USD 1.2 Trillion Investment Needed for BESS to Support Global Renewable Energy Boom

As the world moves toward adding over 5,900 GW of new wind and solar power by 2034, around USD 1.2 trillion in battery energy storage investments will be needed, according to a new report by Wood Mackenzie.

The report highlights that grid-forming battery technology (GFM) will play a pivotal role in ensuring system reliability and stability in the era of high renewable energy penetration.

Unlike traditional grid-following systems, which respond to existing grid signals, grid-forming BESS actively maintains voltage and frequency, functioning much like a conventional power plant. This functionality becomes increasingly crucial as renewable energy takes center stage in power generation across the globe.

“Grid-forming battery systems represent a critical breakthrough for renewable energy integration,” said Robert Liew, Research Director at Wood Mackenzie. “With global power demand projected to surge by 55 percent by 2034, and over 80 percent of new capacity additions coming from variable renewables, GFM BESS bridges the gap between clean energy growth and grid reliability," he added.

Wood Mackenzie forecasts a 1,400 GW shortfall in grid-forming BESS installations needed to support global renewable integration over the next decade. Several Asia-Pacific countries, where wind and solar already contribute between 46 percent and 90 percent of peak load, represent prime markets for GFM technology.

Recent grid disruptions, ncluding Spain’s blackout in 2025, have underscored the vulnerability of power systems lacking advanced grid-forming infrastructure. GFM batteries offer critical services including independent voltage control, high-current disturbance support, inertia response, and black start capability to restore power after major outages.

Projects like Saudi Arabia’s Red Sea development, the world’s largest off-grid renewable energy system,showcase the feasibility of fully renewable, grid-forming operations on a utility scale.

Although grid-forming technology increases system costs by approximately 15 percent due to the need for upgraded inverters and software, declining battery prices are easing the financial burden. According to the report, battery costs have dropped by 10–40 percent across various global markets over the past year.

With battery-plus-solar hybrid systems already competing with onshore wind and forecasted to undercut fossil fuels by 2040 in many regions, the economic case for advanced battery storage continues to strengthen.

Governments worldwide are ramping up support for grid-forming technologies. Major markets including China, the U.S., and Australia have begun introducing technical guidelines for GFM deployment. While global standards are still in progress, early regulatory trends point toward mandatory inclusion of grid-forming capabilities in future BESS deployments.

In Asia-Pacific, countries like India, Vietnam, Japan, and China are grappling with high renewable shares, up to 92 percent of peak demand in some cases, leading to increased curtailment. The need for grid-forming batteries is becoming increasingly apparent as they offer a sustainable solution to stabilise fluctuating renewable inputs.

With global electricity demand projected to rise at 3 percent annually through 2040, grid-forming batteries are poised to replace conventional synchronous generators as the backbone of modern power systems.

“We’re seeing a perfect storm of declining battery costs, supportive policy shifts, ambitious climate targets, and successful pilot projects,” Liew said. “Grid-forming capabilities are on track to become standard for future battery storage, essential not just for reliability,but for unlocking the full potential of renewable energy investments," he added.