Amid the surging global energy transition, renewable energy generation capacity-including solar and wind power-is expanding at unprecedented rates. Integrating high proportions of new energy sources into the grid poses significant challenges to grid operations. On one hand, accommodating and integrating wind and solar power increases pressure on grid regulation and absorption capacity. On the other hand, the inherent volatility and intermittency of these sources conflict with the stability and inertia required by the grid-a contradiction that demands resolution. Against this backdrop, multiple research institutions have pointed out that the global scale of energy storage technology deployment must be further expanded, with particular emphasis on grid-forming storage technologies.
Grid Technology Upgrades Must Advance in Parallel
Globally, frequent accidents caused by grid instability underscore the urgency of simultaneously advancing both energy storage and grid technology upgrades. Maintaining stable voltage and frequency is essential for normal grid operation, yet the intermittent nature of renewable energy makes it difficult to function as an independent power source-a contradiction that highlights the critical importance of energy storage technology. Bloomberg New Energy Finance notes that as renewable energy becomes the dominant power source, its inherent volatility and intermittency make large-scale storage increasingly vital.
Energy consultancy Wood Mackenzie's latest research indicates that from 2024 to 2034, the world must invest $1.2 trillion in battery energy storage systems to support the grid integration of 5,900 gigawatts of new wind and solar power capacity by 2034. During this period, battery storage systems will become the second-largest source of new power capacity in Europe, North America, and the Asia-Pacific region. Notably, the Asia-Pacific region's new battery storage capacity will be nearly five times that of Europe and North America combined. By 2034, approximately 1,500 gigawatts of new global battery storage installations will surpass new wind power capacity additions.
As renewable energy, particularly solar power, dominates global new power capacity additions, accelerating the large-scale deployment of energy storage technologies becomes imperative. In fact, the economics of new battery storage systems continue to improve globally. Wood Mackenzie notes that the cost of "PV + storage" hybrid projects is already competitive with onshore wind power. By 2040, utility-scale battery storage costs in markets outside the United States are projected to fall below those of coal and gas power.
In some Asia-Pacific countries, renewable energy penetration has reached 46% to 92% of peak demand. High volatility has weakened grid stability, necessitating technologies that both manage grid stability and optimize renewable energy output. Grid-forming storage technologies are undoubtedly the "ideal partner" for grids with high renewable energy penetration. Wood Mackenzie emphasizes that over the next decade, the deployment of grid-forming storage technologies worldwide will accelerate, becoming a key solution for integrating and expanding renewable energy.
Enhancing Grid Stability
Unlike traditional grid-following systems, grid-forming storage systems possess autonomous voltage and frequency support capabilities. They enhance system short-circuit capacity and inertia, improve grid impedance characteristics, and suppress wide-frequency oscillations. Moreover, grid-forming storage systems not only enable efficient charging and discharging but also function as grid "voltage stabilizers." They effectively boost renewable energy integration capacity, ensuring stable and reliable grid operation even with limited transmission lines. This allows greater volumes of renewable power to be delivered more efficiently to end-users.
Moreover, grid-forming energy storage systems operate in both off-grid and grid-connected modes, possess black start capability, demonstrate broad adaptability to both strong and weak grids, and enable 100% renewable energy integration. They represent a key technology for enhancing the safety and stability of large power grids.
Wood Mackenzie projects that from 2024 to 2034, maintaining grid stability will require adding 1,400 gigawatts of battery storage capacity using grid-forming energy storage technology globally. By 2040, with global electricity demand growing at a 3% compound annual growth rate, grid-forming energy storage will become a practical alternative solution. Grid-forming storage requires upgrades to inverters, control systems, and software, estimated to increase total costs by approximately 15%. However, this increase can be partially offset by the 10% to 40% decline in global average battery storage prices over the past year.
Robert Liew, Research Director at Wood Mackenzie, stated that grid-forming storage systems represent a critical breakthrough for renewable energy grid integration. By 2034, global electricity demand is projected to surge by 55%, with over 80% of new capacity coming from fluctuating renewable sources. Grid-forming storage bridges the technical gap between large-scale renewable deployment and grid stability requirements.
"Key drivers for rapid grid-scale energy storage advancement include falling battery costs, clear clean energy targets, supportive policies, and proven pilot projects," emphasized Robert Liew. "Global battery capacity is projected to triple by 2035, making grid-scale storage a fundamental requirement for deployment. This is not only critical for grid reliability but also essential for unlocking the investment value of large-scale renewable energy."
Global Deployment Varies by Region
The High-Tech Industry Research Institute indicates that grid-forming energy storage represents a future trend, though development stages and urgency vary across countries and projects. Over the next five years, global penetration of grid-forming energy storage is projected to reach 20%.
Globally, multiple countries have introduced policy measures supporting grid-forming energy storage. In China, the National Energy Administration issued the "Notice on Ensuring High-Quality Development of New Energy by Improving New Energy Integration" in June this year, explicitly setting a grid-forming energy storage penetration target of exceeding 30% for the first time. It also mandates that new projects in regions with concentrated new energy installations, such as Northwest China, must be equipped with grid-forming capabilities as standard.
In Australia, grid-forming energy storage projects continue to expand. In February, construction commenced on New South Wales' New England region's first large-scale storage facility employing grid-forming technology, with a planned capacity of 1,400 MW/2,800 MWh. In March, South Australia's largest grid-forming storage project secured financing for a 250 MW/500 MWh facility.
In contrast, grid-forming energy storage deployment and adoption in the United States remain far below expectations. OilPrice.com notes that the "Big and Beautiful" bill's phased elimination of tax credits and funding support for clean energy and electric vehicle production will sharply reduce investment in new energy technologies like batteries, thereby reshaping the U.S. battery manufacturing landscape.
The International Council on Clean Transportation estimates that the Big and Beautiful Act's climate policy cuts could force U.S. battery production to decline by approximately 75%, reducing output to 250 GWh by 2030. According to Wood Mackenzie data, U.S. grid-scale energy storage installations are projected to reach 13.3 GW/43.2 GWh this year, while growth in commercial and industrial storage installations remains highly uncertain. Under a pessimistic scenario, total U.S. energy storage installations-including grid-scale, commercial/industrial, and residential storage-could decline by 22% between 2025 and 2029.
The U.S. non-profit organization Energy System Integration notes that grid-forming storage technologies represent a foundational capability for the United States to redefine grid operating rules and unlock the potential of high-penetration renewable energy. Accelerated deployment is imperative.