“More storage capacity in a smaller footprint will mean a lower land requirement, which can increase the capacity of project and also open up new areas that previously were deemed to be land constrained, enhancing the potential growth for battery storage,” says Stirling.

While today’s customers of utility-grid BESS installations tend to be utilities, grid operators, and renewable developers, there’s a fast-growing sector which could significantly increase clean energy demand: data centers.

In the next five years, consumers and businesses will generate twice as much data as they did over the past 10 years. Clean energy will be in high demand to fuel this digital world, yet it also faces competing challenges, with global grid infrastructure requiring significant investment, and the rapid growth of energy-intensive electric vehicle infrastructure and advanced manufacturing.

Smaller countries will be feeling the pinch, but the U.S. too is asking questions about securing the clean energy supplies needed, says Balasubramanian.

“Existing capacity is not enough to support the kind of load growth we are experiencing and there is very little new fossil fuel fired generation being developed. This only increases the need for renewables on the grid putting the storing of renewable energy front-and-center,” he adds.

As a result, demand for utility scale BESS is now broadening beyond more developed locations, such as California, to the Midwest. US utility Xcel Energy has deployment plans for the Upper Midwest region, including 3.6GW of renewables and 600MW of energy storage by 2030.

“The likes of California have been growing for many years, but now we’re seeing developers starting to hit Midwest markets. I’d expect more developers to follow the data centers trail,” Balasubramanian says.

To unlock the potential of utility scale BESS, investors face challenges both from punitive network charges in some countries to export power onto the grid, as well as the network cost of importing energy.

“Such scenarios, where there’s effectively been a double charge, have created barriers to entry into new jurisdictions, with storage being treated both as a generator and final demand,” says Stirling. “However, when such barriers are removed, as we’ve seen in Germany, then the market then enjoys rapid growth."

While U.S. regulator FERC (Federal Energy Regulatory Commission) has recently made new rulings on transition planning rules for renewable energy, a smoother planning permission process is needed, says Balasubramanian. “The U.S. has lacked a long-term plan for energy,” he says. “Hopefully we’re now on the right road to remove hurdles for developers.”

While countries take steps to encourage investment in clean energy infrastructure, opportunities still vary at a state or regional level.

“There are deep variances across markets. Knowing where energy bottlenecks exist, such as in Germany, is crucial,” says Stirling. “There’s now a clear need for storage as part of the renewable energy transition. And it’s increasingly becoming a very attractive investment opportunity.”