Authors: Yashpal Parmar, Joschua Elbing
Edited by:
Last updated: May 18, 2026
Executive summary
Large-scale battery storage systems connect directly to the power grid and help balance electricity supply and demand as wind and solar generation increase. By charging during periods of surplus and discharging when demand is higher, these systems provide flexibility that supports reliable operation. Beyond energy shifting, batteries can deliver ancillary services such as frequency regulation and voltage support, contribute to peak capacity, and support resilience measures such as microgrids, black-start capability, and congestion relief (for example as a “grid booster”).
Economically, battery storage can reduce extreme price movements by arbitraging short-term market volatility, which improves price predictability for market participants. Storage can also lower system costs by avoiding or deferring investments in conventional peaking capacity, while creating multiple revenue streams from energy markets and grid services. Rapid cost declines—especially for lithium iron phosphate technologies—have improved project economics, and standard metrics such as levelized cost of energy storage support investment and planning decisions.
Environmental impacts concentrate in upstream manufacturing and material extraction, so procurement choices, cycling intensity, and end-of-life management strongly influence life-cycle performance. Social risks likewise concentrate along global supply chains and at local project sites, where safety and community acceptance can shape outcomes. Policy and regulation remain critical: incentives, market access, and rules that avoid double charging can accelerate deployment, while clearer storage classifications and faster, more transparent grid-connection processes can unlock investment and enable system-oriented expansion.
1 Description and history
The transition to a more renewable and decentralized power system, together with rising demand for resilience and energy independence amid geopolitical uncertainty, makes large-scale battery storage a core element of future energy infrastructure. Large-scale battery storage systems are grid-connected installations made up of modular, interconnected battery units that buffer fluctuations in electricity generation and demand. Many projects earn revenue by capitalizing on short-term price volatility in electricity markets. Falling battery prices and growing demand for storage capacity have accelerated global deployment in recent years, moving the technology into an early diffusion phase.1International Energy Agency. Batteries and Secure Energy Transitions. (2024).
Electricity grids that increasingly rely on wind and solar photovoltaics must balance variable generation to maintain a reliable and sufficient energy supply across time and location. Energy storage supports this balancing by absorbing surplus electricity and returning it to the grid when demand exceeds supply. Grid-scale battery storage is becoming more important, although pumped-storage hydropower still provides more than 90 percent of global installed storage power.2Clarke, L. et al. Energy Systems. in Climate Change 2022: Mitigation of Climate Change. Contribution of Working Group III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (eds Shukla, P. R. et al.) (Cambridge University Press, Cambridge, UK and New York, NY, USA, 2022). doi:10.1017/9781009157926.008.
Large-scale battery storage generally refers to battery systems with a power rating above 1 MW that connect directly to the grid.3Bundesnetzagentur. Stromspeicher. https://www.bundesnetzagentur.de/DE/Fachthemen/ElektrizitaetundGas/Speicher/start.html (2025).
Lithium-ion batteries (LIBs) currently dominate this segment, especially lithium iron phosphate (LFP) chemistries. Developers also deploy or actively develop other technologies, including lead-acid batteries (LABs), sodium-ion batteries (SIBs), and solid-state batteries (SSBs).1International Energy Agency. Batteries and Secure Energy Transitions. (2024).,2Clarke, L. et al. Energy Systems. in Climate Change 2022: Mitigation of Climate Change. Contribution of Working Group III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (eds Shukla, P. R. et al.) (Cambridge University Press, Cambridge, UK and New York, NY, USA, 2022). doi:10.1017/9781009157926.008.,4Endo, C., Kaufmann, T., Schmuch, R. & Thielmann, A. Benchmarking International Battery Policies. (2024) doi:10.24406/publica-.2030,5Jiang, T. et al. Battery technologies for grid-scale energy storage. Nat. Rev. Clean Technol.1,474-492 (2025).,6Fan, X. et al. Battery Technologies for Grid-Level Large-Scale Electrical Energy Storage. Trans. Tianjin Univ.26,92-103 (2020).,7Tedla, T. S., Hlongwa, N. W., Nkambule, T. T. I. & Kebede, M. A. Advancements in sodium-ion batteries technology: A comprehensive review of recent development on materials, mechanisms, applications, and prospects for energy storage. Energy Rep.14,3175-3203 (2025).
Operators can design large-scale battery storage dispatch to support market efficiency, system stability, and grid reliability.8FfE. Netzverträglicher Ausbau von Großbatteriespeichern – Lösungsansätze aus der Praxis. (2025).
Through energy arbitrage, these systems can stabilize prices by charging during low-price periods and discharging during high-price periods. This behavior moderates price peaks and troughs in wholesale electricity markets.8FfE. Netzverträglicher Ausbau von Großbatteriespeichern – Lösungsansätze aus der Praxis. (2025).
Beyond their market role, large-scale battery storage systems provide system and grid services. Ancillary services include frequency regulation, which corrects frequency deviations after unexpected events, as well as voltage support and other functions that strengthen grid resilience. Battery storage can also provide peak capacity and help manage renewable integration challenges such as the duck curve. During grid disturbances, battery systems can support black-start procedures and enable microgrids that protect critical facilities during outages. In addition, operators can deploy batteries as a so-called grid booster to relieve local bottlenecks and defer or reduce costly grid reinforcement.1International Energy Agency. Batteries and Secure Energy Transitions. (2024).,8FfE. Netzverträglicher Ausbau von Großbatteriespeichern – Lösungsansätze aus der Praxis. (2025).,9Suyambu, M. & Vishwakarma, P. K. Improving grid reliability with grid-scale Battery Energy Storage Systems (BESS). Int. J. Sci. Res. Arch.13,776-789 (2024).
