The IEA’s (International Energy Agency) Special Report on Batteries and Secure Energy tells that in less than 15 years, lithium-ion battery costs have fallen by more than 90%. Today, the energy sector accounts for over 90% of overall battery demand. In 2023 alone, battery deployment in the power sector increased by more than 130% year-on-year, adding a total capacity of 42 gigawatts (GW). Electric car sales increased from three million in 2020 to almost 14 million last year.
The report highlights the key role batteries will play in fulfilling the 2030 commitments made at COP28. These include tripling global renewable energy capacity, doubling the pace of energy efficiency improvements and transitioning away from fossil fuels.
Lithium-ion batteries still dominate. Chemistries can be adapted to mineral availability and price – the market share for lithium iron phosphate (LFP) batteries was 40% of EV sales and 80% of new battery storage in 2023. For new EV sales, over half of batteries have a relatively high nickel content. Nickel and cobalt-free LFP batteries account for the remaining EV market share. Energy density is less critical for battery storage, leading to a shift towards LFP batteries.
Battery use is growing in emerging markets including Africa, with decentralised solutions such as solar home systems and mini grids with batteries. Batteries are key to the transition away from fossil fuels and accelerate electrification and use of renewables. A growing fleet of EVs on the road displaces the need for eight million barrels of oil per day by 2030 in the Net Zero Emissions by 2050 (NZE) Scenario, more than the present European consumption for road transport. Battery storage supports transitions away from coal and natural gas, reducing losses and congestion in electricity grids. In other sectors, clean electrification enabled by batteries is critical to reduce the use of oil, natural gas, and coal.
In the NZE Scenario, about 60% of the CO2 emissions reductions in 2030 in the energy sector are associated with batteries. Close to 20% are directly linked to batteries in EVs and battery-enabled solar PV. Another 40% of emissions reductions are from electrification of end-uses and renewables that are indirectly facilitated by batteries.
