The International Energy Agency (IEA) released a report on Thursday stating that the cost of battery energy storage is expected to significantly decrease in the coming years, which will accelerate the transition from fossil fuels to renewable energy, crucial for achieving climate and energy goals.While renewable energy (generation) itself has become cheaper than coal and gas-fired power plants, it is often subject to weather disruptions, such as solar and wind power generation. Therefore, renewable energy must be combined with energy storage systems to provide a reliable energy source.
In the report titled “Batteries and Secure Energy Transitions,” the IEA points out that batteries can be combined with renewable energy to become a competitive, safe, reliable, and sustainable alternative technology. They can also drive the decarbonization of road transport by providing power for electric vehicles.
IEA Executive Director Fatih Birol stated that currently, the combination of solar and batteries is more competitive than newly built coal-fired power plants in India and will become cheaper than coal-fired power plants in China and gas-fired power plants in the United States in the coming years. Batteries are changing the game.
The report notes that thanks to cost reductions, innovation advancements, and supportive industrial policies, battery costs have decreased by over 90% in less than 15 years.
The most common type of battery is lithium-ion batteries, usually associated with transportation and consumer electronics. However, over 90% of battery demand now comes from the energy sector. Energy storage batteries can be larger, heavier, and have more cost reduction potential.
Only in 2023, battery deployments in the electricity sector grew by over 130% year-on-year, adding 42 gigawatts of power to the global electricity system. In the transportation sector, battery technology drove electric vehicle sales from 3 million in 2020 to nearly 14 million last year, with further strong growth expected in the coming years.
Birol analyzes that the power and transportation sectors are two key pillars for rapidly reducing emissions to meet the goals agreed upon at COP28, and batteries are the foundation of development in these two areas.
The report predicts that battery deployment needs to significantly expand from now until 2030 to put the world on track to achieve energy and climate goals. By 2030, global overall energy storage capacity is expected to increase sixfold, with 90% of the increase coming from battery energy storage capacity.
To promote batteries globally, costs need to be further reduced without compromising quality and technology. Ensuring energy security also requires a more diversified supply chain, including the extraction and processing of critical minerals used in batteries, as well as battery manufacturing.
Additionally, batteries indeed play a crucial role in improving electricity access, especially in areas where electricity is not yet widespread. Battery technology is key to helping achieve the goal of universal electricity access by 2030, providing power access to approximately 400 million people in emerging and developing countries.