Battery development began more than two centuries ago (see “battery storage”), but grid-level, large-scale deployment is relatively recent. The first widely recognized large-scale project was the Hornsdale Power Reserve in Australia, completed in 2017.10Neoen. Hornsdale Power Reserve. Hornsdale Power Reserve (Official Project Website) https://hornsdalepowerreserve.com.au/ (2026).
Developers built the Hornsdale Power Reserve after a statewide blackout in South Australia to deliver fast, reliable power for frequency control and short-term grid security services. The facility began operation in 2017 at 100 MW/129 MWh and added 50 MW in 2020.11Tulip, D. & Hicks, N. Hornsdale Power Reserve Expansion. Final Project Report – ‘the Role of Batteries in the National Electricity Market’. (2024).
Large-scale battery storage expanded rapidly worldwide in the years that followed, with annual additions roughly doubling in recent years. Early projects prioritized system services, while newer facilities increasingly target arbitrage revenues. In 2023, global grid storage power reached about 55 GW, with particularly strong additions in China (15 GW) and the United States (7 GW).1International Energy Agency. Batteries and Secure Energy Transitions. (2024).
In Germany and the rest of the EU, behind-the-meter systems accounted for a large share of 2023 additions (about 90 percent), and grid-scale additions remained below 1 GW that year. Recent market dynamics have shifted, and European grid storage capacity has continued to grow quickly.1International Energy Agency. Batteries and Secure Energy Transitions. (2024).,12Torres, D. European Grid Storage Capacity Doubles in 2025, Reaching 30 GW Milestone. Energy Storage News https://www.energystoragenews.org/articles/european-grid-storage-doubles-2025-30gw (2026).
In Germany, grid operators received a high volume of grid-connection requests for large-scale battery storage (about 226 GW).1International Energy Agency. Batteries and Secure Energy Transitions. (2024).,3Bundesnetzagentur. Stromspeicher. https://www.bundesnetzagentur.de/DE/Fachthemen/ElektrizitaetundGas/Speicher/start.html (2025).
Annual capacity additions have increased substantially, reaching roughly 1.5 GWh by 2025 and bringing total installed large-scale battery storage power to about 2.4 GW.3Bundesnetzagentur. Stromspeicher. https://www.bundesnetzagentur.de/DE/Fachthemen/ElektrizitaetundGas/Speicher/start.html (2025).
To achieve net zero emissions by 2050, global large-scale battery storage capacity would need to expand around 35-fold—from about 28 GW in 2022 to roughly 970 GW by 2030—equivalent to average annual additions of about 120 GW.1International Energy Agency. Batteries and Secure Energy Transitions. (2024).
In Germany, the most recent scenario framework projects between 41 and 94 GW of large-scale battery storage in both 2037 and 2045.13Bundesnetzagentur. Genehmigung des Szenariorahmens 2023-2037/2045. (2025).
2 Economic performance
Large-scale battery storage systems play a pivotal role in modern electricity systems by managing the variability associated with renewable energy sources such as wind and solar photovoltaics. As renewable shares rise, batteries support higher renewable integration, improve reliability, and increase the economic efficiency of market operations. By shifting energy across time, batteries can reduce extreme price movements and make wholesale prices more stable and predictable. Fast, flexible capacity can also reduce the long-term need for gas-fired peaking plants, lowering exposure to fuel price risks and strengthening system resilience.
Battery storage improves operational efficiency by charging during periods of surplus generation and discharging during periods of high demand, which reduces total system costs. Charging and discharging create efficiency losses, which slightly increase electricity generation requirements. Even so, the ability to shift supply from surplus to shortage periods can generate substantial socio-economic benefits. In Germany, one study estimates these benefits at around €12 billion by 2050.14Study: Significance of large battery storage systems for the success of the energy transition is massively underestimated – savings of 12 billion euros possible in Germany. https://www.kyon-energy.de/en/pressemitteilung/studie-bedeutung-von-grossbatteriespeichern-fur-das-gelingen-der-energiewende-wird-massiv-unterschatzt—einsparvolumen-in-deutschland-von-12-milliarden-euro-moglich.
Battery operation affects wholesale prices because systems typically charge when prices are low and discharge when prices are high. As a result, batteries can slightly increase prices during oversupply periods while reducing price spikes during tight supply conditions. Lower volatility improves predictability and forecasting for market participants, supporting procurement planning and reducing balancing and settlement costs. In the German market, analyses suggest that grid-scale battery storage could reduce wholesale prices by about €1/MWh between 2030 and 2050, with an average consumer price reduction of about €1.1/MWh.15frontier economics. Wert von Großbatteriespeichern Im Deutschen Stromsystem. (2023).
A further economic benefit is the potential to avoid building additional conventional power plants. Although battery projects require high upfront investment, savings in fuel and CO₂ emissions can offset these costs when storage displaces conventional generation. For example, one analysis estimates that Germany would need to build about 9 GW of additional gas-fired capacity by 2030 without battery storage; otherwise, wholesale prices could increase by roughly €4/MWh between 2030 and 2050.15frontier economics. Wert von Großbatteriespeichern Im Deutschen Stromsystem. (2023).
