, Sodium-Sulphur and Zinc-Bromide) By End-Use (Residential, Commercial, Industrial and Utilities), and By Region -Global Forecast to 2032

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    Ancillary Services for Battery Energy Storage Systems Market Summary

    As per Market Research Future Analysis, the Global Ancillary Services for Battery Energy Storage Systems Market was valued at 1,597.0 USD Million in 2023 and is projected to reach 5,258.7 USD Million by 2032, growing at a CAGR of 14.63% from 2024 to 2032. The market encompasses various supportive functions such as frequency regulation, voltage support, and peak shaving, which enhance grid stability and reliability. The increasing penetration of renewable energy sources, particularly solar and wind, is driving the demand for ancillary services, as they help manage grid variability effectively. The market is segmented by type, battery energy storage system type, end-use, and region, with lithium-ion batteries expected to dominate due to their high capacity and quick response time.

    Key Market Trends & Highlights

    Key trends influencing the market include the rise of renewable energy and advancements in battery technology.

    • U.S. solar power generation is expected to grow 75% from 163 billion kWh in 2024 to 286 billion kWh in 2025.
    • The industrial segment is projected to hold the maximum market share due to its reliance on battery storage for energy management.
    • Lithium-ion batteries are anticipated to dominate the market, providing essential ancillary services like frequency regulation and voltage support.
    • Asia Pacific is expected to account for significant revenue share, driven by industrialization and renewable energy integration.

    Market Size & Forecast

    2023 Market Size USD 1,597.0 Million
    2024 Market Size USD 1,763.9 Million
    2032 Market Size USD 5,258.7 Million
    CAGR (2024-2032) 14.63%

    Major Players

    Key players include Nidec Industrial Solutions, ESS Inc., EDF Energy, Powin Energy, Saft, Mitsubishi Heavy Industries, Honeywell International, LG Energy Solution, NextEra Energy, and Doosan GridTech.

    Ancillary Services for Battery Energy Storage Systems Market Trends

      • An Increasing Penetration of Renewable Energy Sources Like Solar & Wind Power

    In 2024, the U.S. electric power sector produced 4,017 billion kilowatt-hours (kWh) of electric power. 

    And the nuclear power generation will stay relatively flat, rising from 776 billion kWh in 2024 to 797 billion kWh in 2025. New installations of generating capacity support the increase in the renewable generation forecast. Wind and solar developers often bring their projects on line at the end of the calendar year. So, the new capacity tends to affect generation growth trends for the following year. 

    Advancement of battery technology

    These innovations are in progress because the focus of the manufacturers is to improve energy density, cycle life, safety, and scalability, and most important is to bring down the price, and make it easily affordable to the people. At present Lithium-ion batteries are gaining attention or is being focused due to their high energy density and fast charging capabilities. The innovation is not restricted to the lithium-ion battery, but also is going in flow batteries, they are utilizing liquid electrolytes in external tanks, and offering scalability and longer-duration storage options.

    Graphite, but also graphite/silicon or litigated titanium oxides are used as negative materials.

    Lead-acid batteries can be designed to be high power and are inexpensive, safe, recyclable, and reliable. However, low specific energy, poor cold-temperature performance, and short calendar and lifecycle impede their use. Advanced high-power lead-acid batteries are being developed, but these batteries are only used in commercially available electric-drive vehicles for ancillary loads. They are also used for stop-start functionality in internal combustion engine vehicles to eliminate idling during stops and reduce fuel consumption. 

    The usage of nickel-based batteries in large-scale energy storage is rising because it can be used in all the temperatures, this adds plus point for the nickel-based batteries. Nickel-Cadmium (NiCd) is the most common type of nickel-based battery technology, and it is mostly used or preferred for off-grid installation as they provide a reliable backup system and don’t require regular maintenance (provide the good result at the low cost). 

    Flow batteries are comparatively new to the battery storage market. In recent times they are becoming a strong competitor to Li ion batteries in energy storage domain. They are rechargeable batteries in which electrolyte flows through one or more electrochemical cells from one or more tanks. In these batteries one can easily increase the energy storage capacity by increasing the quantity of electrolyte stored in the tanks.

    Technological Advancements and Growing Demand for Lithium-Ion Battery Energy Storage Systems

    In the present situation, energy is very much important for the comfort living and for the living, as the energy help in the running of factories, and providing the desired output and help in earning the revenue, which will help in the country’ growth and progress. Due to the shift in the choice and the increasing use of battery energy storage system the demand for the electric vehicle is also high. Due to the inclination for the electric vehicle, the demand for fossil fuel has reduced, which has help in [protecting the environment and human health.

