The battery leasing market involves offering batteries, battery packs, battery energy storage systems (BESS) and related infrastructure on a pay-per-use model where customers pay a subscription fee for accessing the capacity over the contract period rather than purchasing the battery assets outright. Battery leasing provides an affordable way for commercial, industrial and utility customers to utilize battery energy storage without having to make large upfront investments. It allows customers to avoid risks associated with technology obsolescence and offers predictable operating costs.
The Global Battery Leasing Market is estimated to be valued at US$ 15.03 Bn in 2024 and is expected to exhibit a CAGR of 11% over the forecast period 2023 to 2030.
Key Takeaways
Key players operating in the Battery Leasing market are Nextera Energy, Onewatt, EDF Energy, Engie, EON Energy Solutions, Alpiq, Leclanche, Sonnen, Enel X, Shell, Total Solar Distributed Generation USA, Sunrun, LG Chem, Samsung SDI, BYD, Panasonic, CATL, Tesla, Fluence, Powin Energy. The key players are focusing on partnering with various project developers and EPC companies and offering innovative pay-per-use business models to capture increased market share.
The key opportunities in the battery leasing market include growing demand from commercial and industrial establishments looking for energy cost optimization and focus on integrating renewable energy through battery storage. Also, battery leasing helps in overcoming the high upfront capital costs for energy storage projects and offers a pay-as-you-go model that reduces customers’ financial risks.
Technological advancements in battery chemistry, improvements in battery pack design, integration of IoT and cloud-based battery management systems have enhanced the scalability, efficiency and lifecycle of batteries. Lithium-ion batteries dominate the market currently but technologies like solid-state batteries and lithium iron phosphate batteries are gaining traction due to their improved safety features and longer lifecycles.
Market Drivers
The main driver for the battery leasing market is the increasing penetration of renewable energy generation from solar PV and wind which creates an ongoing need for battery energy storage to store excess energy and dispatch it when renewable power generation is low. Battery leasing helps power developers monetize stationary storage capacity and overcome intermittency issues associated with solar and wind power. Rising focus on peak shaving and electricity cost optimization from commercial customers through battery-based demand response programs is another key aspect driving the battery leasing market.
Current Challenges in Battery Leasing Market
The battery leasing market is growing at a fast pace. However, there are a few challenges that are hindering the growth of this market. One of the major challenges is the high upfront investment cost associated with battery procurement and installation. The battery systems used for energy storage applications such as electric vehicles, grid energy storage are expensive. This high initial investment poses a financial barrier for many end-users looking to adopt leasing models. Another challenge is the technical issues related to battery degradation over time. As batteries are used for multiple charge-discharge cycles, there is continuous degradation in the battery performance parameters such as capacity. Ensuring optimized battery usage and maintaining performance metrics over the lease period is difficult. Lack of standardized business models and contracts is also restricting the widespread adoption of leasing. Developing simple, flexible contracts that protect interests of both lessors and lessees is crucial for market growth.
SWOT Analysis
Strength: Pay per use business model lowers entry barriers for customers. Leasing transfers ownership risk and maintenance responsibilities to lessors.
Weakness: High dependence on battery technology evolution. Battery degradation and performance risk over multi-year lease period.
Opportunity: Growth in EV and energy storage markets drives opportunities. Circular business models promoting battery reuse present growth potential.
Threats: Competition from outright battery purchase models. Rising battery prices can impact leasing contract economics. Geopolitical factors influencing battery material supply.
Geographical Regions
North America currently dominates the battery leasing market in terms of value, achieving a market share of over 35% in 2023. This is majorly attributed to the high adoption of electric vehicles in countries like US and Canada. China and Japan also account for a significant share owing to their presence in battery manufacturing and electric mobility segments. Europe is extensively supporting development of energy storage infrastructure and cleaner transportation. Government initiatives are promoting battery leasing models in countries like Germany and UK.
The Asia Pacific region excluding China and Japan is expected to exhibit highest growth during the forecast period. Countries like South Korea, India, Australia are witnessing rising EB adoption along with growing investments in renewable energy integration. Supportive policies and falling battery prices are encouraging battery leasing adoption, making Asia Pacific an emerging hotspot.
Geographical Regions
North America currently dominates the battery leasing market in terms of value, achieving a market share of over 35% in 2023. This is majorly attributed to the high adoption of electric vehicles in countries like US and Canada. China and Japan also account for a significant share owing to their presence in battery manufacturing and electric mobility segments. Europe is extensively supporting development of energy storage infrastructure and cleaner transportation. Government initiatives are promoting battery leasing models in countries like Germany and UK.
The Asia Pacific region excluding China and Japan is expected to exhibit highest growth during the forecast period. Countries like South Korea, India, Australia are witnessing rising EB adoption along with growing investments in renewable energy integration. Supportive policies and falling battery prices are encouraging battery leasing adoption, making Asia Pacific an emerging hotspot.
*Note:
- Source: Coherent Market Insights, Public sources, Desk research
- We have leveraged AI tools to mine information and compile it
