Electricity consumption continues to grow worldwide. According to IEA, global electricity demand is expected to rise even faster, at an average rate of 3.4% annually, by 2026. This demand will be driven by an improving economic outlook and a notable expansion of the data center sector.
As electricity consumption rises, ensuring a stable and sustainable energy supply becomes increasingly complex.
The thing is, traditional power grids rely on fossil fuels, and renewable energy sources like wind and solar are intermittent. Here, energy storage is critical in meeting energy demands and supporting sustainable storage.
By capturing excess energy when supply is high (sunny days for solar energy) and releasing it when either it is needed (at night or during cloudy days), or demand peaks, storage solutions allow for renewable integration and enhance grid reliability.
Additionally, this can potentially reduce electricity costs by optimizing energy usage and minimizing the need for new power plants. More importantly, it contributes to decarbonization efforts by reducing dependence on carbon-intensive power sources.
Against this backdrop, the global energy storage market has about tripled in size in 2023 and is further expected to keep growing at an annual rate of 21% through 2030.
Energy storage is actually Ark Invest’s one big idea for 2025 and is expected to “drive exponential advances across industries and catalyze a step change in global economic growth.”
Cathie Wood’s ARK is an annual report that offers a comprehensive analysis of technological convergence and its potential to revolutionize industries. This time around, artificial intelligence, robotics, public blockchains, and multiomic sequencing along with energy storage are the focus areas that are projected to unlock exponential growth.
These ideas, as per the report, are poised to boost productivity dramatically and create long-term investment opportunities. So, let’s take a look at the most prominent energy storage solution!
Battery Technology Advances
Among energy storage solutions, batteries are playing a key role in meeting the increasing demands and accelerating the transition to renewable energy by acting as a flexible, scalable, and environment-friendly option.
Battery storage is an essential enabler of renewable energy generation and applications like peak shaving, self-consumption optimization, and backup power. Over the years, advancements in battery technology have significantly improved their energy density, efficiency, charging speed, lifespan, and safety.
All these advances in battery technology are actually driven by other disruptive technologies, noted ARK in its report. Innovations in battery tech are being influenced by advancements in neural networks, next-gen cloud, intelligent devices, autonomous mobility, distributed energy generation, and renewable rockets.
Now, recent advancements in battery technology include lithium-sulfur batteries, which have a higher energy density, allowing them to store more power; sodium-ion batteries, which use a more abundant material; more fire-resistant organosilicon electrolyte batteries; and NanoBolt lithium tungsten batteries, which are faster to recharge.
A major innovation in battery chemistry, however, has been solid-state batteries (SSB), which, instead of liquid electrolytes, use solid electrolytes, thus improving safety and stability. These solid electrolytes can actually be made from a wider range of cheaper and more environmentally friendly materials.
The solid material used as an electrolyte enables the movement of ions between the anode, typically made from a high-energy material like lithium, and the cathode, which is made from composite materials, during charging and discharging.
Compared to traditional lithium-ion batteries, solid-state batteries offer higher energy density and can store more energy in the same amount of space. The solid electrolyte also minimizes the risk of leaks and fires by making use of a stable, non-flammable solid, which also prevents thermal runaway.
This way, it eliminates the need for thermal management systems, in turn, offering improved performance in extreme temperatures, faster charging times, increased range, and longer life cycles.
The longevity and lifecycle of solid-state batteries have been particularly targeted for improvement through innovations in solid electrolyte materials, which enable them to withstand more charge-discharge cycles. This not only extends the lifespan but also makes these batteries a more sustainable option compared to conventional batteries.
While Li-ion batteries are capable of enduring 1,500 to 2,000 charge cycles, SSB can last 8,000 to 10,000 cycles. This significant improvement in efficiency and durability showcases their potential to outperform current battery technologies in demanding applications and make solid-state batteries a highly promising option for future energy storage solutions across industries.
