Worldwide battery energy storage system (BESS) capacity is on track for explosive growth over the next several years, driven by surging electrification, industrial expansion, and the rapid buildout of AI and data centre infrastructure.
According to a new report from GlobalData, global BESS installed capacity is projected to rise sixfold between 2025 and 2030, reflecting a compound annual growth rate of 42 per cent.
The report, titled Batteries in Power: Strategic Intelligence (2026), identifies China and the United States as the dominant forces shaping this market.
Together, the two countries accounted for 74.6 per cent of global BESS capacity at the end of 2025, a lead attributed to supportive regulatory frameworks, large-scale utility procurement, and ambitious clean energy mandates.
Much of the growth is being fuelled by the increasing share of wind and solar power on electric grids.
As renewable penetration rises, so does intra-day variability, supply and demand imbalances, and curtailment, all of which batteries can address economically.
Falling lithium-ion battery costs, more resilient supply chains, and favourable government policy are further accelerating deployment.
One of the clearest trends emerging in the sector is a shift toward longer-duration storage systems.
“The global power sector is increasingly standardising on four-hour battery energy storage systems rather than two-hour designs,” said Rehaan Shiledar, Power Analyst at GlobalData.
He explained that higher shares of solar and wind create longer daily mismatches between generation and demand, making multi-hour shifting, particularly moving midday solar output into the evening peak, more valuable for reducing curtailment and providing reliable capacity during steep swings in net load.
Utilities and regulators are increasingly treating four hours of storage as a minimum threshold for capacity credit and resource adequacy.
This pattern is playing out across multiple markets.
Under California Public Utilities Commission programs, the majority of battery projects now built carry a four-hour duration.
In Australia, state tenders in Victoria and New South Wales specify multi-hour storage requirements to firm up renewable generation.
Similar trends are emerging in the United Kingdom, where projects are shifting away from frequency-response revenue toward energy and capacity revenue streams, while the Middle East has begun contracting multi-hour solar-plus-storage systems for dispatchable evening power.
Co-located hybrid plants, especially those pairing solar generation with storage, are also becoming the industry default.
Sharing a single site and interconnection point reduces both cost and schedule risk, while batteries capture curtailed solar output and shift it into higher-priced hours such as the evening peak.
In some cases, co-location enables export-limited designs, where solar capacity is intentionally oversized behind a constrained grid connection, with excess energy stored and later discharged without exceeding interconnection limits.
These configurations are common in California and support resource adequacy goals during peak demand periods.
In Texas, where electricity prices fluctuate significantly by location and time of day, battery storage is being used to capitalise on that volatility, charging during low-price periods and discharging when prices spike.
Data centres represent another fast-growing application for battery storage.
“BESS is expected to become a main backup and balancing tool for data centres, moving beyond brief uninterruptible power supply (UPS) support,” Shiledar said.
Because batteries can respond within milliseconds, they are well suited to managing sudden voltage or frequency disturbances and providing instant backup during power switchovers, while also helping data centres stay within site connection limits and reduce demand charges.
Looking ahead, Shiledar framed energy shifting as the defining force behind the industry’s expansion.
“Energy shifting has become the fulcrum of the battery storage value proposition, recasting batteries from ancillary grid-support tools into system-critical infrastructure.”
As costs continue to fall and projects find new ways to combine multiple revenue streams, supported by government mandates, analysts expect energy shifting to remain the primary driver of battery storage deployment and a cornerstone of power systems built around high renewable penetration.