Batteries are the silent workhorses of our technological lives, powering our phones, computers, tablets, and remotes. But their impact goes far beyond our daily screentime — they’re also transforming the electricity grid itself. Grid-scale batteries store excess renewable energy and release it as needed, compensating for the fact that solar and wind resources aren’t always available on demand.
The price of the most ubiquitous battery technology — lithium-ion — has fallen remarkably in the past 15 years. That’s allowed for an enormous buildout of battery storage systems in the U.S. and beyond, which has in turn helped to integrate more renewables onto the grid than ever before. With the assistance of batteries, California ran entirely on clean energy for the equivalent of 51 days last year, while South Australia managed the same for 99 days.
Even as deployment accelerates, startups and other innovators are working to improve on standard lithium-ion tech — or in some cases, supplant it. We’ll get into all that soon, but first, let’s start with a little Battery 101.
How do batteries work?
All electrochemical batteries — that’s everything from your standard AA to grid-scale lithium-ion systems — work by turning chemical energy into electrical energy through what’s known as an electrochemical reaction. These batteries have three primary components:
- One end of the battery is called the anode. In lithium-ion batteries, this is often made of graphite, and it’s where lithium atoms are stored between layers of carbon when a battery is charged.
- The other end is the cathode. In a lithium-ion battery, this is usually made of either nickel, cobalt, and manganese (known as a NMC battery, historically the most common type), or the compound lithium iron phosphate (known as a LFP battery, which is becoming increasingly common).
- A substance in between the two is called the electrolyte. In a lithium-ion battery, this is typically made of a lithium salt dissolved in organic solvents. It carries lithium ions between the two electrodes.
Grid batteries charge when there’s excess renewable energy on the grid or when demand for energy is low. When a lithium-ion battery is charging, lithium ions move from the cathode to the anode, where they’re stored. When the battery discharges electricity back to the grid, lithium ions move from the anode to the cathode. This movement triggers the release of electrons at the anode, which move through an external wire that carries power to the grid.
There’s variation within the realm of lithium-ion batteries. For example, some use different cathode chemistries, a solid electrolyte, or a pure lithium metal anode. Within the broader world of electrochemical batteries, there are also a variety of alternate chemistries including sodium-ion, lithium-sulfur, and iron-air (more on those below).
But if one broadens the definition of a battery to include any system that stores energy, that’s when the possibilities really open up. In this sense, a battery could be a pumped hydropower storage system, in which energy is stored by moving water uphill into a reservoir and later releasing it to generate electricity through kinetic energy. A battery could also be energy stored as heat or compressed air. Many of these mechanisms rely on converting stored energy into electricity by turning a turbine or generator.
What is the role of batteries in the current electricity system?
Batteries help to stabilize the electric grid and help communities and grid operators to take full advantage of their renewable energy resources by providing a reliable power supply when, as the saying goes, the sun isn’t shining and the wind isn’t blowing. New solar or wind plants combined with battery storage can also be highly cost-effective, achieving power prices that are competitive with or lower than those of new natural gas facilities in many cases.
Homes and businesses can also install their own personal battery storage systems to bank energy from rooftop solar panels or directly from the grid. This allows individuals and companies to lower their electricity bills by charging their batteries when grid prices are low and using stored energy when prices are high.
By the end of last year, the installed capacity of utility-scale batteries in the U.S. reached about 26 gigawatts, surpassing the cumulative capacity of pumped hydro for the first time. So while pumped hydro can still store a larger amount of total energy, batteries can now deliver more instantaneous power to the grid than any other energy storage resource. And though that 26 gigawatts represents a mere 2% of the U.S.’s total 1,230 gigawatts of generation capacity, the battery sector is growing rapidly. The International Energy Agency reported in February that planned capacity additions for this year totaled 18.2 gigawatts for the U.S. alone.
How did lithium-ion become the dominant energy storage technology?
Lithium-ion batteries weren’t originally designed for grid-scale energy storage. Rather, they were commercialized in the early 1990s for use in portable consumer electronics such as camcorders, cell phones, and laptops. These batteries proved to be more energy dense, lighter, and longer lasting than their predecessors, and were thus eventually adopted for a whole host of applications, including the growing electric vehicle market in the 2010s.
As electric vehicle production ramped up throughout the decade, manufacturers scaled up their production of lithium-ion batteries, quickly driving down prices — from 2010 to 2020 the cost of battery packs declined nearly 90%. Production became primarily concentrated in East Asia, where companies such as CATL, LG Energy Solution, and Panasonic emerged as dominant players.
As the cheapest and most mature battery tech on the market, lithium-ion thus became the default for grid developers looking to manage the variability of intermittent solar and wind resources. As renewables deployment surged, adding battery storage to these facilities started to become more cost-effective than building new fossil-fuel facilities in some markets and provided a reliable way to regulate the grid’s frequency. Lithium-ion batteries can begin absorbing or delivering power at a moment’s notice, which is integral to keeping the grid balanced.
