The lightbulb of the 21st century: The battery revolution illuminates a new era

Thomas Alva Edison took all the credit in 1879, but the invention originated a long time before that. Seventy years earlier, Humphry Davy, originally from Cornwall in the United Kingdom, had managed to fix a thin strip of carbon between the two poles of a battery. Thus was born the first lightbulb: an invention that would allow humans to live at night, while exponentially multiplying the uses of electricity.

Today, more than two centuries later, another revolution is brewing in the world of batteries. Increasingly advanced energy storage systems hold the key to a true paradigm shift, both when it comes to economic growth and climate change.

The last step toward the definitive explosion of renewables and mass electrification is about to be completed. The technological acceleration, the growing economies of scale, and the proliferation of manufacturers (some even warn of the risk of overcapacity) have drastically reduced the price of batteries. Today, they cost, on average, a little less than 50% of what they did just 18 months ago, and 90% less than a decade ago. A drastic drop of unimaginable proportions, which has opened up opportunities on two key fronts: battery-powered vehicles and the decarbonization of the electricity generation sector.

Batteries — the icing on the renewable cake — will be the grave of oil, coal and natural gas, the fossil fuel troika responsible for the climate crisis. This is firstly because they’ll allow for the definitive electrification of road transportation. Traveling by road, especially when it involves low-tonnage, will be electric, or it won’t happen at all. Goodbye, then, to diesel and gasoline; first in cars and, shortly afterwards, also in trucks and long-distance buses.

“By 2040, kids will think of words like ‘coal,’ ‘gas’ or ‘oil’ as so ancient and archaic,” wrote Assaad Razzouk, author of Saving the Planet Without the Bullshit: What They Don’t Tell You About the Climate Crisis (2022), on his social media accounts in June. This is perhaps a bit optimistic, but it points in an unequivocal direction: compared to their current omnipresence, in a few decades, oil and gas should be limited to very specific uses, mostly industrial. In parallel, global demand for batteries, according to BloombergNEF figures, will increase fivefold by 2035, from just under 1.2 gigawatt hours (GWh) to more than 5.8.

“[Batteries’] impact on demand for fossil fuels is going to be enormous,” says Francisco Blanch, head of global commodities and equity derivatives at Bank of America. “Until now, there was only one way to store energy: in the form of hydrocarbons. That’s no longer the case: clean energy can now be stored in batteries. This will drastically reduce gas and oil consumption,” he adds, on the phone with EL PAÍS from New York City. “When electric cars soon offer ranges of [620 miles] and very fast recharges at affordable prices… who’s going to want a car [with an internal combustion engine]?” he asks rhetorically.

In China, the world leader in this area, the International Energy Agency (IEA) estimates that two out of three battery-powered passenger car models are already cheaper than their petrol-powered equivalents.

Adrián González, a specialist at the International Renewable Energy Agency (IRENA), notes that, in the field of transportation, batteries will be “indispensable for light road traffic and a [viable energy] alternative, with potential for heavy traffic, air and sea [transit].”

“The energy density and cost that lithium-ion batteries are reaching make them the preferred option,” he adds. “Additionally, the innovative boom in this and other chemistries promises to expand the possibilities of batteries to other vehicles, whether hybridized with green hydrogen systems and their derivatives, or independently.”

The expulsion of fossil fuels will also be important in the generation of electricity itself, an area in which batteries — along with pumped storage hydroelectric plants, key to storing energy in the long-term — invite us to think of a massive end to gas plants. Batteries will also end up breaking the correlation between the price of natural gas and that of electricity, which caused so many problems during the last energy crisis (2021-2023).

A guaranteed energy supply

“Batteries are going to revolutionize the energy landscape, multiplying the impact of solar PV,” predicts Duo Fu, Rystad Energy’s head of storage, in an email to EL PAÍS. “Batteries will play a key role in the electricity sector: they will help guarantee supply as thermal power plants are dismantled,” adds Christina Rentell, a senior analyst at the British consultancy Aurora Energy Research.

Key figures were recently put forward by Auke Hoekstra, a researcher at the Technical University of Eindhoven, in the Netherlands. The sun and wind alone are capable of replacing approximately 70% of fossil-based electricity generation. However, when a massive deployment of batteries is added to this binomial, the figure will rise to 90%. And, if green hydrogen and synthetic fuels are also included in the equation, the replacement rate will reach the desired 100%. “Not long ago it seemed like a dream… but in a very short time, we’ll see, with our own eyes, that it’s possible to have a fully renewable system,” says Xavier Cugat, one of many energy professionals who has made the leap in recent months from the solar ecosystem to the storage ecosystem. In his case, to the Shanghai-based Pylontech Technologies.

There are already parts of the world — Australia, Germany, the United Kingdom, Chile and two U.S. states (California, the pioneer, and recently Texas) — where the second phase of this sequence is beginning to be more a matter of today than of tomorrow. In these places, there’s a substantial presence of batteries as a stabilizing element of supply and demand. They’re not merely regulators of frequency and load management, the only function that was entrusted to them until recently.

