Li-ion Battery for Energy Storage Systems (ESS) Market Report

Li-ion Battery for Energy Storage Systems (ESS) Market Overview

The Li-ion Battery for Energy Storage Systems (ESS) Market size was valued at USD 50.35 million in 2024 and is expected to reach USD 106.99 million by 2033, growing at a CAGR of 9.88% from 2025 to 2033.

The Li-ion Battery for Energy Storage Systems (ESS) market has shown substantial expansion due to increased demand for renewable integration, grid reliability, and decarbonization targets. In 2023, the global ESS deployment reached 108.7 billion in installed capacity across utility-scale and behind-the-meter segments.

North America added 9.2 GW of new storage capacity in 2024 alone, raising cumulative installations to over 26 GW. Asia-Pacific commands a 33% share of the global ESS capacity, growing from 21.1 billion to 82.3 billion between 2022 and 2024. Grid-connected systems dominate, accounting for more than 51% of residential deployments in Asia-Pacific. With ESS lithium-ion systems priced between $80 and $130 per kilowatt-hour, the segment is gaining cost competitiveness, particularly with Chinese manufacturers capturing nearly 90% of global ESS cell capacity.

Battery system prices in China have fallen below $80/kWh, while advanced US systems remain above $130/kWh. The surge in deployment is also supported by widespread national incentives and modernization of transmission infrastructure. Energy storage systems using lithium-ion batteries now play a critical role in peak load shifting, voltage stabilization, and backup support for solar and wind integration. Continued investment in battery chemistry innovation and smart grid connectivity is sustaining market momentum globally.

Key Findings

DRIVER: Declining lithium-ion battery costs have enhanced the affordability of large-scale storage.

COUNTRY/REGION: Asia-Pacific leads with 33% global market share and rapid storage capacity expansion.

SEGMENT: On-grid residential and behind-the-meter installations, holding over 51% of market share in APAC.

Li-ion Battery for Energy Storage Systems (ESS) Market Trends

The ESS market powered by lithium-ion batteries is experiencing a consistent growth trajectory, driven by the electrification of grids, clean energy mandates, and aggressive decarbonization goals. In the United States, battery energy storage systems exceeded 26 GW in installed capacity by the end of 2024, growing more than fivefold since 2021. In Asia-Pacific, the valuation of ESS projects has increased to over 82 billion in 2024, a steep rise from 21.1 billion just two years earlier. Notably, behind-the-meter systems now comprise 51.4% of ESS installations across the region, showcasing a shift toward consumer and distributed energy applications. Chemistry innovation is also transforming trends. Lithium iron phosphate (LFP) batteries have gained prominence in stationary storage applications due to lower cost, higher safety, and longer cycle life. In major energy markets, LFP-based ESS configurations are being selected for long-duration applications ranging between 2 and 10 hours. The cost gap between Chinese-made LFP systems and US-based NMC-based ESS remains significant, with Chinese systems approaching $80/kWh and North American systems ranging from $130 to $140/kWh. Utility-scale deployments remain a major market driver.

Li-ion Battery for Energy Storage Systems (ESS) Market Dynamics

The dynamics of the Li-ion Battery for Energy Storage Systems (ESS) market are shaped by a complex interplay of growth drivers, limiting restraints, expanding opportunities, and rising challenges. A key driver fueling market expansion is the accelerating demand for grid-scale energy storage, spurred by surging renewable energy generation and the need for grid reliability. Lithium-ion ESS deployments have surged globally, with over 108.7 billion in installed capacity by 2024, and more than 9.2 GW added in the U.S. alone during that year.

DRIVER

Increasing demand for grid-scale storage and renewable energy integration.

The accelerating shift toward renewable energy has significantly boosted demand for Li-ion Battery for Energy Storage Systems (ESS), particularly for grid stabilization, load shifting, and frequency control. In 2024, global electricity generation from renewables exceeded 9,800 TWh, with solar PV and wind contributing over 70% of the growth. This expansion created higher variability in supply, pushing utilities to adopt Li-ion ESS to maintain grid reliability.

RESTRAINT

Rising supply chain constraints and raw material shortages.