The automotive industry specifically stands to gain immensely from solid-state battery technology due to electric vehicles need for high energy density and safe, long-lasting, and fast-charging batteries.
Now, for fast charging, companies are also exploring anode-free batteries, novel electrolytes, new materials and cooling technologies that dissipate heat more efficiently; advanced converter designs to manage high power levels while reducing heat generation and energy loss; and AI and wireless charging technologies to optimize the charging process.
Besides battery chemistry, other technology advancements in this space include recycling and repurposing batteries to lower their cost and real-time monitoring to optimize battery performance.
Electric Vehicles & Grid Storage
Advanced battery technology, which has brought improvements in battery efficiency and energy storage, is catalyzing advancements in autonomous mobility, distributed energy generation, and humanoid robotics.
From electric vehicles to renewable energy systems and grid energy storage, all these applications rely on efficient and affordable energy storage solutions. Recent developments show that we are, in fact, moving in the right direction as the cost of batteries takes a dive.
If we look at the historical data, a battery with one kilowatt-hour of capacity used to cost a whopping $7,500 in 1991. Since then, the prices have decreased significantly, with lithium-ion batteries emerging as the most cost-effective energy storage solution.
In 2008, the cost per kilowatt-hour (kWh) was $1,355 which further went down to $153 per kWh in 2022. This just didn’t stop here, lithium-ion battery pack prices have further fallen to a record low of $115 per kilowatt-hour in 2024, a 20% drop from the previous year.
The primary reason behind this drop has been progress in battery technology and chemistry as well as a substantial increase in production, reduction in raw material prices, adoption of more affordable materials, and heightened competition.
These decreasing costs should accelerate EV adoption as battery packs are a key part of EVs and help store the energy needed to power these vehicles. The high battery costs have actually been acting as a major roadblock in EV adoption. This is because they can account for one-third of the cost of an EV. And with battery costs declining so should the price of EVs.
BNEF predicts battery pack prices to fall below the $100/kWh mark by 2026 and $69/kWh by 2030. This is projected to help EVs achieve cost parity with internal combustion engine vehicles (ICEV).
Lower battery prices also make intermittent energy systems economically attractive with 100% uptime. This enhances the feasibility of large-scale energy storage solutions and facilitates the integration of renewable energy sources into power grids.
According to the ARK report:
“The declining costs of Advanced Battery Technology should cause an explosion in form factors, enabling Autonomous Mobility systems that collapse the cost of transportation.”
A reduction in electric drivetrain cost, in particular, should unlock micro-mobility and aerial systems like flying taxis which would allow for business models that will transform cities, predicts ARK. Autonomy is also expected to reduce the cost of taxi, delivery, and surveillance by an order of magnitude, enabling frictionless transport, which in turn will increase the velocity of ecommerce and make individual car ownership a rarity.
All these innovations together with solar energy, small-scale fission, and large-scale stationary batteries, according to ARK, can completely transform the energy sector, substituting electricity for liquid fuel and boosting system-wide production and resilience.
Investment Opportunities
Energy storage is the foundation of a sustainable energy future, which is being driven forward by advances in battery technology. So, let’s take a look at a few prominent names in this sector:
#1. Tesla (TSLA +2.44%)
Tesla is a dominant force in battery and EV production with its technology advancements and strategic expansions playing a key role in fostering the industry’s electric dreams. When it comes to the company’s battery technology, Tesla uses a variety of lithium-ion (Li-ion) battery chemistries, which involve different compositions of NMC (nickel-manganese-cobalt) as well as the cheaper LFP (lithium-iron-phosphate).
Most of Tesla’s EV batteries, however, are from other companies, including Panasonic Energy and LG Energy, so the company has been trying to ramp up production of its 4680 battery cells in the US to lower costs and boost margins. The 4680 battery development, however, has been facing significant issues, losing as much as 80% of cathodes in test production.