    The important feature of the energy storage systems, particularly lithium-ion batteries, which can store surplus energy, when the energy is not required much and discharge it when needed or as per the requirement, which help in matching the need, when the energy is most required. For instance, in factoring or the manufacturing units, there is the need of the energy every time, because in absence of the energy, the production will not be there, as a result the supply chain will be affected and will create the imbalance. There the battery energy storge system is required and utilized the most.

    The integration of battery energy storage systems into ancillary services is poised to enhance grid reliability and facilitate the transition to renewable energy sources, thereby supporting a more resilient energy infrastructure.

    U.S. Department of Energy

    Ancillary Services for Battery Energy Storage Systems Market Drivers

    Market Charts and Projections

    The Global Ancillary Services for Battery Energy Storage Systems Market Industry is characterized by robust growth projections. In 2024, the market is valued at 1.76 USD Billion, with expectations to reach 7.92 USD Billion by 2035. This growth trajectory reflects a compound annual growth rate (CAGR) of 14.63% from 2025 to 2035, indicating a strong demand for ancillary services. The charts illustrate the increasing market size and the projected growth, highlighting the importance of battery energy storage systems in the global energy landscape.

    Regulatory Support and Incentives

    Government policies and regulatory frameworks play a crucial role in shaping the Global Ancillary Services for Battery Energy Storage Systems Market Industry. Many governments worldwide are implementing incentives and subsidies to promote energy storage technologies. For example, tax credits and grants for battery storage installations encourage investment in ancillary services. These supportive measures are likely to enhance market growth, as they lower the financial barriers for adopting battery energy storage systems. Consequently, the market is expected to expand significantly, driven by favorable regulations that facilitate the integration of these systems into existing energy infrastructures.

    Technological Advancements in Energy Storage

    Technological innovations in battery energy storage systems are significantly influencing the Global Ancillary Services for Battery Energy Storage Systems Market Industry. Enhanced battery chemistries, such as lithium-ion and solid-state batteries, are improving energy density and cycle life, making these systems more viable for ancillary services. These advancements not only reduce costs but also increase the efficiency of energy storage solutions. As a result, the market is anticipated to grow at a CAGR of 14.63% from 2025 to 2035, potentially reaching 7.92 USD Billion by 2035. This growth underscores the importance of ongoing research and development in the energy storage sector.

    Rising Need for Grid Stability and Reliability

    The increasing complexity of modern power grids necessitates enhanced stability and reliability, which is driving the Global Ancillary Services for Battery Energy Storage Systems Market Industry. As electricity demand fluctuates, ancillary services provided by battery energy storage systems, such as voltage support and spinning reserves, become essential for maintaining grid integrity. This need is underscored by the growing incidence of extreme weather events that disrupt power supply. The market's expansion is indicative of the critical role that battery storage plays in ensuring a resilient energy system capable of meeting contemporary challenges.

    Growing Demand for Renewable Energy Integration

    The increasing global emphasis on renewable energy sources is driving the Global Ancillary Services for Battery Energy Storage Systems Market Industry. As countries strive to meet ambitious climate goals, the integration of solar and wind energy into the grid becomes paramount. Battery energy storage systems provide essential ancillary services, such as frequency regulation and load balancing, which enhance grid stability. For instance, in 2024, the market is projected to reach 1.76 USD Billion, reflecting the urgent need for solutions that can accommodate fluctuating energy supply and demand. This trend is expected to accelerate as more nations adopt renewable energy policies.

    Market Segment Insights

    Ancillary Services for Battery Energy Storage Systems by Type Insights

    The Ancillary Services for Battery Energy Storage Systems Market segmentation, based on Type has been segmented as Frequency Regulation (and Balancing), Congestion relief, Voltage support, Power smoothing, Peak shaving, Backup Power, Solar Plus Storage, Grid Reliability & Microgrid Capability and Others. Among these, the Frequency Regulation (and Balancing) segment is projected to dominate the Ancillary Services for Battery Energy Storage Systems Market revenue through the projected period.

    The power grid relies heavily on battery storage systems for its ability to provide regular and balanced services. These systems adjust power supply to demand in real time, providing rapid response capabilities that are critical to maintaining grid stability. Unlike conventional power plants, battery storage devices can quickly adjust output power to minimize seasonal fluctuations. 

    Charge and discharge control mechanisms allow the battery system to inject or draw power to control the grid frequency to stay within the desired operating range. It has excellent first-order frequency response and continuously adjusts the output in response to sudden grid disturbances such as power outages. Furthermore, battery storage aids in improving secondary frequency response by monitoring grid frequencies and adjusting power levels over extended periods. These systems can enter the regular schedule market, allowing schedulers the flexibility and responsiveness to efficiently manage scheduling operations.

