IEA Urges Sixfold Increase in Global Energy Storage Capacity

The International Energy Agency (IEA) has released its inaugural report emphasising the pivotal role of battery energy storage technology in the ongoing energy transition. According to the report, achieving a threefold increase in renewable energy capacity by 2030 would necessitate the installation of 1,500 gigawatts (GW) of battery storage.

To meet the targets set for 2030, a sixfold rise in global energy storage capacity is imperative, with battery energy storage systems expected to contribute 90% of this increase, followed by pumped hydro for the majority of the remainder.

In its comprehensive assessment titled “Batteries and Secure Energy Transitions,” the IEA underscores batteries as essential for realising the climate and energy objectives outlined at the COP28 climate conference in Dubai. Notably, the report highlights the remarkable growth of batteries, surpassing nearly all other clean energy technologies in 2023, driven by cost reductions, innovation and supportive policies.

Substantial growth was observed across various sectors, including utility-scale projects, behind-the-meter installations, mini-grids, solar home systems and electric vehicles (EVs). In 2023 alone, battery storage capacity surged by over 130%, with electric vehicle battery deployment increasing by 40%, driven primarily by the addition of 14 million new electric cars.

Despite the widespread use of lithium-ion batteries in consumer electronics, the energy sector now dominates annual lithium-ion battery demand, accounting for over 90%, a significant increase from just 50% in 2016.

Remarkably, battery costs have plummeted by more than 90% in less than 15 years, representing one of the swiftest declines witnessed in clean energy technologies. However, the report underscores the need for further cost reductions while maintaining quality and technological advancements to enable the global scalability of batteries.

Anticipated innovations in battery chemistries and manufacturing could lead to a further 40% reduction in global average lithium-ion battery costs by 2030, with the introduction of sodium-ion batteries expected to gain traction, particularly in stationary storage applications due to their lower costs compared to lithium-iron-phosphate (LFP) batteries.

IEA Executive Director Fatih Birol notes that the combination of solar PV and batteries is becoming increasingly competitive, with the potential to outpace new coal plants in India and, in the near future, rival new coal and gas-fired power in China and the United States, signalling a transformative shift in the energy landscape.

Moreover, cost reductions are rendering standalone battery storage more competitive with natural gas-peaking options.

In the most ambitious scenario, total spending on batteries across all applications is projected to soar to $800 billion by 2030, nearly quadrupling from 2023, effectively doubling the share of batteries in overall clean energy investment within seven years.

Global battery manufacturing has experienced significant growth, with production more than tripling over the past three years. While China currently dominates battery production, 40% of all announced plans for new battery manufacturing facilities are in advanced economies such as the United States and the European Union. This trend suggests that these economies may soon have sufficient manufacturing capacity to meet their own needs on the path to achieving net-zero emissions by 2030.

Global battery manufacturing has more than tripled over the last three years. While China produces most batteries today, the report showed 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.