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 or no premium compared with combustion cars. 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 (ACP). 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.