Despite these challenges, Tesla continues to make progress, having deployed 11 GWh of energy storage in Q4 of 2024 and a record 31.4 GWh in the entire 2024, representing a YoY increase of 244% and 114%, respectively. Its Megapack and Powerwall products were the primary drivers of this growth.
According to ARK, Tesla accounts for about 19% of global energy storage, which may seem surprising to some today but as once Musk said, Tesla’s purpose has always been “to accelerate the advent of sustainable energy.”
Tesla is now also planning to design four new versions of in-house batteries to power its Cybertruck, forthcoming robotaxi and other EVs, according to a Reuters report in Oct. last year.
The automaker is also preparing to launch its robotaxi in 2025. ARK is expecting Tesla’s Cybercrab to be profitable at a price of $15,000 or below based on an efficiency of 5.5 miles/kWh and battery cost coming in as little as $2,300.
Tesla, Inc. (TSLA +2.44%)
Now, when it comes to company financials, Tesla reported revenue of $25.71 billion for the most recent fourth quarter of 2024. This includes $19.8 bln in automotive revenue — a decline of 8% from 4Q23 — of which $692 million came from regulatory credits and $3.06 billion in energy generation and storage revenue, which surged 113% from the same period in the prior year.
Tesla’s operating income was $1.6 billion, net income was $2.32 billion, and earnings per share came in at 73 cents adjusted. During this period, Tesla delivered 495,570 vehicles, and in the full year, about 1.8 million EVs were delivered. This year, the company is planning to launch “unsupervised Full Self-Driving as a paid service.”
The $1.12 trillion market cap Tesla has its shares, as of writing, trading at $349, down 13.15% YTD. Its EPS (TTM) is 2.04, while the P/E (TTM) ratio is 172.20.
2. QuantumScape (QS +1.47%)
QuantumScape has developed a cell design that doesn’t involve an anode to offer high-energy-density while simplifying manufacturing and reducing material costs. Its original battery cell tech claims to enable more efficient and reliable energy storage.
With its batteries, the company aims to power next-generation mobility and help with the green shift in the transportation sector, which is one of the top contributors to global GHG emissions. But today’s EVs, QuantumScape says, still lack the performance, safety, and cost required for mass-market adoption of zero-emission vehicles.
Hence, QuantumScape’s focus is on lithium-metal solid-state batteries, which it says will charge faster, go farther, last longer, and operate more safely than existing EVs as well as gas-powered vehicles.
In addition to the anodeless architecture, another QuantumScape innovation that can help bring this new era of energy storage is its proprietary solid ceramic separator, which can meet the key requirements of high conductivity, stability, and low interfacial impedance that enables high-energy density, fast charge, and long life.
Its first planned commercial product is QSE-5, which is designed to pair with different cathode chemistries, including NMC and LFP. The QSE-5 cells have a measured energy density of 844 Wh/L and can charge from 10% to 80% in about 12 minutes.
QuantumScape Corporation (QS +1.47%)
The $2.56 billion market cap QuantumScape has its shares, as of writing, trading at $5, down 3.47% YTD. Its EPS (TTM) is -0.95 while the P/E (TTM) ratio is -5.25.
As for company financials, the last reported quarter was Q3 2024, during which its capital expenditures were $17.9 million, GAAP operating expenses were $130.2 million, and GAAP net loss came in at $119.7 million while liquidity at the end of it was $841 million.
QuantumScape also reported starting the production of low volumes of its first B-sample cells, successfully implementing the Raptor process, and partnering with Volkswagen’s battery manufacturer PowerCo with a $130 million prepayment to bring the QSE-5 tech to mass production.
3. Solid Power (SLDP +2.29%)
Solid Power is developing all-solid-state battery cell technology which is expected to improve on next-gen hybrid cells and conventional liquid-based Li-ion technology. The company uses higher capacity electrodes like silicon and lithium metal to offer better safety, longer life, and a 15-35% cost advantage.