Recent technological progress and cost declines in electrochemical storage support broader deployment of large-scale battery storage. LFP technology has gained particular attention because of declining costs and improved performance. One assessment reports that battery costs fell by an average of 20 percent per year over the last decade as annual installations rose by about 80 percent per year.16How cheap is battery storage? Ember https://ember-energy.org/latest-insights/how-cheap-is-battery-storage.
Several techno-economic indicators help assess storage feasibility, including Net Present Cost (NPC) and the Levelized Cost of Energy Storage (LCOES). For long-duration (four hours or more) utility-scale projects, one estimate puts total capital expenditure at about $125/kWh, implying a cost of roughly $65/MWh to shift electricity.17Borerwe, C. & Longe, O. M. Techno-economic analysis of large-scale battery energy storage system for stationary applications in South Africa. Eng. Res. Express 7, 012301 (2025).
Among these indicators, Levelized Cost of Energy (LCOE) is widely used to evaluate economic performance because it aggregates capital, operations and maintenance, and replacement costs. For lithium-ion systems under 2019 market conditions, one study estimated an energy component of about $0.067/kWh and a power component of about $0.206/kW.18Comello, S. & Reichelstein, S. The emergence of cost effective battery storage. Nat. Commun.10,2038 (2019). Based on those assumptions, the overall LCOES is about 12 US cents/kWh for a four-hour system and around 10 US cents/kWh for a six-hour system.18Comello, S. & Reichelstein, S. The emergence of cost effective battery storage. Nat. Commun.10,2038 (2019).
In Germany, battery storage can become attractive where the spread between retail electricity prices and feed-in tariffs is large. For example, one analysis estimated a price premium of about 16 euro cents/kWh for self-consumed electricity, compared with an optimized levelized cost of storage of around 8.5 euro cents/kWh for a system with roughly seven hours of duration.18Comello, S. & Reichelstein, S. The emergence of cost effective battery storage. Nat. Commun.10,2038 (2019).
Recent deployments also indicate that lithium-ion storage can achieve generation-equivalent costs of roughly $130–200/MWh, while comparable gas peaking plants often range from $180–280/MWh.19Battery Energy Storage vs Natural Gas Peaker Plants: Cost. Patsnp Eureka https://eureka.patsnap.com/report-battery-energy-storage-vs-natural-gas-peaker-plants-cost.
Beyond direct energy shifting, batteries can earn additional revenue by providing grid services such as frequency regulation, peak shaving, load shifting, and renewable integration. Batteries can respond within milliseconds, whereas gas peaking plants typically require 10–30 minutes to start. This speed allows storage to capture high-value, short-duration opportunities in electricity markets.
3 Ecological performance
Analysts commonly assess the ecological performance of large-scale battery storage using life-cycle analysis (LCA), which evaluates environmental impacts across raw material extraction, battery manufacturing, system operation, and end-of-life management. Compared with conventional generation technologies such as coal or natural gas power plants, battery storage produces no direct greenhouse gas emissions during operation. Manufacturing typically drives the largest impacts, especially cell production and electrode materials. One estimate places lithium-ion battery production emissions at roughly 150–200 kg CO₂-equivalent per kWh of battery capacity, driven largely by energy-intensive processes and material extraction (for example lithium, nickel, cobalt, and aluminum).20Sobczuk, S., Jaroń, A., Mazur, M. & Borucka, A. Renewable Energy and CO₂ Emissions: Analysis of the Life Cycle and Impact on the Ecosystem in the Context of Energy Mix Changes. Energies 18, 3332 (2025).
A meta-analysis of LCAs reports a median emission potential of about 17.6 kg CO₂-equivalent per kilogram of battery, with major contributions from processing key materials such as cathodes, anodes, and aluminum casings.21Clemente, M., Maharjan, P., Salazar, M. & Hofman, T. Meta-analysis of Life Cycle Assessments for Li-Ion Batteries Production Emissions. Preprint at https://doi.org/10.48550/ARXIV.2506.05531 (2025).
In another assessment, battery manufacturing accounted for more than 37 percent of the total global warming potential of lithium-ion batteries, and electrode materials represented a large share of the remaining burden.22Lundahl, M., Lappalainen, H., Rinne, M. & Lundström, M. Life cycle assessment of electrochemical and mechanical energy storage systems. Energy Rep.10,2036-2046 (2023).
Material extraction also creates ecological pressures. Mining for lithium, cobalt, and nickel can require large volumes of water and cause soil degradation, ecosystem disruption, and local pollution, particularly where regulations are weaker.23Battery Energy Storage System Impact on Global Infrastructure. Patsnp Eureka https://eureka.patsnap.com/report-battery-energy-storage-system-impact-on-global-infrastructure. LFP batteries avoid cobalt and nickel while maintaining strong performance and durability, which can reduce some extraction-related risks.20Sobczuk, S., Jaroń, A., Mazur, M. & Borucka, A. Renewable Energy and CO₂ Emissions: Analysis of the Life Cycle and Impact on the Ecosystem in the Context of Energy Mix Changes. Energies 18, 3332 (2025).
The main ecological benefit of large-scale battery storage typically arises during operation through enabling higher renewable integration. By storing excess electricity from solar photovoltaics and wind and delivering it during high-demand periods, batteries can reduce reliance on fossil-fuel peaking plants and improve overall grid efficiency. For example, one estimate suggests that a 2 GWh project can avoid about 60,000 tons of CO₂ per year, with higher savings possible depending on how much fossil generation the storage displaces.24Sixl, M. How climate-friendly are storage projects? GESI Deutschland https://gesi-deutschland.de/en/how-climate-friendly-are-storage-projects/ (2025).
