The global energy storage market is on the cusp of a long-running investment and deployment boom, according to one of the world's most influential energy analysts.

Bloomberg New Energy Finance (BNEF) this week announced an upgrade to its forecasts for the behind-the-meter (BTM) and grid-scale energy storage sectors, confirming that in response to falling costs it had "significantly increased" its projections for the sector.

The latest annual report on the global energy storage market predicts global energy storage capacity, excluding pumped hydro storage, will soar over the next two decades from less than 20GW to nearly 1,000GW by 2040.

Specifically, BNEF said it now expects the market to grow to a cumulative 942GW/2, 857GWh by 2040, attracting $1.2tr in investment over the next 22 years.

It added that the emergence of "cheap batteries" will provide a knock on boost to the renewables market, as it will allow wind and solar projects to provide power when the wind is not blowing or the sun is not shining.

"We have become much more bullish about storage deployments since our last forecast a year ago," explained Yayoi Sekine, energy storage analyst for BloombergNEF and co-author of the report, in a statement. "This is partly due to faster-than-expected falls in storage system costs, and partly to a greater focus on two emerging applications for the technology - electric vehicle charging, and energy access in remote regions."

The report also confirms cost reductions across the energy storage sector are consistently out-stripping expectations. It said it now expects the capital cost of a utility-scale lithium-ion battery storage system to fall another 52 per cent between 2018 and 2030, on top of the steep declines seen earlier this decade. "This will transform the economic case for batteries in both the vehicle and the electricity sector," BNEF said.

Logan Goldie-Scot, head of energy storage at BNEF, said the sector was on track to become a key component of the global energy industry. "We see energy storage growing to a point where it is equivalent to seven per cent of the total installed power capacity globally in 2040," he said. "The majority of storage capacity will be utility-scale until the mid-2030s, when behind the meter applications overtake."

The report predicts the BTM market will be dominated by industrialised economies with China, the US, India, Japan, Germany, France, Australia, South Korea and the UK to the fore. These nine markets are expected to represent two thirds of the installed capacity by 2040.

However, the report also notes that developing countries in Africa will become major markets for battery storage systems as utilities "recognise increasingly that isolated assets combining solar, diesel and batteries are cheaper in far flung sites than either an extension of the main grid or a fossil-only generator".

But it is the rapid growth of the electric vehicle market that is likely to dominate the sector over the coming two decades.

"Despite the rapid growth from today's levels, demand for batteries for stationary storage will make up only seven per cent of total battery demand in 2040," BNEF predicted. "It will be dwarfed by the electrical vehicle market, which will more materially impact the supply-demand balance and prices for metals such as lithium and cobalt."

The news follows the launch of a new database of UK grid-scale storage projects, which suggests the country's fledgling energy storage sector is growing far faster than expected and now has around 7GW of storage capacity either operating, under construction or in planning.