The falling costs of batteries, advancing innovation, and supportive industrial policies helped drive up demand for a technology that will be critical to delivering the climate and energy targets.
According to a new report by the International Energy Agency (IEA), in less than 15 years, battery costs have fallen by more than 90%, one of the fastest declines ever seen in clean energy technologies.
In the first comprehensive analysis of the entire battery ecosystem, the IEA’s Special Report on Batteries and Secure Energy Transitions set out the role that batteries can play alongside renewables as a competitive, secure, and sustainable alternative to electricity generation from fossil fuels – while also underpinning the decarbonisation of road transport by powering electric vehicles.
The most common type of batteries, those based on lithium-ion, have typically been associated with consumer electronics.
Lithium-ion batteries are one of the favoured options for renewable energy storage. They are widely seen as one of the main solutions to compensate for the intermittency of wind and sun energy.
In 2023 alone, battery deployment in the power sector increased by more than 130% year-on-year, adding a total of 42 gigawatts (GW) to electricity systems around the world.
In the transport sector, batteries have enabled electric car sales to surge from 3 million in 2020 to almost 14 million last year, with further strong growth expected in the coming years.
IEA Executive DirectorFatihBirol told a virtual media briefing that the electricity and transport sectors are two key pillars for bringing down emissions quickly enough to meet the targets agreed at COP28 and keep open the possibility of limiting global warming to 1.5 °C.
“Batteries will provide the foundations in both areas, playing an invaluable role in scaling up renewables and electrifying transport while delivering secure and sustainable energy for businesses and households,” he said.
Birol says the combination of solar PV and batteries is today competitive with new coal plants in India. “And just in the next few years, it will be cheaper than new coal in China and gas-fired power in the United States. Batteries are changing the game before our eyes.” Birol observed.
Battery deployment will need to scale up significantly between now and the end of the decade to enable the world to get on track for its energy and climate goals, according to the report.
In this scenario, overall energy storage capacity will increase sixfold by 2030 worldwide, with batteries accounting for 90% of the increase and pumped hydropower for most of the rest.
Batteries in Energy Transition
Today, the energy sector accounts for over 90% of overall battery demand. Battery storage, or battery energy storage systems (BESS), are devices that enable energy from renewables, like solar and wind, to be stored and then released when the power is needed most.
Lithium-ion batteries, which are used in mobile phones and electric cars, are currently the dominant storage technology for large-scale plants to help electricity grids ensure a reliable supply of renewable energy.
IEA says by enabling greater shares of renewables in the power system and shifting the electricity supply to when it’s most needed, batteries will help advance progress on the goals set at COP28.
These include tripling renewable energy capacity by 2030, doubling the pace of energy efficiency improvements, and transitioning away from fossil fuels.
To triple global renewable energy capacity by 2030, 1 500 GW of battery storage will be required. It is observed that a shortfall in deploying enough batteries would risk stalling clean energy transitions in the power sector.
Scaling Up Battery Manufacturing.
To scale up batteries globally, the report found that costs need to come down further without compromising quality and technology.
Ensuring energy security also requires greater diversity in supply chains, including for extracting and processing the critical minerals used in batteries – and for manufacturing the batteries themselves.
IEA reports that countries are already tackling this through ambitious industrial programmes to support local manufacturing capacity with targeted policies in the United States, European Union, and India among others. Global battery manufacturing according to IEA has more than tripled in the last three years.
While China produces most batteries today, the report shows that 40% of announced plans for new battery manufacturing is in advanced economies such as the United States and the European Union.
“If all those projects are built, those economies would have nearly enough manufacturing to meet their own needs to 2030 on the path to net zero emissions,”
The report highlights the versatility of battery storage to support electricity security cost-effectively as part of clean energy transitions.
Batteries in the Renewable Energy Sector
In the power sector, batteries help smooth out the variability of renewable electricity from technologies such as wind and solar.
Moreover, battery storage can alleviate grid congestion in times of high supply, offering an outlet to capture and store excess renewable electricity that would otherwise be lost.
Rechargeable batteries provide highly technical services to the grid, such as voltage and frequency control, that can help system operators.
Batteries can also play a vital role in improving access to electricity for those who still lack it. In a pathway to achieving universal energy access worldwide by 2030, they help 400 million people in emerging and developing economies gain electricity access through decentralised solutions like solar home systems and mini-grids with batteries.
According to IRENA in addition to providing frequency response, reserve capacity, black-start capability (restoring an electric power system), and other grid functions, battery systems can also upgrade mini-grids, facilitate “self-consumption” of rooftop solar power, and store electricity in electric vehicles.
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