South America Energy Storage Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The South America energy storage market is expected to grow at a CAGR of approximately 7.39% during the forecast period. Factors such as the declining prices of lithium-ion batteries with increased application range and improved adoption and increased demand for uninterrupted power supply are expected to drive the South America energy storage market. Moreover, the growing renewable energy sector which demands a higher need for energy storage is expected to promulgate the market. However, the demand-supply mismatch of raw materials such as a shortage of minerals required for lithium-ion batteries is expected to restrain the growth of the energy storage market in the region.

Key Highlights

• Batteries segment is expected to be the largest market during the forecast period in South America, owing to an increasing shift toward higher levels of renewable energy into grids and the need for long-term energy storage.
• The Compressed air energy storage (CAES) can achieve an efficiency of 70-80%, which is a significant improvement from the current 25-35%. Achieving such high efficiency can help CAES becoming a mainstream energy storage technology, in turn, allowing this technology to explore significant untapped potentials and creating opportunities for the market players.
• In South America, Brazil is expected to be the dominate during the forecast period marked by increasing energy demand from residential as well as industrial and commercial sector.

Key Market Trends

Batteries Segment to Dominate the Market

• Batteries are expected to be the largest segment during the forecast period in South America. Moreover, there is a huge potential for the market to grow in this region over the forecast period, owing to a large number of lithium reserves in Bolivia, and battery storage and renewable integration plans in Colombia.
• In 2017, Enel installed a system that integrates photovoltaic generation with a hybrid energy storage system based on Li-ion battery (132 kWh) and hydrogen storage (1 MWh), at the Cerro Pabellón geothermal plant in Chile.
• The Argentine energy storage market has been traditionally dominated by pumped hydropower. However, battery-based utility-scale storage systems are also being considered in the country. In May 2017, Power China was planning for 1 GW solar power projects, with round-the-clock storage.
• Utilities are still the biggest segment of the battery energy storage market, and more utilities are including storage in their solicitations for solar projects, thereby increasing the opportunities for battery energy storage systems during the forecast period.
• Furthermore, combining big batteries with renewable energy projects improves reliability without creating greenhouse gas (GHG) emissions, and therefore, homeowners and businesses are increasing focusing on the use of batteries for backup power and to capture the excess energy from rooftop systems to use whenever required, in turn promulgating the market in South America.

Brazil to Dominate the Market

• As the region’s largest economy and electricity market, Brazil holds vast potential for renewables and energy storage development. The country is majorly dependent on hydropower generation for meeting its power demand. In 2018, around 17.7% of the total electricity generated in the country came from renewables.
• Under the ‘Pro-GD’ initiative launched in 2015, the Brazilian government is expecting investments of USD 230 billion in distributed generation by 2030. The initiative also includes the announcement of installing more than 2.7 million solar units to help increase Brazil’s non-hydropower renewables share in electricity generation by 23%, till 2030, which is expected to supplement the demand for energy storage systems in the country.
• In March 2017, ANEEL pre-approved 23 of 29 proposals for battery energy storage pilot projects in Brazil. Engie also partnered with Eos Aurora and Northern Power in the same year, to implement a 1MW/4MWh utility-scale battery energy storage pilot in the Brazilian municipality of Tubarao.
• Scenario of area not having access to electricity is changing, with the intervention of hybrid generators and renewable power sources, such as solar PV and battery storage systems, under the Luz para Todos (Light for all) program.
• Therefore, with high energy demand and government policies, energy storage market is expected to be driven during the forecast period.

Competitive Landscape

The South America energy storage market is fragmented. Some of the key players are GS Yuasa Corporation, Contemporary Amperex Technology Co. Limited, BYD Co. Ltd, LG Chem Ltd, and Samsung SDI Co. Ltd.

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