A planned 200 MW battery energy storage project in Ukraine estimated annual reductions of about 124,721 tons of CO₂ by supporting a shift from fossil generation to higher renewable integration.25Ukraine – Improving Power System Resilience for European Power Grid Integration Project. World Bank https://documents.worldbank.org/en/publication/documents-reports/documentdetail/803731625364161631.
Depending on technology and operating conditions, studies report that storage systems may achieve a carbon footprint between about 9 and 53 kg CO₂-equivalent per MWh of electricity delivered.26Mostert, C., Ostrander, B., Bringezu, S. & Kneiske, T. M. Comparing Electrical Energy Storage Technologies Regarding Their Material and Carbon Footprint. Energies 11, 3386 (2018).
Compared with fossil fuel power plants, battery storage has much lower life-cycle greenhouse gas emissions. Coal-fired plants typically emit roughly 800–1300 kg CO₂ per MWh during operation, while natural gas plants emit around 450–600 kg CO₂ per MWh. In contrast, one comparison reports life-cycle emissions for lithium-ion storage of about 30–40 kg CO₂-equivalent per MWh when manufacturing, maintenance, and end-of-life impacts are included.27NenPower. How do the emissions from utility-scale batteries compare to those from traditional power plants. NenPower https://nenpower.com/blog/how-do-the-emissions-from-utility-scale-batteries-compare-to-those-from-traditional-power-plants/ (2024).
Comparisons with pumped-hydro energy storage (PHES) indicate that lithium-ion storage may have higher life-cycle emissions (about 48.7 kg CO₂/MWh) than PHES (about 22.2 kg CO₂/MWh) in 2050 projections.28Zhang, K. et al. Life cycle environmental and economic impacts of various energy storage systems: eco-efficiency analysis and potential for sustainable deployments. Integr. Environ. Assess. Manag.22,289-302 (2026).
System utilization also influences environmental performance. One study reports that lithium-ion batteries can reach a global warming impact of about 11 kg CO₂-equivalent per MWh delivered, far lower than many other storage technologies such as lead-acid (149 kg CO₂/MWh) or sodium-sulfur (176 kg CO₂/MWh).26Mostert, C., Ostrander, B., Bringezu, S. & Kneiske, T. M. Comparing Electrical Energy Storage Technologies Regarding Their Material and Carbon Footprint. Energies 11, 3386 (2018). When operators cycle batteries frequently over their lifetimes, manufacturing emissions spread over more delivered electricity, which further reduces the carbon intensity of stored energy.
4 Social impact
Large-scale battery storage has multi-layered social implications. Social impacts arise along global supply chains for battery materials and manufacturing, through system integration, and from local impacts at project sites.
Many of the most significant negative impacts occur along supply chains. Mining and processing key raw materials (for example lithium, aluminum, and iron) and downstream production can involve substantial social risks.29Domingues, A. M., de Souza, R. G. & Luiz, J. V. R. Lifecycle social impacts of lithium-ion batteries: Consequences and future research agenda for a safe and just transition. Energy Res. Soc. Sci.118,103756 (2024). Communities may face health hazards from pollution and toxicity, as well as poor working conditions, labor exploitation, and child labor.29Domingues, A. M., de Souza, R. G. & Luiz, J. V. R. Lifecycle social impacts of lithium-ion batteries: Consequences and future research agenda for a safe and just transition. Energy Res. Soc. Sci.118,103756 (2024).
Social injustices along battery supply chains often concentrate in the Global South, where raw material extraction and e-waste disposal can reinforce existing ethnic inequalities, power asymmetries, and community vulnerabilities.30Pechancova, V., Saha, P. & Pavelková, D. Social Implications. in 279–290 (2024). doi:10.1007/978-3-031-48359-2_16. The intensity of these impacts varies with battery chemistry and material composition.29Domingues, A. M., de Souza, R. G. & Luiz, J. V. R. Lifecycle social impacts of lithium-ion batteries: Consequences and future research agenda for a safe and just transition. Energy Res. Soc. Sci.118,103756 (2024).
Stakeholders can reduce risks by developing and deploying batteries that rely on less critical materials and by strengthening social sustainability in supply chains. Battery storage can also create indirect social benefits by supporting cleaner and more reliable power systems.31Hannan, M. A. et al. Impact assessment of battery energy storage systems towards achieving sustainable development goals. J. Energy Storage 42, 103040 (2021).
At the system level, more large-scale battery storage can reduce reliance on fossil-fuel peaking plants during high-demand periods and for ancillary services, which can in turn reduce the harms associated with fossil fuel supply chains.32Olson, C. & Lenzmann, F. The social and economic consequences of the fossil fuel supply chain. MRS Energy Sustain.3, E6 (2016).
Because batteries often have lower marginal operating costs than fossil-fueled peakers and can arbitrage price differences, they can reduce system costs. They can stabilize price levels, moderate extreme price peaks and troughs, and contribute to a more cost-efficient electricity system, which can dampen consumer electricity prices.8FfE. Netzverträglicher Ausbau von Großbatteriespeichern – Lösungsansätze aus der Praxis. (2025).,15frontier economics. Wert von Großbatteriespeichern Im Deutschen Stromsystem. (2023).,33Adeyemo, A. A., Marra, F. & Tedeschi, E. Sizing of energy storage for spinning reserve and efficiency increase in isolated power systems within a data-driven stochastic unit commitment framework. J. Energy Storage 111, 115051 (2025).
