The Economist--Grid-scale energy storage is poised for a significant breakthrough. The International Energy Agency (IEA) projects that by 2025, global installations will add 80GW of new capacity—an eightfold increase from 2021. This rapid growth is driven by four key forces reshaping the energy landscape.
Meeting Renewable Energy’s Challenges
The rise of solar and wind power, which are inherently intermittent, has created demand for energy storage solutions. In markets where renewables contribute over half of generation capacity, big batteries stabilize the grid by storing excess energy and releasing it during lulls. The IEA predicts that by 2025, combining solar PV and battery storage will be cheaper than coal power in China and gas plants in the U.S., accelerating adoption.
Cheaper Lithium-Ion Batteries
China's overcapacity in battery manufacturing has dramatically lowered lithium-ion battery prices, which have dropped by 97% since 1991. As growth in electric vehicle (EV) sales slows, battery manufacturers are turning to the grid market. In 2025, prices for grid-scale batteries are expected to align with those of EV batteries, spurring further adoption. Policies requiring storage integration with solar and wind projects, particularly in China, are also driving growth.
Rising Power Demand from AI
Data centers, fueled by the rise of artificial intelligence, are projected to consume 600TWh of power by 2025, up from 240TWh in 2020. To meet their renewable energy commitments, tech giants are increasingly relying on grid storage to ensure a steady supply of clean power.
Innovative Energy-Storage Alternatives
New technologies are diversifying the energy storage landscape. Sodium-ion batteries, which are cheaper and safer than lithium-ion, are gaining traction. Companies like China’s HiNa are scaling up production for grid use. Form Energy, an American startup, is developing iron-air batteries, with operations set to begin in 2025.
Other innovations include gravity-based storage systems. Switzerland’s Energy Vault combines pumped water and lithium batteries, with projects planned in Sardinia and future skyscrapers. Traditional pumped-hydro storage remains dominant, with India’s Greenko modernizing the approach to add 100GWh of capacity in the coming years.
Compressed gas storage is also emerging. Italy’s Energy Dome uses carbon dioxide, while Canada’s Hydrostor employs compressed air, with facilities planned in the U.S. and Australia.
The Future of Grid Storage
For now, lithium-ion batteries dominate the grid-scale storage market. However, the rise of innovative and diverse technologies promises a cleaner, more resilient energy future, marking the start of an energy-storage revolution.
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