Although there have been delays, as with electric cars, the wave of stationary batteries is reaching several new countries, such as Spain. “We’re going slower than we should, but the real takeoff will be noticed from 2025 onwards,” Cugat affirms. “Between now and the end of the decade, I see 100 GWh or more. That is, the ability to accumulate what five nuclear plants generate every day.”

“It’s a disruption that’s very similar to that of photovoltaics (solar panels) a few years ago,” explains Pedro Fresco, author of the book Energy Fakes (2024). The comparison couldn’t be more appropriate: at the dawn of the solar revolution, panel prices were high and prevented head-to-head competition with nuclear energy or fossil fuels. Over the years, however, costs plummeted. Today, solar panels are, by far, the cheapest way to obtain electricity in much of the world.

A well-matched marriage

The solar-battery marriage is particularly well-matched. “It’s like Cinderella’s foot and the slipper,” Fresco chuckles, on the other end of the phone. The former offers electricity at a bargain price, while the second offers the possibility of storing it for a few hours — between two and six — when it’s most expensive. The result: a flatter price curve.

In short, this is good news for consumers, who will pay much less in the most expensive parts of the day, and for the transport and distribution networks, which will be less congested, as observed in Germany. The rise of batteries is also good news for solar panel manufacturers, which have invested billions in photovoltaic power stations, or solar plants. Batteries offer a double solution: reducing energy waste to a minimum and, at the same time, stabilizing prices during high-usage hours.

“The numbers are already coming out and they’re getting better and better. Both because of the fall in the cost of batteries and because of the negative electricity prices, which are increasingly common in European markets. This is a great incentive for the installation [of batteries],” Blanch emphasizes. In its latest report on energy and storage costs, a benchmark in the sector, the asset management firm Lazard already places batteries on a par with other backup technologies.

Even without public subsidies, the enormous — and growing — price volatility between lunchtime (when there’s more sun) and breakfast and dinnertime (when the UV index is minimal or non-existent and household demand, contrastingly, soars) already makes arbitrage profitable in many countries: buying electricity when it’s cheap, storing it in a battery, and selling it when it’s expensive. A game in which households are also starting to participate, as they use small batteries to store the surplus energy from their solar panels, so as to not have to draw on the grid at night.

This is just the beginning. “Its growth will be exponential,” Fu, from Rystad Energy, predicts. This boom on all fronts — large-scale, electric cars, domestic devices — is also translating into colossal growth in the volume of companies dedicated to the development of batteries. Many of them are new: start-ups focused on this segment have raised $8 billion in recent years, according to consulting firm Oliver Wyman. “It’s become a key focus of change… although we don’t expect a significant impact on the electric vehicle market until 2030,” the New York firm notes.

Until then, many companies in the battery sector, which, paradoxically, isn’t going through its most buoyant period of sales, are finding refuge in the stationary storage market. Tesla, for example, is already starting to make more money with Megapack, its large-scale storage solution.

“Although the price of cells has dropped a lot, in some applications, such as electric cars, this drop hasn’t yet been fully transferred,” Cugat laments. “And that’s something that has more to do with car manufacturers. If there were more competition…”

The drastic drop in the price of batteries has a good chance of being anything but ephemeral. Added to the production overcapacity is another factor: lithium — its main raw material — is currently trading at three-year lows, after losing 80% of its value since the end of 2022. And sodium — the alternative with the best prospects of replacing lithium in some types of batteries — is one of the most common and cheapest elements in the Earth’s crust.

“The price will continue to fall… and quickly. And this will accelerate the adoption of the electric vehicle, creating a virtuous circle in which greater production leads to lower costs and more technological development,” Azeem Azhar and Nathan Warren predicted a few days ago. The two analysts attempt to predict the effects of technological changes. For now, they appear to be on the right track. “The cycle will continue with other technologies, such as solid-state batteries or sodium-ion batteries,” they note.

Forecasts

If the prediction is fulfilled, their calculations lead them to set a price for batteries at around $25 per megawatt hour (MWh) in the final stretch of this decade, compared to the current $75. “Even if the declines slow down, the cost in 2030 will be 50% lower than today,” Azhar and Warren claim.

“There are half-a-million types of batteries in development, with different metals and typologies. And a lot of money is on the table in research,” says Blanch, from Bank of America. Billions of dollars a year are entering this sector, which is set to be the most promising in the energy world in the coming years. “It’s a key area, with three fundamental objectives: increasing the absolute storage capacity and reducing both losses and weight. There won’t be a universal type of battery… each one will have its characteristics. But there’s still a lot of room for improvement.”

In this promising future there are, however, some loose ends to tie up. The first is the environmental impact of batteries. Although they significantly reduce emissions over their lifetime compared to fossil alternatives (combustion engines or combined cycles), they release a lot of CO2 in the manufacturing process. And then, there’s the geopolitical derivative: China’s dominance is overwhelming. Two of the three largest battery manufacturers (CATL and BYD) are Chinese-owned, a dominance that’s only contested, albeit at a great distance, by South Korea. “The risk is in who controls the production chain. And for now, that’s China,” Blanch notes.

After computer chips, the battlefield moves to lithium ions… a dilemma that wasn’t even remotely on the table during Edison’s time. Even less so in Davy’s.

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