2024 was a fantastic year for energy storage
Batteries reshaped the power grid in California and Texas, showing the rest of the country what’s possible when the tech is allowed to flourish.
Energy storage used to be the cute companion nipping at the heels of solar and wind. Now it’s increasingly a main attraction, reshaping both the power grid and the automotive industry, and 2024 was easily the sector’s biggest year yet.
The oft-cited constraints on batteries — manufacturing bottlenecks, mineral scarcity, fire risk — simply didn’t hinder battery deployments this year. Instead, excess manufacturing capacity and plunging prices for key metals pushed battery prices to record lows.
States with ample battery storage put it to good use, enriching developers while lowering costs for consumers. California, still leading in total installed capacity, passed the symbolic milestone of 10 gigawatts, but Texas stole the show by becoming the fastest-growing, most dynamic market for grid storage. In both places, when extreme weather events hit, batteries were able to shore up the grid and lower energy costs for customers.
But it wasn’t all sunshine and roses for battery storage in 2024. Efforts by Western governments to localize the supply chain hit turbulence. Major American and European battery contenders ran out of cash, and others dialed back their ambitions. Similarly, the battery recycling sector, which promised big breakthroughs for a circular battery economy, struggled to get past the first step of dismantling and shredding old battery packs.
Here are Canary Media’s top five takeaways from a topsy-turvy year in energy storage.
Batteries got unprecedentedly cheap
Up until now, cost has prevented batteries from taking over the grid and the automotive sector. But this year, the battery industry managed to push prices to unprecedented lows.
The global, volume-weighted average battery-pack price dropped 20 percent to just $115 per kilowatt-hour, according to newly released research by BloombergNEF.
Of course, averages comprise a range of data points. Some packs are still selling for much more than that, but BNEF also tracked price points as low as $45 per kilowatt-hour in China, the beating heart of global battery manufacturing. Pack prices are on pace to break the mythical $100-per-kilowatt-hour barrier sometime in 2026, BNEF analyst Evelina Stoikou told Canary Media.
These pack prices don’t mean much for the average consumer, but they represent leading indicators of tipping points to come. Battery-pack prices have dropped 92 percent since 2010. Cheaper batteries mean electric vehicles selling at less of a premium compared with combustion cars, or no premium at all. They mean grid storage plants competing more effectively with fossil-fueled plants to deliver power when the grid needs it most.
Commodity prices for key battery ingredients fell precipitously over the year, making lithium, nickel, and cobalt more affordable. But the declines in overall battery-cell pricing outpaced the declines in mineral price, Stoikou said. “Battery manufacturers were actually cutting costs in other areas beyond metals,” she concluded.
That speaks to companies finding new efficiencies as they scale up production and gain more experience with the technology, which bodes well for future cost declines. But manufacturers, led by China, have commissioned 2.5 times more production capacity than actual demand this year, by BNEF’s count, and that extreme surplus has pushed prices extra low.
This also means much stiffer competition for the new factories that the U.S. and Europe are building to catch up with China’s highly efficient manufacturing sector. Ever cheaper batteries are a boon to customers and businesses that buy batteries, but a sisyphean burden for the manufacturers themselves.
Texas grid storage market takes off
The Lone Star State came out of nowhere a couple of years back to become the liveliest state for grid battery construction, and firmly cemented that reputation in 2024.
In the waning days of this year, Texas was on track to have installed 4 gigawatts of grid-scale storage in 2024, outpacing California’s new battery construction by 12 percent, according to the latest count by Wood Mackenzie.
That amounts to a major coup on the leaderboard of grid battery installations. California paved the way with a decade of state-ordained incentives and mandates that pushed utilities into signing contracts for battery capacity. Texas didn’t do that, nor does it allow climate policy to dictate how it runs its energy system. Instead, the state lets private investors build whatever kind of power plant they think will make money in the competitive ERCOT market. Wide-open landscapes and lax permitting regimes make it even more builder-friendly.
ERCOT had to issue 11 conservation calls in 2023, when summer heat pushed demand high enough to overtake supply. This year, with gigawatts of new batteries online, ERCOT issued no conservation calls all summer, as noted in a recent analysis by American Clean Power. Power prices in August 2024, the peak demand month for Texas, were on average $160 per megawatt-hour lower than in August 2023.
The Texas battery miracle certainly benefited from the storage-related tax incentives in the Inflation Reduction Act. But those credits are available nationwide, and no other place has produced a battery market quite like Texas. This suggests there’s something special about Texan energy policies, which have persisted through years of Democrats and Republicans in the White House. As Donald Trump returns to power, the Texas model is likely to carry far more weight than California’s.
California surpassed 10 gigawatts, and batteries started pitching in at night
Texas covered more ground this year, but California still installed a whole lot of battery capacity, and it became the first state to pass 10 gigawatts, back in April. Battery power now adds up to about one-fifth of peak demand on the grid managed by CAISO (which covers most of the state, with some exceptions like Los Angeles and Sacramento).
