Global Trends in Battery Storage: Diversification, Cost Reductions, and Supply Chain Resilience
Demand for battery storage is expanding rapidly, driven by significant investments in solar and wind infrastructure, broader electrification initiatives, and the necessity to enhance grid reliability.
Global battery storage installations saw an increase of 43 percent in 2025, with predictions of an annual growth rate of approximately 10.8 percent from 2024 to 2034, according to Wood Mackenzie. This surge is supported by manufacturers capitalising on falling costs, driven by economies of scale and technological advancements.
China remains the dominant force in battery manufacturing, with the average global unit costs decreasing by 90 percent since 2010, as reported by the International Energy Agency. Analysts at Ember estimate that as of December 2025, the average project cost was around 125 pounds per kilowatt-hour, with core equipment from China costing approximately 75 pounds per kilowatt-hour and installation accounting for 50 pounds per kilowatt-hour.
In the United States, grid-scale storage capacity has risen sharply, influenced by higher power demand, the expansion of renewable energy, and market structures that reward capacity and ancillary services. Surging solar installations and federal investment tax credits for storage have increased US battery deployments by 53 percent in 2025. However, growth is expected to slow due to trade policies restricting Chinese equipment from qualifying for tax credits.
As data centre construction accelerates and ageing fossil fuel plants are retired, the demand for dispatchable power solutions grows alongside clean energy options. Battery storage offers a rapid deployment advantage over traditional gas or nuclear plants, enabling quicker responses to grid needs.
European countries, supported by government policies, are also witnessing rising demand for storage solutions. Additionally, emerging markets in the Middle East, Latin America, Africa, and Southeast Asia are forecast to experience growth rates of 30 to 50 percent over the next five years, as their grids are bolstered to improve resilience.
Supply-side enhancements include China's plans to develop 7,500 gigawatt hours of annual battery manufacturing capacity by 2035, and the United States aiming to increase capacity from a current low base to approximately 1,000 gigawatt hours. These developments have helped stabilise prices and shorten lead times, although geopolitical and policy factors may introduce short-term volatility.
While China retains its position as the leading supplier, the United States and European nations are actively fostering domestic manufacturing capacities to bolster energy security, with the European Union aiming for at least 40 percent of its net zero technology requirements to be manufactured locally by 2030.
Chinese firms continue to lead in upstream material supplies and battery chemistries, particularly lithium iron phosphate, owing to cost efficiencies and scale. However, US policies such as Domestic Content Requirements may eventually reduce reliance on Chinese cells, with US capacity projected to grow significantly by 2030.
Developers are diversifying their supply chains to mitigate risks associated with trade policies and geopolitical tensions. Companies like Lightshift and Fluence are establishing local manufacturing and resilient supply networks, including partnerships with local contractors and building decentralised, distributed energy storage portfolios to expedite deployment.
Innovative deployment strategies are also emerging, including utilising existing distribution substations for smaller, decentralised batteries capable of fast dispatch. This approach aims to leverage existing grid infrastructure, reducing costs and speeding up project timelines without compromising performance.