Despite robust demand, the Li-ion Battery for ESS market faces notable supply chain challenges. The price of lithium carbonate rose from $6,750/ton in 2020 to a peak of $70,000/ton in early 2023 before stabilizing at $25,000/ton in 2024. Additionally, global shortages in cobalt and nickel have impacted production schedules, especially for NMC and NCA chemistries. China controls over 60% of global lithium processing capacity and nearly 80% of cobalt refining, concentrating supply in geopolitically sensitive regions.

OPPORTUNITY

Government incentives and policy mandates accelerating deployments.

Governments worldwide are playing a critical role in scaling the Li-ion Battery for Energy Storage Systems (ESS) market. The United States implemented over 70 energy storage incentives across 38 states in 2024, including Investment Tax Credits (ITCs) of up to 30% for standalone ESS projects. In Europe, Germany allocated over €3.5 billion toward residential and commercial ESS installations, while Italy introduced fast-track permits for grid-scale Li-ion deployments exceeding 1 MW. China, the largest ESS market, announced the addition of over 100 GWh of new storage capacity by the end of 2025, with subsidies covering up to 40% of system costs.

CHALLENGE

Environmental impact and lifecycle emissions from battery systems.

While Li-ion Battery for Energy Storage Systems (ESS) are key to decarbonization, their environmental footprint remains a growing concern. Manufacturing one lithium-ion battery pack for ESS use can emit up to 150 kg CO₂ per kWh, depending on the chemistry and energy source. In 2024, over 80% of cell manufacturing was still powered by non-renewable electricity, particularly in regions with high coal dependency like Inner Mongolia and India.

Li-ion Battery for Energy Storage Systems (ESS) Market Segmentation

The Li-ion Battery for Energy Storage Systems (ESS) market is segmented by type and application, with varying adoption levels based on performance needs, regional policies, and grid infrastructure. By type, the market is divided into Lithium-Ion Batteries and Battery Management Systems (BMS). By application, the major sectors include Renewable Energy, Electric Vehicles (as grid-tied storage), Energy Storage (standalone systems), and Utilities. Each segment plays a unique role in scaling energy transition strategies worldwide, contributing to more than 150 GWh of ESS capacity installations globally by the end of 2024.

By Type

Lithium-Ion Batteries: Lithium-ion batteries form the backbone of modern ESS deployments, accounting for over 92% of global stationary storage installations by energy capacity in 2024. Among various chemistries, lithium iron phosphate (LFP) holds the dominant share in stationary applications, with over 65% usage due to its safety, cost efficiency, and longer life cycles exceeding 6,000 full cycles.
Battery Management Systems (BMS): Battery Management Systems (BMS) are critical to the safety, efficiency, and operational intelligence of Li-ion ESS. By 2024, more than 85% of installed utility-scale ESS projects integrated advanced BMS solutions that offer real-time monitoring, thermal control, and predictive analytics. A typical BMS-equipped system can reduce operational failures by up to 40% and extend battery life by 15–25%.

By Application

Renewable Energy Integration: Li-ion ESS is most widely used for renewable energy integration, accounting for over 44% of global stationary storage deployments in 2024. These systems are installed alongside solar PV and wind power plants to balance intermittent supply, enhance dispatchability, and reduce curtailment.
Electric Vehicles (EVs) – Grid-Tied Applications: Electric vehicles are now contributing to the ESS market through Vehicle-to-Grid (V2G) and Vehicle-to-Home (V2H) applications. In 2024, more than 400,000 bidirectional EV chargers were operational globally, enabling EV batteries to discharge stored energy into homes or the grid.
Standalone Energy Storage Systems: Standalone Li-ion ESS systems—unconnected to renewable energy or vehicles—comprise about 31% of global installations by energy capacity in 2024. These installations serve as peak shaving, load balancing, and backup power systems.
Utilities – Grid Stability and Frequency Regulation: Utilities remain one of the most important adopters of Li-ion ESS for grid stability, capacity support, and ancillary services. By 2024, over 35% of global Li-ion ESS deployments were directly tied to utility-led or contracted projects.

Regional Outlook for the Li-ion Battery for Energy Storage Systems (ESS) Market

The Li-ion Battery for Energy Storage Systems (ESS) market shows distinct regional trends shaped by energy policies, grid capacity, and renewable integration rates. While Asia-Pacific continues to lead global deployment with more than 33% market share, North America and Europe are rapidly scaling up their capacity through legislative incentives and infrastructure modernization. Each region contributes differently to battery chemistry preferences, system sizes, and policy adoption.

