Global Energy Transition in 2025: Driving Force Behind the Battery Storage Industry

The global battery storage market is experiencing a significant surge, with annual capacity additions expected to increase by 35% in the coming year. This growth is driven by a combination of factors, including declining costs, increasing renewable energy deployment, supportive government policies, and the need for grid stability as fossil fuel plants retire.

One of the key regions driving this expansion is Europe. The European market for utility-scale batteries is growing more rapidly than previously anticipated, and projections suggest it could overtake the residential sector to become the largest segment in the region from 2026 onward.

China leads the global expansion, adding 100 GWh of new battery storage capacity in 2024. The United States follows closely with 35 GWh of new additions. Other significant markets include Germany, Australia, the United Kingdom, and emerging deployments in Saudi Arabia, South Africa, and Chile.

The global average cost of battery storage has fallen to under $300 per kWh, making it increasingly competitive with conventional power generation technologies. Experts suggest that if prices reach $250 per kWh, the cost of storing electricity could fall to approximately $60 per MWh.

Battery technology now offers guarantees of 10,000 charge-discharge cycles while maintaining over 80% battery health throughout that lifespan. Industry analysis projects a compound annual growth rate of 14.7% through 2035, culminating in annual additions of approximately 972 GWh by that year.

Battery storage systems offer multiple services for grid stability, including frequency regulation, peak shaving, renewable integration, transmission and distribution deferral, and resilience and backup power. They are transforming the energy landscape by accelerating renewable adoption, decentralizing energy systems, creating new market structures, empowering consumers, and electrifying transportation.

For countries pursuing decarbonization goals, investments in battery storage represent a critical pathway to achieving climate objectives while maintaining reliable and affordable electricity supplies. Recent research demonstrates that in markets like Germany, utility-scale solar installations with integrated battery storage have become more economical than gas-fired power plants.

However, the battery storage market is not without challenges. Supply chain constraints, recycling infrastructure, regulatory frameworks, fire safety, and long-duration storage are some of the issues that need to be addressed. Furthermore, battery chemistry, system integration, and business models will likely see further innovation in the coming decades.

For readers interested in learning more about the battery storage market, exploring related educational content on energy market trends and technological developments in the renewable energy sector is recommended. The market is projected to grow ninefold to over 4 TW by 2040, with annual additions reaching nearly 1,000 GWh by 2035. Thus, understanding this technology and its implications is increasingly important for understanding the future of energy.

Global Energy Transition in 2025: Driving Force Behind the Battery Storage Industry