Navigating the Challenges of Energy Storage Systems

Consumer CompactElectrical and ElectronicsMarch 25, 2025

As the demand for cleaner, more efficient energy grows, energy storage systems (ESS) have become the cornerstone of many modern energy solutions for homes, industry, transportation and infrastructure. They make renewable energy sources like solar and wind more reliable and improve grid stability and energy efficiency. But what are the key trends impacting the global ESS market and what solutions are available to manufacturers and suppliers?

ESS refers to technologies that store energy for later use. Systems include batteries for everything from portable devices to electric vehicles (EV), pumped hydro storage, compressed air energy storage (CAES), thermal energy storage and flywheel energy storage. Each ESS has a specific use case depending on the scale, cost and speed of energy delivery required.

Market drivers

The global market for ESS is expanding rapidly. Valued at USD 468.2 billion in 2024, it is projected to reach USD 1,200 billion by 2031, reflecting a compound annual growth rate (CAGR) of 15.2%.¹

Several factors are driving this growth, including the energy transition, increased adoption of renewable energy and the electrification of transportation. Technical advancements, such as innovations in battery chemistry, improvements in energy density, extended lifespan and enhanced recyclability, have also played a key role. Additionally, incentives like the Investment Tax Credit (ITC) for Energy Property (26 US Code § 48) have contributed to market expansion. Funded by the US Department of the Treasury, this initiative provides a 30% tax credit for standalone energy storage facilities.²

Governments worldwide are actively promoting the adoption and integration of ESS. In the US, the Federal Energy Regulatory Commission (FERC) has implemented regulations to support storage deployment. Order No. 841 requires grid operators to integrate storage-specific reforms into wholesale capacity, energy and ancillary service markets, allowing ESS to participate more effectively in grid operations. Furthermore, Order No. 2222 encourages the inclusion of distributed energy resource (DER) aggregations, including ESS, in wholesale markets, increasing flexibility and efficiency in energy distribution.

California is taking proactive steps by introducing regulations to ensure new residential properties are prepared for battery storage, thereby helping to stabilize the electrical grid. These rules apply to single-family homes, duplexes, townhomes and accessory dwelling units (ADUs). To maintain safety and grid reliability, individual ESS units are limited to a maximum rating of 20 kWh, while the total aggregate storage within utility closets, basements and storage or utility spaces must not exceed 40 kWh. Local authorities having jurisdiction (AHJ) may also have their requirements, adding another layer of complexity.

Governments across the globe continue to introduce new regulations and incentives to facilitate renewable energy adoption while ensuring the safety of ESS. For example, in the European Union, Regulation (EU) 2023/1542 on batteries and waste batteries came into effect on February 18, 2024,³ while standards such as UL 9540A (thermal runaway testing) for residential battery ESS and IEC standards for grid-connected systems play a key role in regulating this growing market. Additionally, manufacturers must consider a growing number of market-specific regulations governing per- and polyfluoroalkyl substances (PFAS) in battery components.

However, navigating this evolving regulatory landscape remains a challenge due to policy uncertainty, fluctuating incentives and legislative changes. At the same time, high-profile ESS-related fire incidents have intensified the focus on thermal management, fire suppression systems and safety standards. To avoid noncompliance, businesses must stay updated on safety protocols, grid interconnection requirements and building codes.

Challenges for industry

The ESS industry faces several challenges, with regulatory compliance at the forefront. Companies must meet a series of critical safety and performance standards, such as UL 1973, UL 9540, UL 9540A, IEC 62619, IEC 62620, IEC 63056, IEC 62477-1 and the IEC 62933 series. Failure to comply can result in costly delays, fines or market bans, making regulatory adherence a top priority.

Linked to compliance is risk mitigation. Safety concerns, such as thermal runaway, pose significant liability and reputational risks. To prevent these hazards, companies must maintain the highest safety standards, ensuring both consumer confidence and industry credibility.

Market competition continues to intensify as consumers demand ESS solutions with higher energy density, faster charging and longer battery life. To stay ahead, companies must not only innovate but also keep pace with rapid technological advancements. At the same time, sustainability has emerged as a crucial differentiator. Customers increasingly prioritize environmentally friendly, PFAS-free and recyclable products, compelling manufacturers to adapt and align with these expectations to maintain a competitive edge.

Finally, cost efficiency remains an ongoing challenge. Companies must strike a balance between reducing production costs, investing in new technology, maintaining regulatory compliance and meeting consumer expectations. Successfully navigating these competing demands is essential for long-term success in the ever-evolving ESS market.

SGS solutions

We provide comprehensive solutions to help clients navigate the complex ESS landscape. Our services ensure regulatory compliance, enhance safety and sustainability, while accelerating time-to-market and giving businesses a competitive edge.

Compliance remains a top priority. We offer full-scope product testing and certification based on up-to-date UL and IEC standards across a wide range of systems. Additionally, we conduct installation-level testing, including AHJ-required burn tests to UL 9540A and UL 9540B, ensuring systems meet local jurisdiction requirements. Our expertise allows clients to confidently enter global markets while meeting the highest safety and performance standards.

Safety is at the core of what we do. For ESS, we perform fire propagation, thermal runaway and abuse testing to identify potential risks and help our clients develop safer, more reliable systems. Our rigorous quality assurance process validates critical performance metrics, such as battery life, energy density and charging capability, ensuring products meet consumer expectations.

Sustainability is another key focus. As demand for eco-friendly solutions rises, we help manufacturers align with environmental standards through PFAS testing, lifecycle assessments, and recycling audits. By verifying compliance and sustainable product claims, we support clients in meeting both regulatory requirements and consumer expectations.

Beyond testing and certification, we offer expert consultation to keep clients informed about emerging regulations, industry trends and best practices. Whether navigating new compliance requirements or optimizing system performance, our insights empower clients to make strategic, informed decisions. With Testing Resource eco-Efficiency Enhancement Solutions (TeREES^® L2), we can enhance these insights to help businesses create marketable products and services.

Additionally, we provide a range of complementary services, including EV testing, renewable energy solutions, cybersecurity assessments, research and development support and energy efficiency testing.

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