IEA report: A new phase for batteries

The global battery industry has entered a new phase marked by record-breaking battery deployment and declining prices. According to the latest analysis from the International Energy Agency (IEA), battery deployment reached record levels in 2024, with demand surpassing 1 TWh for the first time. This surge is largely attributed to the growing popularity of electric vehicles (EVs), which saw a 25% increase in 2024, reaching 17 million units sold.

A significant factor in this growth is the dramatic reduction in battery prices. The average price of an EV battery pack dropped below $100/kWh in 2024, a critical threshold for competing with conventional vehicles, reports the IEA. This price decline has been propelled by a substantial drop in lithium prices, which have decreased by more than 85% since their peak in 2022, along with rapid advancements in battery technology and manufacturing processes.

In 2024, global battery manufacturing capacity reached 3 TWh, a figure the IEA suggests could triple in the next five years if all announced projects are realised. The industry is transitioning from regional, small-scale markets to a global, large-scale market, accompanied by a move towards standardisation in technological approaches, says the IEA. Key competitive factors will include economies of scale, supply chain partnerships, manufacturing efficiency and the ability to quickly bring innovations to market.

China dominates the global battery market, producing over three-quarters of the world’s batteries. In 2024, the average price of batteries in China fell faster than anywhere else, dropping by nearly 30%, according to the IEA. This price advantage is due to four main factors: extensive manufacturing know-how; supply chain integration; prioritisation of lithium-iron phosphate (LFP) batteries, which are cheaper than their main competitor lithium nickel cobalt manganese oxide (NMC) batteries; and fierce domestic competition.

In Europe, the competitive edge of China’s battery industry presents significant challenges, notes the IEA. Many European battery producers have postponed or cancelled expansion plans due to concerns about future profitability. Production costs in Europe are approximately 50% higher than in China, and the region’s battery supply chain ecosystem remains underdeveloped. The bankruptcy of Northvolt, Europe’s largest investment in a homegrown battery manufacturer, highlights the difficulties faced by European producers in competing with Asian counterparts, says the IEA.

However, Europe is developing strategies to build a more competitive battery industry. For example, the European Commission (EC) last week unveiled a new ‘action plan’ with €1.8bn investment aimed at creating a secure and competitive supply chain for battery raw materials. The initiative is part of a broader strategy to address the sector’s most pressing challenges that are driven by rapid technological changes and increasing international competition.  

Ensuring strong domestic demand, supported by clear policy signals, is essential for European manufacturers to refine production processes and develop robust regional industrial ecosystems, according to the IEA. It also notes that efforts to produce cheaper LFP batteries are beginning to gain traction in Europe, with some Korean companies investing in European LFP manufacturing to better compete with Chinese producers.

Meanwhile, Chinese battery makers are also expanding their presence in Europe through partnerships. Joint ventures like the one between Stellantis and CATL could accelerate the adoption of LFP batteries in the region, enhance Europe’s battery ecosystem and potentially reduce the cost gap with China, suggests the IEA.

Globally, the battery production landscape is evolving rapidly, according to the analysis, with Korea and Japan already established as major players. Their strong innovation track records position them well in the race to develop new technologies such as solid-state batteries, says the IEA.

Meanwhile, in the US, battery manufacturing capacity has doubled since 2022, driven by tax credits for producers. This growth includes nearly 700 GWh of additional capacity under construction.

Emerging production hubs in south-east Asia and Morocco are also attracting substantial investments, according to the IEA. These regions offer strategic advantages, such as access to critical minerals and established manufacturing industries. Indonesia, with its significant nickel reserves, and Morocco, with its phosphate resources, are expected to become key players in the global battery supply chain.

TotalEnergies claims ‘world first’ with immersion-cooled car battery

In other news, TotalEnergies Lubrifiants reports that it has integrated an immersion-cooled lithium battery in a mass-market EV in a ‘world first’. The technology works by submerging the battery cells in a dielectric fluid that undergoes a phase change from liquid to vapour when heated, and back to liquid when cooled, effectively absorbing heat from the battery cells and enhancing cooling efficiency.  

The immersion-cooled battery, incorporating TotalEngerie’s Cell-Shield fluid technology, was installed in a 100% electric Renault Mégane E-Tech. The company says the system offers ‘faster charging, better cooling, increased safety and reduced cost and weight, without the need to modify the battery or vehicle design’.

Zenobē commissions Europe’s largest battery energy storage system

Meanwhile, in the stationary battery sector, Zenobē has energised a 200 MW/400 MWh battery energy storage system (BESS) in Blackhillock, adding over 30% to operational battery storage capacity in Scotland. A second phase adding a further 100 MW is expected online by 2026.  

The project is reported to be largest BESS currently in operation in Europe. It is also the first project delivered under the Network Options Assessment (NOA) Stability Pathfinder programme, an initiative promoted by the National Grid Electricity System Operator (NESO) in Scotland to improve the long-term stability of the electricity system and help reduce consumer bills.  

The Blackhillock site will integrate wind power from the nearby Viking, Moray East and Beatrice offshore wind farms in the North Sea, helping address grid congestion and supporting the UK government’s mission to have a net zero power grid by 2030.  

By capturing clean power that might otherwise be wasted, Zenobē is hoping that its battery storage site can reduce consumer bills by over £170mn and slash around 2.6mn tonnes of CO₂ over the next 15 years.

The Blackhillock BESS has been supplied by Wärtsilä. The company is supplying a second 300 MW/600 MWh BESS to Zenobē's Kilmarnock South project in Scotland, under the Stability Pathfinder programme. The project is expected to be operational by the end of 2025. 

The 200 MW/400 MWh Blackhillock BESS in Scotland is reported to be the largest currently in operation in Europe

Photo: Zenobē