Battery costs have fallen 90% in less than 15 years, says new IEA report

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The cost of batteries has fallen by more than 90% over the past 15 years, according to a new report from the International Energy Agency (IEA).

It’s one of the fastest declines ever seen in clean energy technology, and it gives hope that batteries can help the world meet its renewable energy goals.

Although we still tend to think of lithium-ion batteries as a component of consumer electronics devices such as telephones and laptops, this technology is playing an increasingly important role in the energy sector, which today represents more than 90% of global battery demand.

In 2023 alone, battery deployment in the energy sector will increase by more than 130%. They are also intensifying the buyout of electric carswith 14 million vehicles sold last year, compared to 3 million in 2020.

“The electricity and transport are two essential pillars to reduce emissions quickly enough to achieve the targets agreed at COP28 and to keep open the possibility of limiting global warming to 1.5°C,” says IEA Executive Director Fatih Birol.

“Batteries will lay the foundations in both areas, playing an invaluable role in the development of renewable energy and the electrification of transport, while providing a energy safe and sustainable for businesses and households. »

At the COP28 climate summit in Dubai in December, countries agreed to triple their renewable energy capacity by 2030 and double the pace of energy efficiency, while moving away from harmful fossil fuels for the climate.

Batteries are at the heart of this ambition, as the IEA explains in its special report on batteries and secure energy transitions, the first comprehensive analysis of the entire battery ecosystem.

Why are batteries so important?

Since solar and wind energy are variable renewable sources, the battery storage is essential to facilitate the supply of electricity from these green sources.

It can also alleviate grid congestion during times of high demand, by providing an outlet to capture and store excess electricity that would otherwise be lost.

To triple global renewable energy capacity by 2030, the IEA estimates that 1,500 GW of energy storage, including 1,200 GW from batteries, will be needed.

Batteries can also help achieve universal energy access worldwide by 2030, providing 400 million people in developing economies with access to electricity through decentralized solutions such as THE solar home systems and mini-grids.

What is needed to increase battery capacity?

Battery growth outpaced that of almost all other clean energy technologies in 2023, according to the IEA, as falling costs, innovation and supportive industrial policies helped drive demand.

“The combination of photovoltaic solar power and batteries is now competitive with new coal-fired power plants in India,” explains Dr Birol. “And in the next few years alone, it will be cheaper than new coal in China and gas power in the United States. Batteries are changing the game before our eyes. »

But battery deployment still needs to ramp up significantly in the coming years if the world is to meet its energy and climate goals.

To do this, overall energy storage capacity will need to increase sixfold by 2030 worldwide, with batteries accounting for 90% of the increase and pumped hydropower covering most of the rest.

G7 leaders committed Tuesday to a new global energy storage target that matches that goal.

The IEA report believes this is achievable if costs continue to fall without compromising quality.

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Ensuring energy security also requires greater diversity in supply chains, including for the extraction and processing of critical minerals used in batteries, and for the manufacturing of the batteries themselves.

Global battery manufacturing has more than tripled in the past three years, he adds.

While China produces most batteries today, the report shows that 40% of announced plans to manufacture new batteries are in advanced economies such as the United States and the European Union.