The price of batteries is plummeting, it’s good news for the planet
Scientists have been pushing for a switch from fossil fuels to renewable energy sources for years. Although wind and solar power are becoming more popular, their dependence on the weather results in power generation gaps. The response? an increase in battery capacity.
According to a new report from the International Energy Agency (IEA), batteries are essential to reaching the world’s climate goals. Transitions to renewable energy are becoming more viable due to declining costs brought about by advances in lithium-ion technology. According to the report, battery prices will drop by 40% by 2030.
But in the upcoming years, even more affordable batteries will be required due to the growing demand for renewable energy sources and electric vehicles. By 2030, the IEA predicts that energy storage capacity will have increased six times.
“Meeting international energy and climate targets depends on rapidly scaling up batteries,” stated IEA Executive Director Fatih Birol. “Batteries are fundamentally changing the energy landscape.”
Previously mainly connected to consumer electronics, lithium-ion batteries are now the backbone of the energy industry. This industry accounted for 90% of battery demand in 2023, and the market as a whole grew tenfold in just eight years. The most notable price reduction in energy technology to date has been the 90% reduction in battery costs over the last 15 years.
This means that solar energy and electric cars will become more competitive with fossil fuels due to their lower costs. “Solar PV (photovoltaic) combined with batteries is already cost-competitive with new coal plants in India,” Birol noted. “Within a few years, it’ll be cheaper than new coal in China and gas-fired power in the US.”
Notwithstanding these encouraging numbers, the IEA cautions that a six-fold increase in global battery storage may be necessary to meet the UN’s target of tripling renewable energy capacity by 2030. This corresponds to a minimum 25% annual growth rate in the use of battery storage. Prices for batteries must continue to decline while maintaining or increasing performance.
According to the IEA, by 2030, advances in battery chemistry and manufacturing could reduce the cost of lithium-ion batteries by 40% worldwide. Furthermore, the production of batteries is currently centered in a small number of nations; therefore, diversification is necessary for long-term sustainability.
“A shortfall in battery deployment could stall clean energy transitions,” warns the report.
The Consumer Impact of Cheaper Batteries
Reducing emissions requires the use of renewable energy sources and electric vehicles to increase. Globally, EV adoption is trending positively, despite a slight slowdown in the US. The number of EVs on the road increased by 40% in 2023, totaling 14 million new vehicles. According to IEA estimates, 8 million barrels of oil could be replaced every day by the growing EV fleet by the end of the decade.
In the near future, lower battery costs will translate into cheaper electric vehicles for consumers. One of the biggest obstacles to US drivers considering EVs is affordability. Falling battery costs combined with more accessible models may persuade more people to make the switch, which could help the Biden Administration reach its 2030 target of 50% electric vehicle sales.
In terms of infrastructure, less expensive energy storage enables developing countries to contemplate renewable power plants at costs that are on par with fossil fuels. Declining battery costs also make it easier to install renewable microgrids in underprivileged areas.
A more dependable, battery-powered energy sector would improve energy independence in nations like the US by lowering dependency on imported fossil fuels. In 2020, renewable energy made up just 19% of the US grid; however, accessible and dependable storage could make a difference. Stanford researchers even ran a simulation in which the US grid could continue to run entirely on renewable energy sources by 2050.
The Challenge of Critical Minerals
There is a critical mineral dependency with the current battery boom. More than half of the world’s cobalt and lithium are processed in China alone. These minerals can be hazardous to mine and harmful to the environment.
Novel battery varieties might provide answers. Increasingly found in electric vehicles (EVs), lithium iron phosphate (LFP) batteries use an alternative chemistry that does not include nickel or cobalt. In 2023, LFP made up 80% of all new batteries produced, even though conventional lithium-ion batteries continue to be the industry leader. Additionally, less intensive battery production might result from more effective recycling of copper, aluminum, and other resources from e-waste. Less than 1% of rare earth metals found in e-waste are recycled at the moment.
There is hope for a cleaner future thanks to the battery boom, but there are still big obstacles to overcome. A truly sustainable energy future requires addressing the critical mineral dependency and raising recycling rates.
