The lithium-ion battery is the energy transition's most important manufactured product after the solar module, and it followed the same path: a cost collapse driven by scale, much of it in China, followed by a glut. BloombergNEF's annual survey put the average price of a lithium-ion battery pack at ~$108/kWh in 2025, down 8% in a year and from more than $1,000/kWh in 2010 (real terms); packs for stationary storage fell ~45% in a year to ~$70/kWh, the cheapest segment for the first time, and lithium-iron-phosphate (LFP) packs averaged ~$81/kWh against ~$128/kWh for nickel-manganese-cobalt (NMC) (BNEF, December 2025). Turnkey grid battery systems averaged ~$117/kWh worldwide (BNEF, December 2025), though US prices are higher because of tariffs. Cheaper batteries turned grid storage from a niche into a mass market: the US installed a record ~18.9 GW / ~51 GWh of batteries in 2025 (Wood Mackenzie and ACP; SEIA and Benchmark count ~57.6 GWh), and in California and Texas batteries now routinely supply a large share of the evening peak. But storage is not a source of energy; it is a machine for moving energy through time, and its revenue comes from a stack of services (energy arbitrage, ancillary services, capacity or resource-adequacy payments, contracted tolls) whose prices fall as more batteries are built. Ancillary-service markets saturated first (ERCOT and Great Britain, 2023–25), arbitrage spreads narrow as fleets grow, and capacity accreditation for four-hour batteries falls as their share rises. Safety is the licence: the fire at Vistra's Moss Landing battery building in California on 16 January 2025, in a ~300 MW / ~1,200 MWh installation, forced evacuations and set off a wave of local opposition, and its cause had not been published a year later (reported). This section explains chemistries and cost curves, China's share, the grid-storage revenue stack, capacity accreditation, long-duration storage, safety, recycling and policy. Two companion files give a worked example of a four-hour battery's revenue stack in a capacity market and a storage-project diligence checklist.
What the study covers
- 1Overview: storage sells time, not energy
- 2Units
- 3Chemistries and cost curves
- 4The supply chain and China's share
- 5Grid-scale storage by market
- 6The revenue stack
- 7Long-duration energy storage (LDES)
- 8Safety and the licence to operate
- 9Recycling and second life
- 10US policy
- 11How to read storage numbers
- 12Key numbers
- 13Landmark companies and cases
- 14Pitfalls
- 15How an expert thinks about it
- 16Glossary
Technical exhibits
Worked examples, checklists and case studies included with this study.
Four Hour Battery Capacity Market Revenue Stack Worked Example
A stylized 100 MW / 400 MWh battery in a PJM-style capacity market: capacity, arbitrage and ancillary revenues, degradation and augmentation, the investment credit sold for cash, IRR under capacity-price paths from ~$50 to ~$329/MW-day, falling accreditation, a performance penalty, and the tolling price that would replace merchant risk (computed in Python)
Storage Project Diligence Checklist
Questions to ask of a battery project, integrator or cell supplier about revenue, accreditation, degradation, warranties, safety, FEOC and tariffs