Battery storage can also strengthen energy-system resilience. Large-scale systems can help microgrids remain operational during disturbances and shortages, which protects critical infrastructure.9Suyambu, M. & Vishwakarma, P. K. Improving grid reliability with grid-scale Battery Energy Storage Systems (BESS). Int. J. Sci. Res. Arch.13,776-789 (2024).
Battery storage also enables collectively organized energy systems such as community microgrids and neighborhood batteries.30Pechancova, V., Saha, P. & Pavelková, D. Social Implications. in 279–290 (2024). doi:10.1007/978-3-031-48359-2_16.,34Mohanty, A., Ramasamy, A. K., Verayiah, R. & Mohanty, S. Neighborhood and community battery projects: A systematic analysis of their current state and future prospects. J. Energy Storage 95, 112525 (2024). Shared storage can pool flexibility, enhance local resilience, reduce local energy costs, and strengthen participation in energy systems.34Mohanty, A., Ramasamy, A. K., Verayiah, R. & Mohanty, S. Neighborhood and community battery projects: A systematic analysis of their current state and future prospects. J. Energy Storage 95, 112525 (2024).
Large-scale battery projects can also affect nearby residents and communities directly. While many people perceive battery storage as useful and innovative, communities also raise concerns about visual integration, sustainability, and safety risks such as fire.30Pechancova, V., Saha, P. & Pavelková, D. Social Implications. in 279–290 (2024). doi:10.1007/978-3-031-48359-2_16.,35Baur, D., Baumann, M. J., Stuhm, P. & Weil, M. Societal Acceptability of Large Stationary Battery Storage Systems. Energy Technol.11,2201454 (2023).
These factors influence public acceptance. Survey results suggest lower acceptance for projects in residential areas and in people’s own neighborhoods (often described as NIMBY dynamics), while support tends to be higher for siting in industrial or rural areas. Better visual integration and transparent communication that links projects to renewable energy goals can improve acceptance. Financial compensation may be less influential than other factors, but municipalities can still use it to build local support.36Federal Ministry for Economic Affairs and Climate Action. Electricity Storage Strategy. (2023).
To address social risks and community concerns early, some countries have introduced mandatory social management plans for energy infrastructure projects, including large-scale battery storage.37Barbosa, G. G. & Lozano, J. E. C. Mexico Publishes New Provisions on the Social Impact Statement in the Energy Sector and Raises Social Obligations for Energy Projects. (2026).
Overall, the social impacts of large-scale battery storage are not one-dimensional. Global supply chains can involve significant risks that vary by battery technology, while societies can benefit from cleaner, more resilient power systems and potential cost reductions. At the local level, social outcomes depend on project design, siting, safety management, and communication.
5 Political and legal aspects
Regulatory frameworks will shape the future of large-scale battery storage alongside economics and environmental and social performance. Governments support deployment through a wide range of policy instruments, yet regulatory barriers still constrain projects in many markets.
Many countries promote battery innovation through research and development strategies, financial support programs, and other technology policy measures. Intense global competition among major battery producers drives many of these initiatives.4Endo, C., Kaufmann, T., Schmuch, R. & Thielmann, A. Benchmarking International Battery Policies. (2024) doi:10.24406/publica-.2030
Although many policies target batteries for electric vehicles (EVs), the EV market creates spillover effects for grid-scale storage. EV-driven scale-up has contributed significantly to recent technological advances and cost reductions in batteries.1International Energy Agency. Batteries and Secure Energy Transitions. (2024).
The EU and the United States generally pursue technology-open research approaches, while Japan and China more often focus on specific technologies, including LIBs and solid-state batteries. South Korea combines R&D funding with substantial tax credits for manufacturers, which has supported large private investments (around €30 billion). Geopolitical tensions and supply chain risks have encouraged the EU and Germany to expand support for domestic battery production and strengthen strategic autonomy. In parallel, the EU’s emphasis on sustainability and circularity standards influences global markets because suppliers that want access to European markets increasingly align with these requirements.4Endo, C., Kaufmann, T., Schmuch, R. & Thielmann, A. Benchmarking International Battery Policies. (2024) doi:10.24406/publica-.2030
To support development and construction of large-scale battery storage, countries set expansion targets, provide financial support, reform regulation, and fund R&D.1International Energy Agency. Batteries and Secure Energy Transitions. (2024).,38International Energy Agency. Grid-scale Storage. https://www.iea.org/energy-system/electricity/grid-scale-storage#tracking (2023).,39Faunce, T. A., Prest, J., Su, D., Hearne, S. J. & Iacopi, F. On-grid batteries for large-scale energy storage: Challenges and opportunities for policy and technology. MRS Energy Sustain.5,10 (2018).
Policy instruments that improve project economics typically follow two approaches: reducing investment costs and improving operational revenues. To reduce investment costs, the United States offers investment tax credits of up to 50 percent under the Inflation Reduction Act. Australia and the EU provide project-related subsidies, India covers up to 40 percent of capital costs through a viability-gap funding mechanism, and Chinese provinces grant direct subsidies.1International Energy Agency. Batteries and Secure Energy Transitions. (2024).
