The International Energy Agency (IEA) anticipates a significant decrease in battery costs for energy storage in the coming years, a development poised to hasten the global transition from fossil fuels to renewable energy sources, the agency announced on Thursday.
Despite the already established cost competitiveness of renewable energy compared to coal and gas-fired plants, the intermittency of solar and wind power necessitates pairing with energy storage systems to ensure a reliable energy supply.
According to the IEA's Batteries and Secure Energy Transitions report, total capital costs of battery storage are expected to plummet by as much as 40% by 2030, marking a pivotal shift in the energy landscape. IEA Executive Director Fatih Birol underscored this transformation, stating, “The combination of solar PV (photovoltaic) 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.”
While the majority of lithium-ion batteries are currently utilized in the transport sector, where emphasis is placed on compact and lightweight units, there exists significant potential for cost reduction in energy storage batteries, which can be larger and heavier. Last year, cheaper lithium iron phosphate (LFP) batteries dominated 80% of new storage batteries, according to the IEA.
Although cheaper sodium-ion batteries are projected to represent less than 10% of electric vehicle batteries by 2030, their utilization in energy storage batteries is anticipated to grow, the agency added.
The report highlighted a doubling of the global market for energy storage to over 90 gigawatt-hours (GWh) last year. Furthermore, the IEA foresees a six-fold increase in global energy storage capacity by 2030, with batteries accounting for 90% of the rise and pumped hydropower comprising the majority of the remainder.
Pumped hydropower, a system involving the pumping of water to a higher reservoir during off-peak times to generate electricity at peak times, is poised to play a significant role in energy storage expansion.
The decline in battery costs is expected to facilitate access to electricity for millions of people currently without it, with the IEA projecting nearly halving the average electricity costs of mini-grids equipped with solar PV coupled with batteries by 2030.
