The market for advanced batteries for utility-scale energy storage faces an array of challenges. Costs are high compared to traditional power generation resources; the regulatory environment remains ambiguous; no single optimal technology has emerged; and advances in grid infrastructure equipment, such as smart inverters, could accomplish many of the same objectives as advanced batteries. Amid rising demand for electricity and increasing penetration of renewable energy resources, however, advanced batteries represent a unique asset, offering the promise of grid flexibility and generation asset enhancement at rapid speeds and varying levels of scalability.

According to a new report from Pike Research, the market for advanced batteries will roughly double each year over the next five years, reaching $7.6 billion in 2017. Over the ensuing half-decade, growth will level off to a still-robust compound annual growth rate (CAGR) of 31 percent, and revenues in the sector will reach $29.8 billion in 2022.

“While interest in advanced batteries for grid-scale energy storage remains high, battery manufacturers have not yet put forth a leading technology or business model that has achieved strong traction in the utility industry,” says research analyst Brittany Gibson. “Regulatory and market structures are rapidly evolving, however, and adapting in ways that signal the potential for advanced batteries to provide a unique value to grid infrastructure. The next several years will be crucial for the sector’s development.”

As a globally advanced battery manufacturing epicenter, Asia Pacific may benefit before other regions from cost decreases in advanced battery technologies, according to the new report. Though Western Europe lags behind Asia Pacific and North America, the European Union’s aggressive carbon reduction goals and public funding for grid modernization hold abundant future promise. North America, with its highly decentralized electricity industry, has a broad spectrum of opportunity and technology development, but some common drivers in the North American utility industry could make it a fertile environment for advanced batteries.