Policies also aim to improve ongoing operational viability. Greece, Italy, and several Chinese provinces use feed-in tariffs to provide stable long-term revenues.1International Energy Agency. Batteries and Secure Energy Transitions. (2024). In Germany, remuneration can occur through integration into EEG feed-in tariffs for temporarily stored renewable electricity.39Faunce, T. A., Prest, J., Su, D., Hearne, S. J. & Iacopi, F. On-grid batteries for large-scale energy storage: Challenges and opportunities for policy and technology. MRS Energy Sustain.5,10 (2018).,36Federal Ministry for Economic Affairs and Climate Action. Electricity Storage Strategy. (2023).
In addition, China, India, and in some cases Germany reduce grid tariffs and taxes for battery storage.1International Energy Agency. Batteries and Secure Energy Transitions. (2024).,36Federal Ministry for Economic Affairs and Climate Action. Electricity Storage Strategy. (2023). In the EU, policymakers have eliminated double charging (fees applied at both charging and discharging), which has improved project economics.1International Energy Agency. Batteries and Secure Energy Transitions. (2024).
Storage mandates represent another important instrument. These rules prescribe minimum storage quotas, such as India’s requirement of 5 percent of project capacity for new renewable projects and Chinese provincial requirements that often range from 5 percent to 30 percent for wind and solar parks. California also applies storage mandates, and evidence suggests mandates have strongly driven growth in China and California.1International Energy Agency. Batteries and Secure Energy Transitions. (2024).,39Faunce, T. A., Prest, J., Su, D., Hearne, S. J. & Iacopi, F. On-grid batteries for large-scale energy storage: Challenges and opportunities for policy and technology. MRS Energy Sustain.5,10 (2018).
In Germany, policymakers are examining incentives for combined renewable energy and storage projects.36Federal Ministry for Economic Affairs and Climate Action. Electricity Storage Strategy. (2023).
Despite growing political support, significant barriers remain. Many countries lack clear and consistent frameworks, which complicates viable business models.1International Energy Agency. Batteries and Secure Energy Transitions. (2024).,40Csereklyei, Z., Kallies, A. & Diaz Valdivia, A. The status of and opportunities for utility-scale battery storage in Australia: A regulatory and market perspective. Util. Policy 73, 101313 (2021). In some markets, storage cannot fully participate in short-term electricity markets, faces double taxation, or lacks access to ancillary service markets. Market rules designed for conventional plants often disadvantage storage facilities.1International Energy Agency. Batteries and Secure Energy Transitions. (2024).,39Faunce, T. A., Prest, J., Su, D., Hearne, S. J. & Iacopi, F. On-grid batteries for large-scale energy storage: Challenges and opportunities for policy and technology. MRS Energy Sustain.5,10 (2018).,40Csereklyei, Z., Kallies, A. & Diaz Valdivia, A. The status of and opportunities for utility-scale battery storage in Australia: A regulatory and market perspective. Util. Policy 73, 101313 (2021).
Another challenge is the absence of a clear regulatory classification for storage. Batteries can act as both load and generator, which can trigger dual registration requirements and associated administrative and financial burdens. As a result, operators may not fully monetize the full range of system services.40Csereklyei, Z., Kallies, A. & Diaz Valdivia, A. The status of and opportunities for utility-scale battery storage in Australia: A regulatory and market perspective. Util. Policy 73, 101313 (2021).
Australia introduced the Integrated Resource Provider (IRP) category to consolidate overlapping roles and reduce barriers to market participation.40Csereklyei, Z., Kallies, A. & Diaz Valdivia, A. The status of and opportunities for utility-scale battery storage in Australia: A regulatory and market perspective. Util. Policy 73, 101313 (2021). The EU similarly recommends systematically identifying and removing regulatory barriers—especially double grid fees—and better integrating storage into market and grid structures.41European Commission. Commission Recommendation (EU) of 14 March 2023 on Energy Storage – Underpinning a Decarbonised and Secure EU Energy System 2023/C103/01. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32023H0320(01) (2023).
In Germany, authorities are analyzing barriers to improve framework conditions and to assess whether future EEG support could extend to stored gray electricity.36Federal Ministry for Economic Affairs and Climate Action. Electricity Storage Strategy. (2023). To enhance grid utility, Germany is also considering project-specific incentives such as reduced construction cost contributions, faster grid connection processes, and service fees.8FfE. Netzverträglicher Ausbau von Großbatteriespeichern – Lösungsansätze aus der Praxis. (2025).
Long grid-connection queues pose another obstacle. In 2023, requests totaling about 1,030 GW were submitted in the United States, and in Germany requests reached around 220 GW in 2024.3Bundesnetzagentur. Stromspeicher. https://www.bundesnetzagentur.de/DE/Fachthemen/ElektrizitaetundGas/Speicher/start.html (2025). Long waiting times, limited transparency, and planning uncertainty slow deployment.1International Energy Agency. Batteries and Secure Energy Transitions. (2024).,42Agora Energiewende. Die Energiewende in Deutschland: Stand Der Dinge 2025 – Rückblick Auf Die Wesentlichen Entwicklungen Sowie Ausblick Auf.2026 (2026).
Grid expansion and associated costs create further challenges for storage deployment.1International Energy Agency. Batteries and Secure Energy Transitions. (2024).
To facilitate deployment, Germany now classifies large-scale battery storage as being of overriding public interest, which can accelerate approval procedures.36Federal Ministry for Economic Affairs and Climate Action. Electricity Storage Strategy. (2023).
