Battery storage deployment surged globally in 2025 as falling costs and rising renewable energy capacity drove utilities and governments to rely on batteries to stabilize electricity grids and shift power supplies across the day, International Energy Agency strategists said in a Friday note.
The IEA said global battery storage additions climbed about 40% over the year to 108 gigawatts in 2025, exceeding the historical peak for gas-fired power capacity additions recorded in 2002.
The agency said utility-scale projects accounted for about 87 GW of the new capacity, with behind-the-meter systems also accelerating in markets with high electricity prices and supportive incentives.
The expansion highlights the growing role of battery storage as a critical source of flexibility for power systems grappling with rising shares of intermittent renewable energy, such as solar and wind.
Battery storage is increasingly becoming a core part of electricity systems, the IEA said, noting that batteries are now being used not only for grid balancing services but also for large-scale energy shifting.
China remained the dominant market, adding over 63 GW of battery capacity last year, followed by the US with 19 GW. Europe installed about 6.2 GW, though the region experienced a pronounced shift toward larger utility-scale systems.
Australia's battery additions surged to about 8 GW in 2025, almost nine times higher than the previous year, helped by federal and state incentives. Meanwhile, installations in the Middle East topped 3 GW, driven by Saudi Arabia, where batteries are being deployed to support an expanding renewable energy pipeline.
The IEA said battery storage now accounts for about 18% of installed dispatchable capacity in Australia, compared with 7% in China, 5% in the US, and 4% in Europe, as the technology is being rapidly integrated into power systems.
Costs have also dropped over the past decade, with battery prices falling by over 90% between 2010 and 2025 due to technological advances, economies of scale, and increased competition, the agency said.
Battery projects have shifted away from solely providing ancillary services, such as frequency regulation, toward energy-shifting applications as deployment has scaled up. The IEA said the share of new projects focused primarily on energy shifting rose from about 40% in 2015 to over 90% in 2025.
Battery projects are also becoming larger and longer in duration. The agency said the average duration of utility-scale battery projects commissioned in 2025 rose to three hours, up from about two hours in 2023, amid growing demand for longer-duration storage to support renewable integration.
The IEA said that battery capacity in California has risen from less than 1 GW in 2019 to over 17 GW today, enabling batteries to supply over 40% of the state's evening electricity demand at one point on March 29, 2026.
However, despite strong momentum, the IEA said that permitting delays, grid connection bottlenecks and regulatory uncertainty could slow future deployment.
"To unlock the full potential of battery storage, policymakers and regulators need to ensure that regulatory systems recognize the full value of the services the technology offers, while enabling market access and establishing price signals that accurately reflect its various contributions," the IEA said.