    Ancillary Services for Battery Energy Storage Systems by Type, 2023, 2032 (USD Million)

    Ancillary Services for Battery Energy Storage Systems by Battery Energy Storage System Type Insights

    Based on Battery Energy Storage System Type, the Ancillary Services for Battery Energy Storage Systems Market is segmented as Lead acid, Lithium-ion, Flow batteries, Nickel-based batteries, Sodium-Sulphur and Zinc-Bromide. Out of which the Lithium-ion segment dominated base year market and is also projected to dominate the Ancillary Services for Battery Energy Storage Systems Market revenue through the projected period.  

    Battery energy storage systems (BES) are expected to incorporate lithium-ion batteries as a major technology, providing ancillary services to the power grid. The high capacity, long life and quick response time of lithium-ion batteries makes them a perfect choice for extended service applications that require fast and precise adjustments. 

    In the field of ancillary services, lithium-ion batteries are useful in functions such as frequency regulation, voltage support and grid stability. Lithium-ion batteries are fast to charge and release power, providing good frequency requirements by quickly responding to changes in voltage due to changes in power demand or power supply.

    Ancillary Services for Battery Energy Storage Systems by Battery Energy Storage System Type, 2023, 2032 (USD Million)

    Ancillary Services for Battery Energy Storage Systems by End-Use Insights

    The Ancillary Services for Battery Energy Storage Systems Market segmentation, based on end-use has been segmented as Residential, Commercial, Industrial and Utilities. Among these, the Industrial segment held the maximum market share and is also expected to account for the significant revenue share during the forecast period.

    In industrial applications, auxiliary battery storage services are crucial for optimizing energy management, improving reliability, and improving operational efficiency. Battery storage systems are utilized in industrial facilities to provide demand response, frequency regulation, and backup power as ancillary services. 

    Battery storage systems can handle regular usage and fluctuations in the power grid quickly while maintaining consistent reliability and stability in industrial applications. When the power is lost, battery storage becomes a reliable source of emergency power and helps prevent system failures. Industrial end users can enhance their competitiveness and sustainability in a changing energy environment by utilizing battery storage backup services, which reduces operational risks and helps maintain grid stability.

    Ancillary Services for Battery Energy Storage Systems by End-Use Insights, 2023, 2032 (USD Million)

    Ancillary Services for Battery Energy Storage Systems by End-Use Insights, 2023, 2032 (USD Million)

    Get more detailed insights about Ancillary Services for Battery Energy Storage Systems Market Research Report — Global Forecast till 2032

    Regional Insights

    Based on Region, the Ancillary Services for Battery Energy Storage Systems market is segmented into North America, Europe, Asia-Pacific, Middle East & Africa, and Latin America. The Asia Pacific Ancillary Services for Battery Energy Storage Systems market held the maximum market share and is also expected to account for the significant revenue share during the forecast period.

    Several factors are driving the rapid growth of the market for ancillary services such as battery energy storage systems (BESS) in Asia Pacific. Reliable and efficient electricity infrastructures are increasingly needed as industrialization and urbanization continue in the region. 

    In addition, the growing use of renewable energy sources and ambitious climate goals are driving the deployment of BESS to support grid stability and the integration of renewables. Countries such as China, Japan, South Korea and Australia are leading the deployment of BESS with significant investments in grid modernization and energy storage projects.

    Ancillary Services for Battery Energy Storage Systems Regional Insights, 2023 (USD Million)

    Ancillary Services for Battery Energy Storage Systems Regional Insights, 2023

    Key Companies in the Ancillary Services for Battery Energy Storage Systems Market market include

    Industry Developments

    • Q3 2025: Tesla remains the top global producer of battery energy storage systems in 2024, but Sungrow narrows the gap Tesla retained its position as the leading global battery energy storage system integrator in 2024 with a 15% market share, while Sungrow increased its share to 14%, narrowing the gap to just 1 percentage point. The report also notes a significant surge in Chinese integrators' market share in Europe and a decline in North America due to geopolitical tensions.

    Future Outlook

    Ancillary Services for Battery Energy Storage Systems Market Future Outlook

    The Ancillary Services for Battery Energy Storage Systems Market is projected to grow at a 14.63% CAGR from 2024 to 2035, driven by increasing renewable energy integration and regulatory support.

    New opportunities lie in:

    • Develop advanced software solutions for optimizing energy storage operations.
    • Invest in partnerships with renewable energy providers for integrated service offerings.
    • Explore emerging markets with growing energy demands and limited infrastructure.