During a heat wave in the summer of 2020, California ran short on power and had to initiate rolling blackouts to avoid greater damage. Now, when record heat hits and millions of Californians crank their air-conditioning, the state can call upon a new army of batteries to shift its ample solar production into the hours when the sun goes down and supplies run low.
“This is the first year since grid batteries have been around that summer didn’t happen in Texas and California,” quipped Jason Burwen, VP of policy and strategy at developer GridStor, in an interview with Canary Media.
Burwen, who previously spearheaded policy advocacy for the storage industry, wasn’t denying the existence of prolonged hot, sunny weather in either locale, but pointing out that the grid-related tumult that used to accompany such weather didn’t materialize. A lot of variables made that possible, but record battery installations played a big role.
“As we have electric grids dealing with historic growth in demand for energy along with weather-related stressors — historic summer heat, volatile winter storms — energy storage is really delivering at boosting reliability while simultaneously lowering costs,” said Noah Roberts, vice president of energy storage at ACP. “That’s a unique combination.”
Unique in that typically, people have to pay a premium to increase reliability — like when a family shells out for a home backup generator, or when society collectively pays for power plants to sit around doing nothing most of the year just in case supply gets tight for a few extreme hours.
In Texas and California, though, the new storage doesn’t sit around waiting for heat waves: It plays in the markets everyday, displacing more costly and inefficient fossil-fueled plants from various grid operations.
Western battery manufacturing setbacks
The Biden administration and European governments have thrown a bunch of policy tools at the challenge of building up domestic battery supply chains, in the hopes of onshoring jobs and reducing dependence on China for the key building blocks of the clean energy transition. This effort suffered some setbacks this year.
U.S. startup Our Next Energy aimed to become the first homegrown battery mega-manufacturer, but spent the year cutting costs and looking for additional investment to fill out the cavernous factory shell it built near Detroit. The only press release the company has issued since April announced the closure of its South Korea outpost. Meanwhile, Europe’s great hope for a homegrown battery champion, Northvolt, struggled to raise output at its Sweden gigafactory and declared bankruptcy this fall.
Other forthcoming U.S. gigafactories were structured as joint ventures between automakers and Asian companies with deep experience in battery production. These factories don’t share the struggles of startups trying to scale production for the first time, but even some of them have scaled back ambitions.
The U.S. has yet to bring on additional mining capacity to supply its battery needs, but a bevy of battery recyclers hope to offer a more environmentally friendly alternative: repurposing materials from old batteries to make new ones.
The new recyclers have raised a few billion dollars collectively, but this year they endured a string of problems, including construction delays, financial trouble, and at least one catastrophic fire. The U.S. has succeeded at building facilities to break down old battery packs, but isolating and refining the valuable materials is proving more difficult.
LDES steps a little closer to its “deployment era”
So far, lithium-ion batteries have completely dominated the energy storage market. But the scientists and entrepreneurs of the nascent long-duration energy storage (LDES) sector are seeking out new technologies that can succeed where lithium-ion hasn’t: cost-effectively delivering power over many hours if not days.
Convincing customers to try novel, even exotic technologies is tough going, and LDES has operated in a perennial state of becoming. The LDES sector didn’t break out of that dynamic this year. But customer conversations around LDES projects are moving toward broader deployment, said Julia Souder, who runs the Long Duration Energy Storage Council trade group.
“It’s no longer ‘We’re curious,’ it’s, ‘We know this is critical, how do we deploy it and get it out there?’” she said. “2025 is going to be about ‘fund, build, and scale.’”
The council works with governments and utilities to set long-duration storage targets to help jump-start planning for when grids hit high renewable production levels. In June, New York officially adopted a storage roadmap that contemplates a bigger LDES buildout than California, which previously led in long-term grid planning for these resources. New York energy officials calculated that the state could cost-effectively build 4 gigawatts of eight-hour-duration storage by 2035, especially in the New York City area, where fossil plants are retiring.
Several LDES companies installed demo units with major data-center operators this year, Souder added. As AI and computing giants grapple with their immense power needs, LDES can differentiate itself from conventional batteries by actually delivering 24/7 power.
And most notably, Form Energy completed its factory in Weirton, West Virginia, to mass-produce novel iron-air batteries for multiday clean energy delivery. That VC darling recently completed fire safety testing for the industry standard known as UL9540A. The iron-air cells didn’t catch fire, even under extreme conditions that would risk cascading thermal events in conventional lithium-ion batteries. This finding enables Form to install its systems without fireproof barriers and other fire defenses that add cost and complexity to conventional battery projects (and in some cases have actually started battery fires).
Italian LDES startup Energy Dome rounded out the year by signing a landmark contract with global energy provider Engie to deliver 10-hour storage at a project in Sardinia.
The startup scoured the globe for similar contracts, and believes that this is the first deal for an operational project to provide 10 hours of stored energy (excluding the legacy pumped-hydro storage projects, which have delivered that duration or longer for decades). The 20-megawatt/200-megawatt-hour project is slated to wrap up commissioning in the first quarter of 2025.
A spokesperson told Canary Media that this contract signals the start of the “deployment era” for novel long-duration storage technologies.