The global battery storage capacity must increase six-fold by 2030 – this is the main message of the International Energy Agency’s (IEA) Special Report, Batteries and Secure Energy Transitions, published in April. According to the IEA, without this highly ambitious growth, the targets agreed by nearly 200 countries at the COP28 Climate Change Conference in Dubai cannot be met – especially the tripling of renewable energy capacity by 2030 and the phasing out of fossil fuels.
“Batteries are already the heart of our technology-based society,” says IEA Executive Director Fatih Birol. “As the transition towards clean energy is picking up speed, batteries are gaining importance, and as a consequence, we are becoming more dependent on them.
Manufacturers are producing batteries for a growing range of consumer and industrial products because the demand is soaring, from electric vehicle drivetrains to electricity storage in our power systems.”
According to the IEA, the energy sector already accounts for over 90 percent of total lithium battery demand. In 2023 alone, the global battery deployment has increased by 42 gigawatts (GW) over the previous year in this sector. This represents an increase of more than 130 percent. In 2023, battery storage was the fastest-growing commercially available energy technology in the electricity sector, with deployments more than doubling from the previous year.
At the same time, the cost of batteries has dropped by more than 90 percent in less than 15 years. This is said to be the fastest decline in clean energy technology ever. This drop is even more impressive when you consider that the IEA monitors and analyzes the progress of more than 500 energy technologies, providing valuable insights into the evolution of the global energy sector.
“The combination of photovoltaics and batteries is now competitive with new coal-fired power plants in India. In the next few years it will be cheaper than new coal-fired power plants in China and gas-fired power plants in the United States. Batteries are changing the game right before our eyes,” the IEA Executive Director emphasizes.
According to the IEA’s special report, tripling the world’s installed renewable energy capacity by 2030, as agreed in Dubai, will require 1,500 GW of battery storage capacity. If we don’t deploy enough batteries, the transition to clean energy in the electricity sector could come to a standstill. The report concludes that for the global battery storage market to grow, the costs must continue to fall without compromising quality and technology.
The IEA special report also examines the global battery production capacity, which has been increased to 300 percent over the last three years. While China produces the most batteries today, the report shows that 40 percent of the announced battery production facilities are planned in regions such as the United States and the European Union. If all of these projects are realized, those countries would have a large enough production to cover almost all of their own demand required to achieve net-zero emissions by 2030.
However, according to the IEA, the production of electricity storage systems is still limited to a few countries, as is the extraction and processing of critical minerals on which it depends. The good news is that new chemical methods for batteries will help reduce the over-reliance on a handful of key components, the report says. Improved recycling of raw materials will also eventually limit the demand for critical minerals.
Governments will play a critical role in establishing reliable local and international supply chains to ensure the safe and sustainable production of batteries at a reasonable cost. Legislation such as the Inflation Reduction Act in the United States, the Net-Zero Industry Act in the European Union and the Production Linked Incentive schemes in India are seen by the IEA as good examples of how governments can make a big difference in transforming the industry by supporting the production of technologies.
But it will also require policies that accelerate the introduction by minimizing the entry barriers for developers and reducing the red tape that often stifles new projects.
The IEA Special Report Batteries and Secure Energy Transitions is available at this link.