    By 2035, the market is expected to achieve robust growth, reflecting a pivotal role in global energy systems.

    Market Segmentation

    Ancillary Services for Battery Energy Storage Systems Type Outlook

    • Frequency Regulation (and Balancing)
    • Congestion relief
    • Voltage support
    • Power smoothing
    • Peak shaving
    • Backup Power
    • Solar Plus Storage
    • Grid Reliability & Microgrid Capability
    • Others

    Ancillary Services for Battery Energy Storage Systems End-Use Outlook

    Industrial
    • Heavy Industries
    • Renewable Energy
    • Others

    Ancillary Services for Battery Energy Storage Systems Regional Outlook

    North America
    • US
    • Canada
    • Mexico

    Ancillary Services for Battery Energy Storage Systems Rated Battery Energy Storage System Type Outlook

    • Lead acid
    • Lithium-ion
    • Flow batteries
    • Nickel-based batteries
    • Sodium-Sulphur
    • Zinc-Bromide

    Report Scope

    Report Attribute/Metric Details
    Market Size 2023 USD 1,597.0 Million
    Market Size 2024 USD 1,763.9 Million
    Market Size 2032 USD 5,258.7 Million
    Compound Annual Growth Rate (CAGR) 14.63% (2024-2032)
    Base Year 2023
    Forecast Period 2024-2032
    Historical Data 2018 & 2022
    Forecast Units Value (USD Million)
    Report Coverage Revenue Forecast, Competitive Landscape, Growth Factors, and Trends
    Segments Covered Type, Battery Energy Storage System Type, End-Use and Region
    Geographies Covered North America, Europe, Asia Pacific, Middle East & Africa, and Latin America
    Countries Covered US, Canada, Mexico, Germany, UK, France, Italy, Spain, Norway, China, India, Japan, South Korea, Brazil, Argentina, GCC Countries, South Africa
    Key Companies Profiled Nidec Industrial Solutions, ESS Inc., EDF Energy, Powin Energy, Saft, Mitsubishi Heavy Industries, Ltd., Honeywell International, Inc., LG Energy Solution Ltd., NextEra Energy, and Doosan GridTech
    Key Market Opportunities ·       Technological advancements and growing demand for lithium-ion battery energy storage systems
    Key Market Dynamics ·       An increasing penetration of renewable energy sources like solar & wind power ·       Advancement of battery Technology

    Market Highlights

    Author
    Sakshi Gupta
    Research Analyst Level II

    I have about two years of experience working in the consumer goods and retail industries and I am a biotech graduate.A tech-savvy analytically focused professional with a strong capabilities in identification, concept generation, and strategy evaluation. I can produce data-driven solutions while fusing unusual viewpoints with original concepts. I have been extensively working on business case studies, competitive & comparative analyses, and strategic reports. My primary areas of experience include client management, financial analysis, supply chain evaluation, market entry strategy evaluation, and estimating and forecasting market size.

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    FAQs

    How much is the Ancillary Services for Battery Energy Storage Systems Market?

    The Ancillary Services for Battery Energy Storage Systems Market size was Valued at US$ 1,597.0 Mn.

    What is the growth rate of the Ancillary Services for Battery Energy Storage Systems Market?

    14.63% is the growth rate of the Ancillary Services for Battery Energy Storage Systems Market.

    Which region held the largest market share in the Ancillary Services for Battery Energy Storage Systems Market?

    Asia Pacific region held the largest market share in the Ancillary Services for Battery Energy Storage Systems Market.

    Who are the key players in the Ancillary Services for Battery Energy Storage Systems Market?

    Nidec Industrial Solutions, ESS Inc., EDF Energy, Powin Energy, Saft, Mitsubishi Heavy Industries, Ltd., Honeywell International, Inc., LG Energy Solution Ltd., NextEra Energy, and Doosan GridTech.

    Which Type had the largest market share in the Ancillary Services for Battery Energy Storage Systems Market?

    Frequency Regulation (and Balancing) Type had the largest market share in the Ancillary Services for Battery Energy Storage Systems Market.

    Which Battery Energy Storage System Type had the largest market share in the Ancillary Services for Battery Energy Storage Systems Market?

    Lithium-ion Battery Energy Storage System Type had the largest market share in the Ancillary Services for Battery Energy Storage Systems Market.

    Which End-Use had the largest market share in the Ancillary Services for Battery Energy Storage Systems Market?

    Industrial End-Use had the largest market share in the Ancillary Services for Battery Energy Storage Systems Market.

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