One reform measure under discussion is the introduction or improvement of time-of-use (TOU) tariffs that reflect higher system costs during peak periods. Such price signals strengthen investment incentives for flexibility and can improve storage project economics.39Faunce, T. A., Prest, J., Su, D., Hearne, S. J. & Iacopi, F. On-grid batteries for large-scale energy storage: Challenges and opportunities for policy and technology. MRS Energy Sustain.5,10 (2018).
Policymakers also debate whether transmission system operators should be allowed to build large-scale battery storage for grid-related purposes. Although this could raise concerns about market power, it could also increase deployment and improve grid stability. In Germany, grid booster pilot projects test and evaluate similar approaches.36Federal Ministry for Economic Affairs and Climate Action. Electricity Storage Strategy. (2023).,40Csereklyei, Z., Kallies, A. & Diaz Valdivia, A. The status of and opportunities for utility-scale battery storage in Australia: A regulatory and market perspective. Util. Policy 73, 101313 (2021).
Overall, rapid technological progress in battery development contrasts with policy frameworks that are still evolving. Clearer regulatory definitions, harmonized market rules, and reduced planning and permitting barriers will be crucial for scaling large-scale battery storage in a sustainable, system-oriented way.
References
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- 29Domingues, A. M., de Souza, R. G. & Luiz, J. V. R. Lifecycle social impacts of lithium-ion batteries: Consequences and future research agenda for a safe and just transition. Energy Res. Soc. Sci.118,103756 (2024).
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- 34Mohanty, A., Ramasamy, A. K., Verayiah, R. & Mohanty, S. Neighborhood and community battery projects: A systematic analysis of their current state and future prospects. J. Energy Storage 95, 112525 (2024).
- 35Baur, D., Baumann, M. J., Stuhm, P. & Weil, M. Societal Acceptability of Large Stationary Battery Storage Systems. Energy Technol.11,2201454 (2023).
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- 39Faunce, T. A., Prest, J., Su, D., Hearne, S. J. & Iacopi, F. On-grid batteries for large-scale energy storage: Challenges and opportunities for policy and technology. MRS Energy Sustain.5,10 (2018).
- 40Csereklyei, Z., Kallies, A. & Diaz Valdivia, A. The status of and opportunities for utility-scale battery storage in Australia: A regulatory and market perspective. Util. Policy 73, 101313 (2021).
- 41European Commission. Commission Recommendation (EU) of 14 March 2023 on Energy Storage – Underpinning a Decarbonised and Secure EU Energy System 2023/C103/01. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32023H0320(01) (2023).
- 42Agora Energiewende. Die Energiewende in Deutschland: Stand Der Dinge 2025 – Rückblick Auf Die Wesentlichen Entwicklungen Sowie Ausblick Auf.2026 (2026).
- 1International Energy Agency. Batteries and Secure Energy Transitions. (2024).
- 2Clarke, L. et al. Energy Systems. in Climate Change 2022: Mitigation of Climate Change. Contribution of Working Group III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (eds Shukla, P. R. et al.) (Cambridge University Press, Cambridge, UK and New York, NY, USA, 2022). doi:10.1017/9781009157926.008.
- 3Bundesnetzagentur. Stromspeicher. https://www.bundesnetzagentur.de/DE/Fachthemen/ElektrizitaetundGas/Speicher/start.html (2025).
- 4Endo, C., Kaufmann, T., Schmuch, R. & Thielmann, A. Benchmarking International Battery Policies. (2024) doi:10.24406/publica-.2030
- 5Jiang, T. et al. Battery technologies for grid-scale energy storage. Nat. Rev. Clean Technol.1,474-492 (2025).
- 6Fan, X. et al. Battery Technologies for Grid-Level Large-Scale Electrical Energy Storage. Trans. Tianjin Univ.26,92-103 (2020).
- 7Tedla, T. S., Hlongwa, N. W., Nkambule, T. T. I. & Kebede, M. A. Advancements in sodium-ion batteries technology: A comprehensive review of recent development on materials, mechanisms, applications, and prospects for energy storage. Energy Rep.14,3175-3203 (2025).
- 8FfE. Netzverträglicher Ausbau von Großbatteriespeichern – Lösungsansätze aus der Praxis. (2025).
- 9Suyambu, M. & Vishwakarma, P. K. Improving grid reliability with grid-scale Battery Energy Storage Systems (BESS). Int. J. Sci. Res. Arch.13,776-789 (2024).
- 10Neoen. Hornsdale Power Reserve. Hornsdale Power Reserve (Official Project Website) https://hornsdalepowerreserve.com.au/ (2026).
- 11Tulip, D. & Hicks, N. Hornsdale Power Reserve Expansion. Final Project Report – ‘the Role of Batteries in the National Electricity Market’. (2024).
- 12Torres, D. European Grid Storage Capacity Doubles in 2025, Reaching 30 GW Milestone. Energy Storage News https://www.energystoragenews.org/articles/european-grid-storage-doubles-2025-30gw (2026).
- 13Bundesnetzagentur. Genehmigung des Szenariorahmens 2023-2037/2045. (2025).
- 14Study: Significance of large battery storage systems for the success of the energy transition is massively underestimated – savings of 12 billion euros possible in Germany. https://www.kyon-energy.de/en/pressemitteilung/studie-bedeutung-von-grossbatteriespeichern-fur-das-gelingen-der-energiewende-wird-massiv-unterschatzt—einsparvolumen-in-deutschland-von-12-milliarden-euro-moglich.