North America

North America has emerged as one of the fastest-growing regions for Li-ion ESS adoption, with the United States alone accounting for over 9.2 GW of new ESS capacity added in 2024, bringing the cumulative total beyond 26 GW. California leads with more than 5.6 GW of operational battery capacity as of Q1 2024, driven by mandates such as SB 100 and high renewable penetration. Residential ESS installations in the U.S. exceeded 500,000 units in 2023, with average system sizes of 13.5 kWh. Canada added over 850 MW of grid-scale Li-ion ESS projects in 2024, with provinces like Ontario and Alberta leading development.

Europe

Europe’s Li-ion ESS market has been expanding rapidly due to rising energy prices, ambitious decarbonization goals, and increasing electrification. Germany leads the continent with over 3.5 GWh of installed residential storage systems, accounting for more than 40% of Europe's home ESS market. Italy and the UK follow, with more than 1 GWh and 850 MWh in installed ESS capacity respectively in 2024. Grid-scale Li-ion ESS projects are gaining traction across Spain, France, and the Netherlands, with multiple utility-scale plants ranging from 50 MW to 100 MW launched in 2023–2024.

Asia-Pacific

Asia-Pacific is the dominant region for Li-ion ESS, accounting for over 33% of global deployment as of 2024. China alone added more than 21 GW of new ESS capacity between 2022 and 2024, with the majority tied to solar PV and wind farms in provinces like Xinjiang, Inner Mongolia, and Shandong. South Korea installed over 2.3 GW of stationary storage in 2024, while Japan focused on residential and disaster-resilient ESS systems, exceeding 750,000 household units.

Middle East & Africa

The Middle East & Africa region is witnessing growing adoption of Li-ion ESS due to renewable integration, grid reliability needs, and off-grid electrification. In 2024, the region exceeded 2 GW in cumulative installed ESS capacity, with the UAE, Saudi Arabia, and South Africa being key contributors. Saudi Arabia commissioned over 600 MWh of lithium-ion storage to support NEOM and other Vision 2030 projects, while the UAE launched multiple solar-plus-storage projects totaling 350 MWh.

List of Top Li-ion Battery for Energy Storage Systems (ESS) Companies

CATL (China)
LG Energy Solution (South Korea)
Panasonic (Japan)
Samsung SDI (South Korea)
BYD (China)
Northvolt (Sweden)
Tesla (USA)
Enel X (Italy)
Fluence (USA)
Eos Energy Enterprises (USA)

CATL (Contemporary Amperex Technology Co. Limited): is the global leader in lithium-ion ESS cell manufacturing, holding over 36% of the global market share in ESS battery shipments in 2024. The company produced more than 145 GWh of energy storage battery cells in a single year, with its LFP-based utility-scale batteries deployed in over 38 countries.

LG Energy Solution (South Korea): LG Energy Solution ranks second in the global Li-ion ESS market with approximately 14% share of total ESS battery shipments in 2024. The company delivered over 58 GWh of lithium-ion batteries for stationary storage applications, targeting both residential and commercial sectors. LG’s RESU series for home storage surpassed 1.2 million units sold globally by 2024.

Investment Analysis and Opportunities

The Li-ion Battery for Energy Storage Systems (ESS) market has entered a high-investment cycle, driven by large-scale grid transformation, renewable integration mandates, and technological advancements in lithium-ion battery chemistry. As of 2024, global investments in ESS infrastructure using lithium-ion batteries exceeded 75 GWh of commissioned capacity, with a pipeline exceeding 300 GWh globally through 2026. Utility-scale investors are focusing on lithium iron phosphate (LFP) systems, which now account for more than 65% of new grid-connected installations due to their favorable safety profile and cost structure. In the United States, the Inflation Reduction Act (IRA) continues to unlock significant capital for energy storage developers, offering 30%+ investment tax credits (ITC) on standalone ESS systems. More than $18 billion has been allocated to battery storage manufacturing plants, supporting vertical integration from cell production to full system assembly. As of Q2 2024, over 18 GWh of new lithium-ion ESS projects were under construction across Texas, California, and New York alone. At the residential and commercial levels, system integrators are increasingly adopting hybrid solar + storage packages, with installation costs dropping below $600/kWh for bundled systems in many U.S. states.

