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A drone view shows Sembcorp's battery storage facility in Singapore. (Photo: Sembcorp Industries)
The International Energy Agency (IEA) predicts that a significant decline in battery costs for energy storage over the next few years will accelerate the transition from fossil fuels to renewable energy, as reported on Apr. 25.
Although renewable energy is already cheaper than coal and gas-fired plants, the intermittency of solar and wind power requires pairing with energy storage systems to ensure reliable energy supply.
The IEA's report, Batteries and Secure Energy Transitions, forecasts a potential 40% reduction in the total capital costs of battery storage by 2030.
IEA executive director Fatih Birol said, "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."
Approximately 90% of lithium-ion batteries are utilized in the transport sector, prioritizing dense and lightweight units. There is greater potential for cost reduction in energy storage batteries, which can be larger and heavier.
According to IEA, cheaper lithium iron phosphate (LFP) batteries accounted for 80% of new storage batteries in 2023. It also added that cheaper sodium-ion batteries will account for less than 10% of EV batteries by 2030 but will make up a growing share of energy storage batteries.
The report said that the global market for energy storage doubled last year to more than 90 GWh.
The overall global energy storage capacity is expected to increase six-fold by 2030, with batteries accounting for 90% of the rise and pumped hydropower for most of the remainder.
The IEA said that the decline in battery costs will also facilitate providing electricity to millions of people without access, reducing the average electricity costs of mini grids with solar PV coupled with batteries nearly half by 2030.