- 15frontier economics. Wert von Großbatteriespeichern Im Deutschen Stromsystem. (2023).
- 16How cheap is battery storage? Ember https://ember-energy.org/latest-insights/how-cheap-is-battery-storage.
- 17Borerwe, C. & Longe, O. M. Techno-economic analysis of large-scale battery energy storage system for stationary applications in South Africa. Eng. Res. Express 7, 012301 (2025).
- 18Comello, S. & Reichelstein, S. The emergence of cost effective battery storage. Nat. Commun.10,2038 (2019).
- 19Battery Energy Storage vs Natural Gas Peaker Plants: Cost. Patsnp Eureka https://eureka.patsnap.com/report-battery-energy-storage-vs-natural-gas-peaker-plants-cost.
- 20Sobczuk, S., Jaroń, A., Mazur, M. & Borucka, A. Renewable Energy and CO₂ Emissions: Analysis of the Life Cycle and Impact on the Ecosystem in the Context of Energy Mix Changes. Energies 18, 3332 (2025).
- 21Clemente, M., Maharjan, P., Salazar, M. & Hofman, T. Meta-analysis of Life Cycle Assessments for Li-Ion Batteries Production Emissions. Preprint at https://doi.org/10.48550/ARXIV.2506.05531 (2025).
- 22Lundahl, M., Lappalainen, H., Rinne, M. & Lundström, M. Life cycle assessment of electrochemical and mechanical energy storage systems. Energy Rep.10,2036-2046 (2023).
- 23Battery Energy Storage System Impact on Global Infrastructure. Patsnp Eureka https://eureka.patsnap.com/report-battery-energy-storage-system-impact-on-global-infrastructure.
- 24Sixl, M. How climate-friendly are storage projects? GESI Deutschland https://gesi-deutschland.de/en/how-climate-friendly-are-storage-projects/ (2025).
- 25Ukraine – Improving Power System Resilience for European Power Grid Integration Project. World Bank https://documents.worldbank.org/en/publication/documents-reports/documentdetail/803731625364161631.
- 26Mostert, C., Ostrander, B., Bringezu, S. & Kneiske, T. M. Comparing Electrical Energy Storage Technologies Regarding Their Material and Carbon Footprint. Energies 11, 3386 (2018).
- 27NenPower. How do the emissions from utility-scale batteries compare to those from traditional power plants. NenPower https://nenpower.com/blog/how-do-the-emissions-from-utility-scale-batteries-compare-to-those-from-traditional-power-plants/ (2024).
- 28Zhang, K. et al. Life cycle environmental and economic impacts of various energy storage systems: eco-efficiency analysis and potential for sustainable deployments. Integr. Environ. Assess. Manag.22,289-302 (2026).
- 29Domingues, A. M., de Souza, R. G. & Luiz, J. V. R. Lifecycle social impacts of lithium-ion batteries: Consequences and future research agenda for a safe and just transition. Energy Res. Soc. Sci.118,103756 (2024).
- 30Pechancova, V., Saha, P. & Pavelková, D. Social Implications. in 279–290 (2024). doi:10.1007/978-3-031-48359-2_16.
- 31Hannan, M. A. et al. Impact assessment of battery energy storage systems towards achieving sustainable development goals. J. Energy Storage 42, 103040 (2021).
- 32Olson, C. & Lenzmann, F. The social and economic consequences of the fossil fuel supply chain. MRS Energy Sustain.3, E6 (2016).
- 33Adeyemo, A. A., Marra, F. & Tedeschi, E. Sizing of energy storage for spinning reserve and efficiency increase in isolated power systems within a data-driven stochastic unit commitment framework. J. Energy Storage 111, 115051 (2025).
- 34Mohanty, A., Ramasamy, A. K., Verayiah, R. & Mohanty, S. Neighborhood and community battery projects: A systematic analysis of their current state and future prospects. J. Energy Storage 95, 112525 (2024).
- 35Baur, D., Baumann, M. J., Stuhm, P. & Weil, M. Societal Acceptability of Large Stationary Battery Storage Systems. Energy Technol.11,2201454 (2023).
- 36Federal Ministry for Economic Affairs and Climate Action. Electricity Storage Strategy. (2023).
- 37Barbosa, G. G. & Lozano, J. E. C. Mexico Publishes New Provisions on the Social Impact Statement in the Energy Sector and Raises Social Obligations for Energy Projects. (2026).
- 38International Energy Agency. Grid-scale Storage. https://www.iea.org/energy-system/electricity/grid-scale-storage#tracking (2023).
- 39Faunce, T. A., Prest, J., Su, D., Hearne, S. J. & Iacopi, F. On-grid batteries for large-scale energy storage: Challenges and opportunities for policy and technology. MRS Energy Sustain.5,10 (2018).
- 40Csereklyei, Z., Kallies, A. & Diaz Valdivia, A. The status of and opportunities for utility-scale battery storage in Australia: A regulatory and market perspective. Util. Policy 73, 101313 (2021).
- 41European Commission. Commission Recommendation (EU) of 14 March 2023 on Energy Storage – Underpinning a Decarbonised and Secure EU Energy System 2023/C103/01. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32023H0320(01) (2023).
- 42Agora Energiewende. Die Energiewende in Deutschland: Stand Der Dinge 2025 – Rückblick Auf Die Wesentlichen Entwicklungen Sowie Ausblick Auf.2026 (2026).