Battery Storage Era: 5 Reasons BESS Is Supercharging the RE Revolution

Among many things, 2024 will probably remain a marker for the momentum it built up for Battery Energy Storage Systems (BESS). So sharp has been the pick up here that even countries like the UK which had special focus on Pumped Hydro Storage (PSP) have changed rules in recent weeks to allow BESS projects to fill key energy storage needs. Batteries have become bigger, cheaper and more efficient, besides being faster to deploy. Promising upto 8 hours of backup in many cases now, taking them ever more closer to serving as a perfect complimentary to solar power. Not only did the year 2025 begin with the strongest first month on record for the expanding energy storage market, but its growth continues, with huge future expansion expected ahead.

The BESS market expanded by 44 percent in 2024, installing 69 GW/161 GWh of capacity and discharge output. About 80 percent came from the grid-scale segment. As per a Wood Mackenzie report, the global energy storage market is set to surpass 1 TW/3 TWh over the next decade, nearly seven times the current installed capacity. If one looks at projections for solar versus actual achievement in the past decade, then don’t be surprised if the final numbers blow past these estimates, especially if promised changes in costs and technology continue. 

Here we look at the top 5 markers which highlight the rise of the battery energy storage solutions market as the most popular and the fastest growing sector of clean energy sector. 

#1 Reduced Cost of Battery Storage

Cost of adoption is a crucial factor responsible for deciding the pace of energy transition. Battery costs have fallen down substantially by over 90 percent in recent years to make energy storage an attractive investment for the solar and wind project developers. Notably, the global average lithium-ion battery pack prices have fallen 20 percent to USD 115 per kWh in 2024 which is the biggest annual fall as per BloombergNEF. 

 

Various factors are responsible for the decline, including cell manufacturing overcapacity, economies of scale, low metal and component prices, adoption of lower-cost lithium-iron-phosphate (LFP) batteries, and a slowdown in electric vehicle sales growth in 2022-23. 

In addition, the aggressive expansion of battery production capacity by the producers also contributed to the cost reduction. The fully commissioned battery-cell manufacturing capacity of 3.1 terawatt-hours globally is more than 2.5 times the annual demand for lithium-ion batteries in 2024.

#2 Technological Advancement: Bigger & Safer Storage Solutions

So far traditional lithium ion batteries were driving the sector in tandem with the pumped hydro. However, technological advancements are significantly contributing to the rise of the battery storage era, enhancing the efficiency, affordability, and sustainability of energy systems.

Sodium-ion batteries are one such technology gaining popularity as the sodium is not only more abundant and less expensive than lithium, but also offers potential for large-scale energy storage. The US-based Natron Energy, for example, is among the businesses based on this technology. The firm is looking to expand with a USD 1.4 billion giga-scale sodium-ion battery manufacturing facility in North Carolina, US. 

Further, innovations like solid-state batteries are offering higher energy density and safety with reduced risk of thermal runaway. Renowned names investing in the technology include the likes of Toyota, Volkswagen (via QuantumScape), BMW, etc. Toyota is developing a solid state battery with a 750-mile EV-range and faster charging, aiming for market launch by 2026-2027.

Flow batteries, liquid CO2 storage, and a combination of lithium-ion and clean hydrogen are some other emerging technologies which go beyond the traditional boundaries of safety and energy density. Silicon anodes are another area of advancement, offering higher theoretical capacity (3860 mAh/g) compared to graphite (372 mAh/g), potentially revolutionizing energy density

#3 Rapidly Advancing Major Economies 

The global battery storage project pipeline for the next two years reached 748 GWh, indicating a surge of the global battery storage ecosystem. Notably, in November 2024, COP29 agreed to a global energy storage target of 1,500 GW by 2030, up from existing 340 GW, covering all technologies, including BESS and pumped hydro. 

 

In a race of providing battery energy storage solutions to global renewable capacity, China is leading with about 60 percent of the global manufacturing capacity of lithium-ion batteries and more than 90 percent of the processing capability of raw metals and minerals, a potential to provide for the 2024 global energy storage needs all by itself. 

However, all major economies, including the EU India, Australia, and the Middle East, are experiencing an unprecedented growth of battery storage. In Europe, residential batteries are leading, with Germany and Italy at the forefront, supported by subsidies. The US is among the biggest markets after China and is projected to grow significantly, reaching an estimated value of USD 31.36 billion by 2032. 

Australia has also shown impressive growth in the sector with some major projects like Woolooga Battery Energy Storage System (222MW/640MWh). Saudi Arabia is projected to install 14 GW/53 GWh of energy storage capacity and output by 2033. The Indian government is promoting domestic manufacturing with an INR 18,100 crore PLI ACC scheme, aimed at initially developing 50 GWh of battery manufacturing capacity in the country. 

#4 Renewables and Battery Deployment: A Symbiotic Relationship

The growth of renewable energy is a major catalyst for battery storage deployment, as batteries store excess energy for use when generation is low, a major challenge that  obstructed renewable penetration for so long. 

This relationship is crucial for grid stability, with batteries expected to drive 90 percent of energy storage growth by 2030 to meet net-zero goals. Notably, the energy sector accounts for over 90 percent of overall battery demand increasing 130 percent year-on-year in 2023. 

Batteries support grid services like frequency response, reserve capacity, and black-start capability, enabling higher shares of variable renewables. In regions like California, large-scale batteries like Moss Landing store excess solar energy, addressing the “duck curve” and ensuring reliability. 

A combination of renewable energy, such as solar, and batteries is today already competitive with new coal plants in India and is expected to get cheaper in the next few years than new coal in China and gas-fired power in the United States.

Thanks to this symbiotic relationship, the International Energy Agency (IEA) notes that of the sixfold expected energy storage capacity increase by 2030 worldwide, batteries will share 90 percent of the growth owing to exponential expansion by the end of the decade. In fact, at least 1200 GW of battery storage capacity will be needed if the world wants to achieve 2030 energy transition goals.

#5 Downsides of PSH

While Pumped storage hydropower (PSH) is a traditional storage method that accounts for a majority of global storage still, it faces challenges which make alternative storage solutions a more attractive option.  Dams and reservoirs require mammoth investments, which remains a major concern. In addition, these are also infamous for inflicting damages to the environment including ecosystem disruption, potential flooding, and changes to river flows, raising concerns among conservationists. 

On the technical side, geographical constraints limit the site availability for PSH as it requires specific topography with elevation differences. The major scalability issues arise due to long construction lead times (often years) and up to 30 percent energy losses during pumping.

In contrast, batteries offer modularity, faster deployment, and flexibility, making them more suitable for urban and distributed applications. Further, the declining costs are making BESS a better alternative for energy storage.