The International Energy Agency (IEA), founded in 1974 in response to the oil crisis, is a leading institution dedicated to global energy policy and ensuring the energy supply of its member states. With well-founded analyses and policy recommendations, it supports countries around the world in shaping a sustainable and secure energy future. The focus is in particular on expanding renewable energy and increasing energy efficiency.
In April 2024, the IEA published the “Batteries & Secure Energy Transition” Report, which, as a special report, highlights the importance of battery storage technologies in the global energy transition. The report underlines how batteries will help achieve the ambitious climate goals set by almost 200 countries at COP28 for 2030 and put the global energy system on the path to net-zero emissions.
We summarize the report's key findings on battery storage in this blog article.
Stationary battery storage systems play a central role in integrating renewable energies such as solar and wind power into the power grid. They are the key to moving away from fossil fuels and accelerating energy efficiency through electrification and the increased use of renewable energy in the power supply. In 2023, battery storage was the fastest growing commercially available energy technology, with use more than doubling compared to the previous year. The global volume of battery storage systems used in the energy sector reached over 2,400 gigawatt hours (GWh) in 2023 — four times that of 2020.
In the net-zero emissions scenario, it is predicted that by 2030, around 60% of CO2 emission reductions in the energy sector will be directly linked to the use of batteries, making them a crucial element in achieving our joint climate goals. To achieve the goals of COP28, global storage capacity must be increased to 1,500 GW by 2030, with 90% of this growth being covered by battery storage systems (both stationary, industrial and home storage). The demand for energy storage systems must therefore be six times higher than currently in order to improve the efficiency of power grids and reduce losses. To achieve this, the use of battery storage must continue to increase by an average of 25% per year by 2030.
Battery storage costs have fallen drastically in recent years and could fall by a further 40% by 2030. Particularly remarkable is the fall in the cost of lithium-ion batteries, which has fallen by 90% since 2010, as a result of advances in research and development and economies of scale in production — one of the fastest cost declines among all energy technologies. This unprecedented drop in prices, combined with higher energy density and longer lifespan, has made lithium-ion batteries the preferred choice over alternative technologies. The cost reductions significantly increase the competitiveness of battery storage systems compared to fossil energy sources such as coal and natural gas. In particular, the combination of solar PV and battery storage systems is already cheaper in many regions than building new coal-fired power plants, which further accelerates the transition to renewable energy sources.
Battery storage systems have become an indispensable part of modern energy systems, particularly in their ability to ensure security of supply and increase the flexibility of the power grid. They offer essential services such as grid stability, load management and capacity balancing by being able to store excess energy from renewable sources and quickly feed it back into the grid as needed. This is particularly important during periods of peak demand when electricity demand exceeds supply, or during grid disruptions, where a rapid response is required to avoid power outages.
A key advantage of battery storage systems is their ability to respond to electricity market signals within seconds. This fast and precise response time makes them ideal for compensating for fluctuations in electricity generation from renewable energy sources such as wind and solar energy, which are naturally variable. In many markets, battery storage systems are already being used successfully to ensure grid stability by serving as buffers in the event of frequency deviations or by compensating for voltage fluctuations.
In addition, battery storage systems support load management by storing energy during periods of low demand and releasing it during peak periods. This helps to reduce the need for expensive and polluting peak-load power plants, which have traditionally been used to handle short-term increases in demand. Through this ability to shift and smooth loads, battery storage systems help increase the overall efficiency of the power grid while reducing operating costs.
In addition to grid stability, battery storage systems also contribute to capacity balancing by providing reserve capacity that can be activated quickly when other energy sources fail or demand suddenly rises. This is particularly important in scenarios where the reliability of the energy supply is threatened by external factors such as extreme weather conditions or technical disruptions. In such cases, battery storage systems can act as a kind of “safety net” that ensures continuous supply more critically.
These diverse functions make battery storage a key component of the energy systems of the future, particularly in the context of increasing electrification and the growing share of renewable energy. They provide a flexible and reliable power supply that is both economically and ecologically beneficial.
Lithium-ion batteries will continue to play a central role in the short-term storage of energy (≤ 8 hours). In parallel, however, alternative chemical systems are also being developed, which could either complement or compete with these batteries. For example, it is expected that new battery technologies such as sodium-ion batteries could be increasingly used. They are around 20-30% cheaper than lithium iron phosphate batteries and could therefore be a cost-effective alternative. However, the biggest challenge will be to scale the technology quickly in the coming years. The development of battery chemicals and production methods will be crucial to further reduce costs.
Innovations in battery technology will also expand the flexibility and range of applications of energy storage systems so that they can be used more efficiently in grid-connected systems. This would enable them to respond better to different electricity market conditions and offer a wider range of services.
The report also underlines the growing importance of innovations in the area of battery recycling. With the increasing use of batteries, it is becoming increasingly important to establish and optimize recycling processes in order to reduce dependence on critical raw materials and minimize environmental impact, which promotes a sustainable circular economy.
Since 2018, investments in battery storage systems have increased fivefold. Massive investments are required to meet the growing demand for battery storage and to achieve the ambitious goals of the energy transition. Investments in battery storage are expected to continue to grow 3.5 times by 2030, which requires investments of up to 140 billion US dollars. These investments require significant efforts on the part of governments and industry to expand the necessary capacities in good time. Without accelerated growth in battery storage, there could be significant risks to the clean energy transition.
For batteries to expand to the extent necessary, policy makers and regulators must take targeted measures to promote their use and remove existing barriers. This includes both financial incentives and the creation of appropriate regulatory frameworks to facilitate market access and support innovation. Only through these coordinated efforts can the battery industry be able to fully exploit its decisive role in the global energy transition.
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