X-Change: Batteries

The Battery Domino Effect

Please see attached our latest report at RMI on the exponential growth of batteries.

Battery demand is growing exponentially, driven by a domino effect of adoption that cascades from country to country and from one sector to the next. This battery domino effect is set to enable the phaseout of half of global fossil fuel demand and be instrumental in abating transport and power emissions, propelling us over 60% of the way toward a zero-carbon energy system.

• Demand is growing on an S-curve. Battery sales have been doubling every two to three years, and we are on track for a six to eight times increase by 2030, with sales of 5.5-8 TWh per year.

• A reinforcing feedback loop of scale, cost, and quality. As the battery market grows, unit cost keeps falling and quality keeps rising. Both battery cost and energy density are on learning curves: for every doubling of battery production, costs fall by 19%-29% and the density of leading batteries rises by 7%-18%. At this rate, by 2030, battery cell costs will fall to $32-54 per kWh and top-tier batteries will have an energy density of 600-800 Wh/kg.

• The domino effect by sector. As one sector scales up demand, the cost and quality feedback loops enable batteries to start uptake in the next. Batteries started in consumer electronics, moved to motorbikes and buses, and then into cars. Now they are moving into stationary electricity storage and trucking and will be ready to enter short-haul ships and planes by 2030.

• The domino effect by country. Once new battery technology is successful, it jumps geographies. The shift of batteries into the car market was started by early adopters; China is the largest domino to fall; and the transition is now shifting across the rest of the world, from Europe to the US, from Southeast Asia to India.

• The biggest capacity ramp-up since World War 2. The race to the top means we are building 400 gigafactories, with capacity to make 9 TWh of batteries a year by 2030 — over 1 kWh for every person on the planet.

• The largest clean tech market. In 2022 we spent more on building battery factories ($45 billion) than on solar and wind factories combined; and by the end of the decade, the battery market will be larger than both solar panels and wind turbines.

• Over half of fossil fuel demand is at risk. Batteries will enable renewable technologies to replace 175 EJ of fossil fuel demand in the electricity sector and 86 EJ of demand in the road transport sector, and put at risk the remaining 23 EJ of transport demand from shipping and aviation. 

• Batteries put climate goals within reach. As batteries help phase out fossil fuels, they enable the reduction of global emissions by 22 GtCO₂ per year, which is over 60% of global energy-related emissions today. On the current S-curve trend, battery uptake is set to outpace net-zero scenarios.

• Incumbent modelers are behind the curve. Current models keep underestimating the speed of change in batteries. If we stay on the current S-curves, battery sales in 2030 will be up to double consensus expectations of around 4 TWh a year.

• Barriers are soluble. Although supply chains are stressed, thanks to constant innovation and investment, we have enough raw materials that can be sourced — equitably and sustainably — and can act fast enough to build the charging infrastructure required for the future battery-dominated energy system.

• Change does not happen by itself. Batteries got this far through the concerted efforts of companies, governments, researchers, and climate advocates. Continued growth will require continued effort. The path ahead for batteries is clear, but we do still need to walk it.