While lithium-ion batteries have never been a very practical or economical option when it comes to long-duration storage — that is, the ability to dispatch energy for more than about four to eight hours at a time — they are well suited to applications such as storing excess solar produced during the day for use in the evening, or smoothing out the fluctuations in renewable resources throughout the day.
What are some drawbacks of lithium-ion batteries?
For one, China essentially has a virtual monopoly on the lithium-ion battery industry. The country made EV production a national priority beginning in the 2000s, and by the 2010s it was heavily subsidizing battery and EV manufactures alike. Thus, China came to dominate the supply chain at nearly every level, from raw materials refining to cell manufacturing, anode and cathode production, and battery pack assembly. Ideally, the U.S. would lessen its technological reliance on a nation that it’s long seen as an adversary, but building a domestic lithium-ion battery industry from scratch is an extremely complex and expensive endeavor.
In terms of technical drawbacks, most lithium-ion batteries use a flammable liquid electrolyte. That’s prone to catching fire if a battery component or surrounding equipment fails, if a cell is punctured or simply overheats, as illustrated by the Moss Landing fire in California, which broke out in January at one the world’s largest battery storage facilities. While the energy density of lithium-ion is a main selling point, the flipside is that in a fire, more energy equals more heat. And since grid-scale systems pack battery cells close together, a fire in one cell can spread quickly across an entire facility.
Finally, in terms of cost, there’s only so far lithium-ion batteries can fall due to the expense of the raw materials. The price of lithium itself has been notoriously volatile. After hitting record highs in 2022, the commodity price subsequently collapsed after a wave of new mining projects oversupplied the market. This type of volatility wreaks havoc for battery storage developers and their balance sheets, thus spurring interest in chemistries that offer lower, more stable costs, as well as technologies with potentially superior cycle life, energy density, discharge times, and safety profiles.
What other battery technologies are being explored?
The most widely commercialized spin on conventional lithium-ion batteries, which are traditionally made with an NMC cathode, is a variant known as lithium iron phosphate, or LFP. The iron-phosphate bond in a LFP cathode is very strong, making it more thermally stable than those in NMC batteries. LFP materials are also more structurally durable than nickel and cobalt, meaning these batteries can be charged and discharged more times before wearing out. Finally, LFPs are also cheaper and more sustainable, as the cathode materials are plentiful and less environmentally damaging to mine. LFP’s main drawback is its lower energy density, but its many advantages have enabled it to overtake NMC as the leading chemistry for new battery energy storage systems.
All the other competitors have much lower levels of commercial maturity. But on the plus side, this means there’s an opportunity to build out domestic supply chains for them. Sodium-ion batteries, for example, replace lithium with sodium, which is far more abundant. They’re also more thermally stable. Unfortunately for U.S. manufacturers, China is already surging ahead in the race to scale up this tech. Then there’s the more nascent lithium-sulfur batteries. They have a very high theoretical energy density, which could lead to lighter and more compact energy storage systems if companies can overcome core technical challenges such as short cycle life.
Flow batteries are also an option that’s been studied for decades. These store energy in liquid electrolytes held in external tanks rather than in solid electrodes. This presents a promising option for longer-duration energy storage since the design can be scaled easily — more energy simply means bigger tanks. Because the active materials are liquid, these batteries also have a very long cycle life, and their water-based designs are non-flammable. Flow batteries are also much bulkier, however, and haven’t yet scaled enough to become cost-competitive with lithium-ion under most circumstances.
Getting into the realm of long-duration storage also opens up possibilities such as iron-air batteries, which are being commercialized by the Massachusetts-based Form Energy. In theory, these can discharge for 100-plus hours by taking in oxygen from the air and reacting it with iron to form rust, releasing electrons in the process. When the battery is charging, an electrical current converts the rust back into iron. Because iron is cheap and plentiful, this tech could also be significantly less expensive than LFP batteries. And since it uses a water-based electrolyte, these batteries aren’t flammable. The first iron-air battery plant is set to come online at the end of the year.
Beyond the electrochemical domain, there’s a wider, weirder world of energy storage technologies, many of which are being explored for their long-duration storage potential. Pumped hydro can only be built only in very specific geographies, so it’s not a main competitor in many regions today. But gravity-based storage companies such as Energy Vault often take inspiration from this approach, storing energy by using excess electricity to raise heavy objects such as concrete blocks. When energy is needed, the blocks are lowered, causing the motors that lifted them to run in reverse and act as generators to produce electricity.
Canadian company Hydrostor is pursuing another method, which involves using surplus energy to compress air and pump it into a water-filled cavern, displacing the water to the surface. To discharge, water is released back into the cavern, pushing the air to the surface, where it mixes with stored heat to turn an electricity-generating turbine.
Then there’s thermal energy storage — essentially storing energy as heat in materials such as carbon blocks. This method has the potential to decarbonize industrial processes such as steel and cement production, which demand high temperatures that are difficult to achieve with electricity. Via resistance heating — the same technology as a toaster — electricity from renewable energy is converted into heat, which is then stored in thermally conductive rocks or bricks. When that heat is needed, it can be delivered directly as hot air or steam to the facility, or in some cases converted back into electricity for use at the facility or on the grid.