The key ingredient of Solid Power’s All-Solid-State Battery is a sulfide-based solid electrolyte, which promises a solid combination of cell-level performance, manufacturability, and conductivity. This sulfide-based solid electrolyte technology uses abundant materials, and the company aims to scale its production to power 800,000 EVs using its all-solid-state battery cells yearly by 2028.
Solid Power, Inc. (SLDP +2.29%)
The $240 million market cap Solid Power has its shares, as of writing, trading at $1.36, down almost 30% YTD. Its EPS (TTM) is -0.47 while the P/E (TTM) ratio is -2.80.
For 3Q24, the company reported $4.7 million in revenue, an operating loss of $27.6 million, and a net loss of $22.4 million. Its liquidity at the end of the quarter, meanwhile, was $348.1 million. Solid Power has also secured a $50 million award from the US Department of Energy for continuing the production of its sulfide-based solid electrolyte. Furthermore, it extended the agreement with VMW and began work in the electrolyte R&D and pre-pilot lab EIC.
Challenges
As EVs gain rapid expansion and energy grid transitions to renewables, batteries have become a key element of achieving a greener future. But while batteries do offer a promising green technology compared to fossil fuel, they also generate greenhouse gas (GHG) emissions in some direct or indirect way throughout their life cycle.
The manufacturing phase of batteries, which includes mining and refining raw materials, is a significant contributor to GHG emissions. Not only that, but these materials also pose other challenges to battery technology development and, by extension, EVs and energy storage.
Lithium is currently the most critical component in battery production, and its demand is expected to increase by over 40 times by 2040. However, the lithium market itself is facing significant challenges due to production cuts and shifting demand patterns.
Minerals, which are mainly found in Australia, Chile, and China, account for 90% of global production and are also harmful to the environment. Besides the uneven distribution of these critical battery minerals (lithium, cobalt, nickel, manganese, and graphite), they also face scarcity issues and involve intensive mining operations for extraction.
The rising geopolitical tension further exacerbates this situation. Trade policies such as potential tariffs on Chinese imports by the US President Donald Trump and retaliatory tariffs from China on US imports are already threatening to alter global battery pricing and supply chains.
Policy shifts surrounding EVs and renewable energy present another challenge. For instance, in Europe, countries like France and Germany have reduced EV subsidies, which can slow down EV growth and, in turn, affect battery development and advancement.
In addition to it all, battery technology still has challenges in terms of safety, which limits the use of EVs and batteries’ usage for energy storage. Then there’s the issue of poor battery quality1, which can have an impact on the reliability of the devices they power. The disposal of these batteries further creates hazardous waste, while the shorter lifetime of retired batteries leads to expenses for replacement, installation, transportation, and downtime.
Now, to address the sustainability concerns of batteries, the primary focus remains on prolonging their operational lifetime but they need to go far beyond. Besides maximizing energy efficiency, we must minimize the use of toxic materials, use renewable sources to power battery devices, develop multi-functional battery systems and promote battery recycling and repurposing.
Conclusion
As the global push towards renewable energy intensifies, the need for efficient energy storage is becoming more critical than ever. Robust energy storage systems can ensure a stable and continuous energy supply, reduce costs, minimize grid strain, power electric vehicles, and help achieve decarbonization targets.
Energy storage is powered by advances in battery technology, which have resulted in declining costs, better efficiency, and enhanced safety. It is through constant innovation in battery tech that energy storage can revolutionize industries ranging from AI, robotics, to autonomous mobility and distributed energy generation.
Overall, energy storage catalyzed by advanced battery technology is all set to drive the widespread adoption of electric vehicles, enable resilient smart grids, and power a sustainable future!
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Study Reference:
1. Attia, P.M., Moch, E., & Herring, P.K. (2025). Challenges and opportunities for high-quality battery production at scale. Nature Communications, 16, 611. Available online 12 January 2025. https://doi.org/10.1038/s41467-025-55861-7