$1.2 trillion needed for grid-forming battery storage to support global renewable push: Report
battery energy storage systems
(BESS) over the next decade to support the addition of 5,900 gigawatts (GW) of new wind and solar capacity worldwide, energy consultancy Wood Mackenzie said in its latest analysis.
The report forecasts a 55 per cent increase in
global power demand by 2034
, with more than 80 per cent of new capacity additions expected to come from variable renewable energy sources.
'Grid-forming battery energy storage systems represent a critical breakthrough for
renewable energy integration
,' Robert Liew, Research Director at Wood Mackenzie, said. 'As global power demand is projected to surge 55 per cent by 2034, with variable renewable energy comprising over 80 per cent of new capacity additions, GFM BESS provides the technological bridge between renewable abundance and
grid stability requirements
.'
Grid-forming battery systems differ from traditional grid-following systems by actively supporting voltage and frequency stability, which is essential as the share of intermittent renewable sources increases.
According to the report, the power sector faces a 1,400 GW capacity gap for
grid-forming battery storage
installations between 2024 and 2034. This shortfall highlights the need for large-scale deployment of storage systems to ensure grid reliability.
Several Asia-Pacific markets are already operating with wind and solar contributing between 46 per cent and 90 per cent of peak demand. The report notes that markets with
high renewable penetration
are likely to prefer grid-forming capabilities to address stability concerns.
'Grid-forming BESS provides multiple critical functions for stability including independent voltage source capabilities, high current transient support during disturbances, inertia response similar to conventional power plants, and black start functions,' it said.
The report cited the 2025 Spanish blackout as an example of the risks associated with high renewable penetration without corresponding grid-forming infrastructure.
Liew highlighted the Red Sea Project as a case study for grid-forming technology, stating, 'As the world's largest off-grid renewable energy project, it showcases how a utility-scale power system can operate continuously on 100 per cent renewable energy for almost two years.'
While grid-forming capabilities add about 15 per cent to system costs, primarily due to advanced inverters and software, battery prices have declined by 10–40 per cent across global markets over the past year. The report said this has improved the economic feasibility of such installations.
Hybrid utility-scale solar and battery storage systems are already cost-competitive with onshore wind, and projections suggest that battery systems will undercut coal and gas power generation costs in several non-US markets by 2040.
Regulatory momentum is also building for grid-forming battery technology. Countries such as China, the United States, and Australia have issued technical guidelines to facilitate the deployment of such systems.
'Increasing
clean energy targets
, policy developments, and proven pilot projects are accelerating the adoption of grid-forming technology,' Liew added. 'With global battery capacity expected to triple by 2035, grid-forming capabilities will likely become a baseline requirement for new storage deployments.'
India, China, Japan, and Vietnam are currently managing renewable energy penetration of 46 per cent to 92 per cent of peak demand, making them key regions for early adoption of grid-forming storage systems.
The report noted that managing renewable curtailment and improving grid resilience will be central to
energy transition efforts
in these markets.
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