According to a report by Rystad Energy, global energy storage capacity is growing dramatically and is expected to increase ninefold to more than 4 terawatts by 2040, mainly driven by battery energy storage systems, which achieved record growth in 2024. The cost of electricity storage has fallen significantly in recent years due to the decline in battery project costs and technological advances.
Last year, a record 200 GWh of new battery energy storage system (BESS) projects were installed worldwide, bringing the total global battery energy storage capacity to 375 GWh. China maintained its lead with more than 100 GWh of new capacity, followed by the United States with 35 GWh of new capacity. Germany, Australia and the United Kingdom rounded out the top five.
As electricity demand grows, energy storage will play a key role in the integration of renewable energy.
Electricity demand is expected to continue to grow strongly in 2025 and beyond, and the growth rate of low-carbon energy sources is now close to covering all demand growth. Rystad's report states that energy storage will play a key role in integrating the growing share of intermittent renewable energy and providing the flexibility needed for the safe operation of the power system.
The increasing share of intermittent renewable energy, combined with low flexibility of supply and load, leads to price volatility in liberalized electricity markets, making peak-to-valley arbitrage an important revenue source for energy storage, the report states.
Rystad notes that solar energy is expected to grow tenfold faster than all other energy sources combined between 2025 and 2050.
The average cost of energy storage projects worldwide will fall below $300 per kilowatt-hour in 2024. If costs fall to $250 per kilowatt-hour, energy storage costs could be as low as $60 per megawatt-hour, Rystad says, which would allow storage operators to retain a larger portion of the spread as profit.
Technological advances are also driving down the cost of electricity storage, as battery manufacturers now guarantee more than 10,000 charge and discharge cycles and more than 80% battery health over their lifetime.
