IEA Advocates for Sixfold Increase in Global Energy Storage Capacity

According to the International Energy Agency (IEA), there must be a sixfold increase in global energy storage capacity to achieve the 2030 targets set for sustainable energy. This surge in capacity is largely driven by the rapid expansion in the power sector, which saw a doubling of deployment last year. The IEA's first comprehensive "Batteries and Secure Energy Transitions" report highlights that 90% of this growth is expected to come from battery energy storage systems, with pumped hydro accounting for most of the remainder.

The report underscores the pivotal role of batteries in reaching climate and energy goals discussed at the COP28 climate conference in Dubai. In 2023, the growth in battery technology outstripped nearly all other clean energy technologies, spurred by decreasing costs, continued innovation, and strong industrial policies.

Significant developments were noted in utility-scale battery projects, behind-the-meter batteries, minigrids, and solar home systems, which collectively added 42 GW of battery storage capacity worldwide—an increase of over 130% from the previous year. Additionally, the deployment of electric vehicle (EV) batteries grew by 40% in 2023, with 14 million new electric cars introduced, making up the vast majority of battery usage in the energy sector.

The report also highlights a shift in the usage of lithium-ion batteries: while these batteries continue to power billions of personal devices globally, the energy sector's share of annual lithium-ion battery demand has surged to over 90%, a significant jump from 50% in 2016. This shift reflects a market that was ten times smaller just a few years prior.

In the last decade and a half, battery costs have plummeted by over 90%, marking one of the steepest reductions in clean energy technology costs to date. However, a recent report indicates that for global battery scalability, costs must continue to decrease without sacrificing quality or technological advancements.

The report anticipates that ongoing innovations in battery chemistry and manufacturing processes could further cut the average global costs of lithium-ion batteries by an additional 40% from 2023 to 2030. It also forecasts the emergence of sodium-ion batteries in the market. While these are expected to represent less than 10% of electric vehicle (EV) batteries by 2030, they are poised to capture a larger portion of the market for stationary storage batteries. This is partly due to their costs, which are 30% lower than those of lithium-iron phosphate (LFP) batteries, making them an attractive alternative for specific applications.

IEA Executive Director Fatih Birol highlighted the transformative impact of battery technology in the energy sector, noting, "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."

The significant reductions in battery costs are making standalone battery storage increasingly competitive with traditional natural gas peaking power plants, according to the IEA report. In a highly ambitious projection, the report foresees total spending on batteries across all applications reaching $800 billion by 2030, a near 400% increase from 2023. This surge in investment would double the share of batteries in the overall clean energy investment within just seven years.

The global production of batteries has more than tripled in the past three years, with China currently leading in battery manufacturing. However, the report also indicates significant growth potential in other regions, with 40% of all new battery manufacturing plans announced for advanced economies such as the United States and the European Union. The completion of these projects would nearly satisfy their domestic needs for battery manufacturing up to 2030, aligning with the goals for net-zero emissions.