Will this newer tech supplant lithium-ion?
Experts say that none of the aforementioned technologies is likely to fully replace lithium-ion anytime soon. That’s in large part because lithium-ion is a fully mature technology with well-established supply chains, but also because it’s simply efficient and cost effective for what it can do.
Many of the technologies mentioned could, however, become effective complements to lithium-ion on the grid. For example, it’s possible that some combination of iron-air batteries, gravity energy storage, and compressed air energy storage could meet longer-duration needs — in some cases discharging continuously for days at a time. Thermal energy storage could also play a role here, as well as in decarbonizing high-heat heavy industries, which don’t make economic sense to electrify with lithium-ion batteries.
Sodium-ion batteries could eventually become cheaper than LFP, but because the tech has yet to scale and reach that price point, it’s still primarily viewed as a complementary solution. Having other viable battery chemistries such as sodium-ion would help reduce the overall demand for lithium, thus working to stabilize prices and risk in the battery supply chain as a whole. But because sodium-ion is less energy dense, it probably won’t make sense in space-constrained regions.
As for lithium-sulfur, the tech is just beginning to hit the market as companies such as Lyten focus on early applications in drones, satellites, and two- and three-wheelers. But it doesn’t yet have the cycle life to make sense for any grid-scale applications, and whether it will ever get there has yet to be discovered.
Can batteries be recycled?
Yes, but battery recycling — especially for battery energy storage systems — is still a nascent industry. And it remains uncertain whether recycling and reusing battery materials is financially viable in an environment where lithium prices have plummeted and other key battery minerals such as nickel, cobalt, and graphite have become significantly cheaper. LFP’s cost efficiency improvements have further depressed interest in recycling their materials. But there’s still interest in this sector as it could help establish a domestic mineral supply chain, greatly reduce the need for environmentally disruptive mining projects, and ameliorate problems such as toxic chemical leaching and fire risk, which can occur when batteries are improperly disposed of.
Because grid-scale battery deployments didn’t begin to ramp in earnest until 2019, most systems have yet to reach the end of their useful life, which can last on the order of 10 to 20 years. As such, most leading battery recyclers — such as the well-funded startup Redwood Materials — are primarily focused on old EV batteries for now. Redwood says it can recover, on average, over 95% of battery materials such as lithium, nickel, cobalt, copper, aluminum, and graphite. Recently, the company has also been working to repurpose old EV batteries with some life left in them to make grid-scale battery storage systems, and it’s made forays into recycling grid batteries as well.
One of the industry’s former leaders, Li-Cycle, filed for bankruptcy in May, while another player, Ascend Elements, has paused construction on its recycling facility in Kentucky due to “changing market conditions.” As the U.S. seeks to develop a more localized battery supply chain, however, recycling will only become more critical.
How is battery storage faring under Trump?
It’s a mixed bag. On the one hand, President Trump’s steep tariffs on Chinese goods are set to substantially increase prices for domestic battery energy storage systems, given that the U.S. imports nearly all of its battery cells from China. This will threaten developers’ margins, potentially leading to project cancellations or delays.
Trump’s One Big Beautiful Bill maintained tax credits for battery energy storage projects through 2032, however stringent foreign sourcing rules now apply, withholding tax credits from projects that source a certain percentage of their components from Russia, Iran, North Korea, and most importantly, China. Given how China-centric the battery supply chain is, achieving the required sourcing levels could prove difficult, though exactly how difficult ultimately depends on forthcoming guidance from the Treasury department.
On the bright side, the administration is also bullish on bolstering the U.S. supply chain for critical minerals and rare earths. In a recent meeting, White House officials told a group of critical minerals firms that they would guarantee a price floor for their products. Such a policy could, of course, bolster the domestic battery supply chain, though at the risk of making this tech more expensive.
What role will batteries play in the world’s future energy mix?
Assuming the U.S. navigates the current political headwinds and maintains a degree of momentum in its transition to clean energy, battery energy storage will play an increasingly critical role on the future grid, both domestically and globally. As electricity demand grows and renewables make up a progressively larger proportion of the mix, batteries will help ensure grid flexibility and resiliency. That will be increasingly important as extreme weather events become more common and severe.
In some markets, solar plus storage facilities have been more economical than so-called fossil fuel “peaker plants” for years. Peakers fire up during times of maximum electricity demand, and as batteries continue to fall in price, stored renewable power becomes an ever-cheaper way to supplement supply. As long-duration storage tech advances and comes down the cost curve, renewables will be able to provide firm baseload power over a period of days or even weeks, making fossil fuel infrastructure increasingly obsolete.
The International Energy Agency reports that in order to reach net zero emissions by 2050, global grid-scale battery storage needs to expand to nearly 970 gigawatts of capacity by 2030. That means annual grid-scale deployments must average about 120 gigawatts per year from 2023 to 2030. So while last year saw a record-setting 55 gigawatts of newly installed grid-scale capacity, that type of hockey-stick growth will need to accelerate even further if batteries are to pull their weight in the IEA’s net zero scenario.
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U.S. Department of Energy
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