New Product Development

The Li-ion Battery for Energy Storage Systems (ESS) market is undergoing rapid innovation, with product development focused on safety, modularity, high energy density, and cost optimization. In 2023–2024, over 65 new ESS products utilizing lithium-ion technologies were introduced globally by leading manufacturers, including modular grid-scale units, high-voltage rack solutions, and hybrid inverter-integrated batteries. These innovations support faster deployment, improved energy throughput, and longer cycle life, enabling utility, residential, and commercial segments to meet evolving performance standards. One major trend is the shift toward modular containerized systems. These pre-assembled lithium-ion ESS units, typically available in 1 MWh to 5 MWh configurations, offer plug-and-play functionality with integrated thermal management, fire suppression, and digital battery management systems (BMS). Manufacturers such as CATL, BYD, and Tesla launched containerized ESS models in 2024 capable of delivering 10,000+ cycles at 90% depth of discharge, with ambient operation temperatures between -30°C and +60°C. These systems are being deployed in desert, tundra, and island environments without the need for climate-controlled infrastructure.

Five Recent Developments

CATL Launches 5 MWh LFP Containerized ESS (2024): In early 2024, CATL introduced a high-capacity 5 MWh LFP-based containerized energy storage solution designed for grid-scale deployments. The system operates across a temperature range of -30°C to +60°C, supports 10,000+ full charge-discharge cycles, and includes integrated fire suppression and AI-based battery diagnostics
Tesla Expands Megapack Production to 40 GWh/year (2023): Tesla scaled its Megapack 2 production line in Lathrop, California to reach a new annual capacity of 40 GWh by Q4 2023. This expansion enables delivery of over 10,000 Megapack units annually, each capable of 3.9 MWh of lithium-ion LFP storage.
LG Energy Solution Debuts High-Voltage ESS for Commercial Use (2023): LG Energy Solution released a new commercial ESS product line in 2023 with 800V system architecture, supporting capacities up to 2.8 MWh per unit. These systems offer enhanced energy throughput with >91% round-trip efficiency and advanced liquid cooling.
BYD Commissions 1 GWh ESS Project in China’s Gansu Province (2024): In mid-2024, BYD completed a 1 GWh utility-scale lithium-ion ESS project in Gansu Province, China, using LFP chemistry. The system is designed to support a 400 MW solar installation, providing four hours of peak shifting and frequency regulation.
Northvolt Ships First Commercial ESS Units from Sweden (2023): Northvolt began shipping its first commercial-scale lithium-ion ESS systems from its Gigafactory in Skellefteå, Sweden in 2023. The launch product—named Voltpack—offers up to 1.2 MWh of scalable storage per unit with modular architecture.

Report Coverage of Li-ion Battery for Energy Storage Systems (ESS) Market

The Li-ion Battery for Energy Storage Systems (ESS) market report provides in-depth coverage of the global industry landscape, focusing on system-level deployments, technological innovations, manufacturing trends, application segmentation, and regional performance. The report examines more than 45 key countries, spanning North America, Europe, Asia-Pacific, and the Middle East & Africa, offering detailed insights into capacity additions, product types, and policy environments influencing lithium-ion ESS adoption. The scope of the report includes analysis across the entire value chain, from raw material sourcing (lithium, nickel, cobalt) to cell manufacturing, battery module integration, inverter control systems, and energy management software. The study evaluates multiple lithium-ion chemistries, with emphasis on LFP, NMC, and NCA chemistries, which together constitute more than 95% of installed ESS battery types worldwide as of 2024. Battery characteristics such as energy density (150–250 Wh/kg), cycle life (3,000–10,000+), and depth of discharge are benchmarked against their use in various applications—residential, commercial, utility, and off-grid. The report also includes a comprehensive assessment of system architecture types, covering containerized solutions, rack-mounted modules, and hybrid integrated packages. Deployment sizes range from small 5 kWh residential systems to over 500 MWh grid-scale installations. Over 150 project case studies are analyzed to compare system efficiency, degradation profiles, thermal management techniques, and smart BMS functionality.