Global investments in battery storage are projected to surge dramatically, with capacity expected to increase ninefold by 2040. This growth follows a decade of significant expansion in renewable energy, as countries strive to stabilize their green energy supply amidst a transition from fossil fuels to cleaner alternatives like solar and wind power.
As governments and companies work to enhance their renewable energy industries, the challenge of ensuring a stable energy supply has become increasingly apparent. Solar power generation is limited to daylight hours, while wind energy production is contingent on weather conditions. Consequently, many nations have continued to depend on fossil fuels during periods of low or no renewable energy output. The integration of utility-scale battery storage offers a promising solution, allowing for the storage of excess solar and wind energy that can be dispatched to the grid when production is insufficient.
The current global battery storage market predominantly utilizes lithium-ion batteries. In the U.K., for example, the instability of energy sources has hindered the nation’s progress toward a green transition. By employing battery storage, energy producers can better align supply with demand, thereby reducing reliance on fossil fuels. The U.K. government estimates that such technologies could save the country up to £10 billion, ultimately lowering energy costs for consumers.
According to National Grid, “Intelligent battery software uses algorithms to coordinate energy production, while computerized control systems determine when to store or release energy to the grid.” This capability allows energy to be released during peak demand periods, maintaining cost efficiency and reliability.
In March 2024, global energy storage capacity experienced a substantial increase of approximately 200 GWh, resulting in a total capacity of 375 GWh, as reported by Rystad Energy. China led this growth, adding 100 GWh of new capacity, followed by the United States with 35 GWh. Germany, Australia, and the U.K. were also significant contributors to this expansion.
By 2040, total global battery storage capacity is anticipated to exceed 4 TW, according to Rystad Energy. This remarkable growth is facilitated by decreasing electricity storage prices, driven by technological advancements and the deployment of more commercial-scale projects. The average cost of battery energy storage fell below $300 per kWh last year, making it considerably more accessible than in prior years. If prices were to drop to $250 per kWh, the cost of storing electricity could reach as low as $60 per MWh, enhancing operators’ profit margins.
In Germany, recent studies indicate that developing and operating utility-scale solar projects with integrated battery storage is now cheaper than the equivalent cost of gas-fired power plants. Innovations in battery technology have enabled the creation of round-the-clock solar solutions, including the recent announcement of a $6 billion investment by the state-owned renewable energy company Masdar in Abu Dhabi, expected to come online by 2027. If successful, this initiative could inspire further investments in battery storage, further reducing reliance on fossil fuels.
Technological advancements have also led to longer-lasting batteries, with manufacturers currently guaranteeing up to 10,000 charge-discharge cycles while maintaining over 80 percent battery health throughout their lifespan. Various new markets are now exploring battery storage solutions, accelerating the industry’s growth.
Although China and the United States are set to continue dominating the battery storage market in 2025, several gigawatt-hour projects are currently under development in regions such as Saudi Arabia, South Africa, Australia, the Netherlands, Chile, Canada, and the U.K. Annual additions to battery storage capacity are projected to increase by 35 percent this year, with estimates reaching up to 247 GWh, according to BloombergNEF.
The industry is on track to achieve an annual addition of around 972 GWh by 2030. BloombergNEF indicates that the expansion of utility-scale battery power is outpacing previous projections in Europe, the Middle East, and Africa, potentially surpassing the residential sector to become the largest segment in the region by 2026. This growth has been bolstered by favorable policies and financial incentives across the area.
The global battery storage market is witnessing unprecedented growth as investments in renewable energy delivery solutions become more prevalent. With continual advancements in technology and declining costs, the uptake of battery storage is a trend poised to persist for decades, driving a sustainable energy future.
