IRENA: Storage as a Game Changer - Cost Reductions and Market Shifts Drive Global Expansion of BESS
Abu Dhabi (UAE) - Battery energy storage systems (BESS) are gaining strategic importance worldwide for the energy transition. They enable the flexible balancing of fluctuating renewable energy generation and play a key role in decarbonizing power systems and ensuring energy security. The market is evolving dynamically - both technologically and economically.
Energy Shifting Emerges as the Leading Application
Battery energy storage systems are essential for integrating renewable energy into power systems. In particular, so-called energy shifting - the temporal shifting of electricity generation and consumption - has established itself as the leading use case for storage.
This application has been dominant since 2018. In 2024, according to IRENA, around 67% of newly installed BESS capacity worldwide was dedicated to energy shifting. Excess energy - such as that generated by solar PV during peak sunlight or wind turbines during high wind conditions - is stored and fed back into the grid during periods of high demand. This improves system flexibility and increases the share of renewables in the power mix.
BESS are deployed in two main configurations: grid-connected utility-scale systems and behind-the-meter systems located near consumers. The former are connected to distribution or transmission grids, or directly to generation facilities, and are used for services such as frequency regulation and energy shifting. The latter are installed at private, commercial, or industrial sites - often in combination with rooftop solar - and are primarily used for reducing electricity costs, load management, and backup power.
Cost Reductions and Technology Transformation Boost Competitiveness
One of the main drivers of global BESS deployment is the dramatic reduction in costs. Between 2010 and 2024, total costs of fully installed battery storage projects dropped by 93%, from USD 2,571 to USD 192 per kilowatt-hour, according to IRENA. Between 2023 and 2024 alone, costs fell by 38% for two-hour systems and 32% for four-hour systems, significantly improving their economic viability and market appeal.
At the same time, lithium-ion technology has emerged as the leading form of storage, dominating both utility-scale and consumer-level applications - thanks to its high efficiency, long lifespan, and deep discharge capability.
Within this technology class, lithium iron phosphate (LFP) chemistry has seen particularly strong growth. Its market share rose from 48% in 2021 to an estimated 85% in 2024. Key reasons include lower costs, longer lifespan, and improved safety compared to other lithium-ion chemistries.
There are also signs of stabilization in global raw material markets. Prices for lithium, nickel, and cobalt remained relatively stable in 2024 - due in part to increased extraction and refining capacities as well as lower demand expectations.
The International Renewable Energy Agency (IRENA) addresses the storage market in a recent episode of its podcast. Under the title “All Things Renewable,” the organization analyzes current trends in battery storage, covering costs, technologies, and applications.
Source: IWR Online, 10 Sep 2025
