The International Energy Agency (IEA) has stated that there needs to be a sixfold increase in global energy storage capacity, with batteries leading the way, in order to meet the 2030 targets.
Last year, deployment of batteries in the power sector more than doubled.
The IEA’s first assessment of the entire battery ecosystem indicates that battery energy storage systems are expected to contribute to 90% of the increase, while pumped hydro will make up most of the remaining capacity.
According to the “Batteries and Secure Energy Transitions” report by the IEA, batteries are crucial for achieving the climate and energy targets set at the COP28 climate conference in Dubai.
The report highlights that the growth of batteries surpassed that of almost all other clean energy technologies in 2023, driven by cost reductions, innovation, and supportive industrial policies.
Significant growth was observed in utility-scale battery projects, behind-the-meter batteries, minigrids, and solar home systems, resulting in a total addition of 42 GW of battery storage capacity worldwide, representing a more than 130% increase compared to the previous year.
Additionally, electric vehicle (EV) battery deployment saw a 40% increase in 2023, with 14 million new electric cars accounting for the majority of batteries used in the energy sector.
“Despite the continuing use of lithium-ion batteries in billions of personal devices in the world, the energy sector now accounts for over 90% of annual lithium-ion battery demand,” the IEA report said.
“This is up from 50% for the energy sector in 2016, when the total lithium-ion battery market was 10-times smaller.”
Battery costs have dropped by over 90% in less than 15 years, marking one of the most rapid declines in clean energy technologies.
However, the report emphasizes the need for further cost reduction without sacrificing quality and technology in order to expand battery usage globally.
The expectation is that continued innovation in battery chemistries and manufacturing could lead to a 40% decrease in global average lithium-ion battery costs from 2023 to 2030, while also introducing sodium-ion batteries to the market.
The IEA predicts that sodium-ion batteries will make up less than 10% of EV batteries by 2030, but they are expected to have an increasing presence in stationary storage batteries due to their 30% lower costs compared to lithium-iron phosphate (LFP) batteries.
“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,” said IEA Executive Director Fatih Birol.
The IEA report stated that the reduction in costs is also making standalone battery storage more competitive compared to natural gas peaking options.
In the most ambitious scenario, the total expenditure on batteries for all purposes is projected to reach $800 billion by 2030, marking a nearly 400% increase from 2023.
This would result in doubling the proportion of batteries in overall clean energy investment within seven years. Over the past three years, global battery production has more than tripled.
Although China is currently the largest producer of batteries, the report indicated that 40% of all announced plans for new battery manufacturing are 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,” said the report.
Source IEA
