What’s next for battery storage products and solutions?

The energy storage sector is entering a new phase of development. As deployment scales globally and market competition intensifies, industry stakeholders are increasingly focused on the next generation of battery technologies, evolving system architectures, supply chain dynamics and changing grid requirements.

While advances in battery cell design continue to drive performance improvements and cost reductions, innovation is now extending far beyond the cell itself. System-level optimisation, software capabilities, power electronics and new business models are becoming equally important sources of competitive advantage. At the same time, emerging end-use applications and growing demands from grid operators are creating new opportunities and challenges across the value chain.

This shift marks a broader transformation for the industry. Technology differentiation, downstream integration and the development of new use cases are reshaping the competitive landscape and will play a critical role in determining market leaders over the coming years.

Drawing on ongoing market research and industry engagement, Wood Mackenzie’s energy storage analysts have identified five key themes that are expected to influence the next stage of market evolution. Fill out the form on the page to download your complimentary extract from the report, or read on for a brief overview:

1. The next generation of mainstream cells will have 587/588 Ah ratings 

Newly launched 700+ amp hour Ah batteries by EVE and Envision attracted attention at ESIE. These new models represent the highest capacity winding cells currently available. 

There are already 648 Ah- and 684 Ah-rated batteries on the market from CRRC and Sungrow respectively. However, it is lower-rated 587 Ah and 588 Ah cells that have emerged as the flagship product for a broader supplier base. The cost advantages of these cells are achieved by lower wiring and electrical component cost per unit. Additionally, larger cells reduced cost to developers at both system and station levels through fewer paired power control system (PCS) and transformers and lower engineering, procurement and construction (EPC) cost. Battery manufactures enhance profitability by reducing production cost and maintaining pricing power. However widespread market adoption may take longer than for the shift from 280 Ah to 314 Ah last year, due to increased safety concerns.  

2. Modular design is becoming a key feature of growing-capacity battery systems  

Battery systems are evolving towards modular flexibility. As DC block capacity grows from 5 megawatt hours (MWh) to 6 MWh+, modules based on 20-foot containers can exceed 36 tonnes in weight. As a result, more easily transportable 10-foot containers are growing in popularity for overseas shipment.  

Vertical solutions (stacking containers on top of each other) work well for shipment and result in higher squared energy density (SED — the quantity of energy that can be stored within a given footprint). However, the stacked height makes commissioning more complex and creates challenges in meeting earthquake safety requirements — side-by-side positioning is therefore more widely adopted by suppliers. 

3. Power control systems are becoming more important in performance 

The latest PCS offer three key improved functionalities: 

• Safety performance upgrades: Liquid cooling silicon carbide (SiC) offers better thermal management than traditional air-cooled solutions insulated-gate bipolar transistor (IGBT), resulting in high efficiency with minimal heat generation 
• Grid forming: Ensuring stable voltage and frequency enables battery systems to simulate the behaviour of traditional generating sources in helping maintain a stable electricity network   
• High-voltage cascading: Very high alternating current (AC) voltages are connected to a 6-35 kilovolt (kV) busbar without a transformer, resulting in higher system efficiency of up to 92% 

Grid-forming functionality brings more potential revenue streams and is expected to become mandatory under EU and US regulations; as a result, it is being widely applied as a central feature. 

4. AI data centres are emerging as a new application for battery storage 

The rise of data centres for artificial intelligence applications (AIDCs) is creating a new market for battery storage. Due to their unique load characteristics, AIDCs have specific requirements that make them a new and unique user case:  

• High thermal control and availability: High load synchronisation and instantaneous power fluctuation 
• Grid-forming requirements: Short frequency response time and high requirements for grid power quality 
• Integrated power solutions: AIDCs require easily-installed power supply solutions that can manage huge electricity demands safely and reliably 

With AIDC emerging as a key use case for BESS, top manufacturers are evolving into integrated solution providers 

5. Battery manufacturers are becoming integrators and investors 

Changing market demand and intensifying competition is driving battery suppliers towards vertical integration. Their expanding presence is reshaping the competitive market landscape.  

By moving downstream into system integration and EPC, major battery manufacturers like BYD and CATL are compressing price margins for systems integrators. Battery manufacturers have advantages in defining cell-related features such as energy density and lifecycle. However, the top system integrators are building competitive moats based on PCS-related factors such as availability and round-trip efficiency (RTE - a measure of the total losses during charging and discharging). Competition in system integration will intensify in terms of technology and cost. 

Learn more 

Don’t forget to fill out the form at the top of the page to download the report extract, which includes a wealth of supplier- and product-level data relating to these themes.