Giant Batteries AreTransforming the World’sElectrical Grids

Global energy storage capacity has tripled in recent years, thanks to an

industry that barely existed a decade ago.

Illustration: Jay Daniel Wright for Bloomberg Businessweek

By David R Baker

January 17, 2025 at 6:00 AM EST

Updated on January 17, 2025 at 2:06 PM EST

Inside an unmarked stucco building in a Silicon Valley office park, more

than 1,000 black metal cabinets, each about the size of a fridge, line the

floor in rows.

Each cabinet contains 20 new lithium-ion batteries that, starting this

spring, will feed power into California’s often-strained electrical grid,

helping prevent blackouts. They’re essentially bigger versions of the

rechargeable batteries that power phones, laptops and electric cars.

Together they’ll supply 75 megawatts of electricity to the grid, enough to

power 56,250 homes.

The San Jose building, whose past occupants include IBM and a defunct

solar startup, houses Hummingbird Energy Storage, part of an industry

that barely existed 10 years ago but has become essential to keeping the

lights on in California, Texas and other states, and that’s spreading around

the world. The rapid growth of large-scale energy storage is driven by plunging battery prices, rising electricity demand and a recognition among operators, utilities and public officials that grids are less reliable than they once were.

“Energy storage has become a linchpin” for avoiding disruptions, says

Joseph Williamson, vice president for projects at esVolta LP, the company

that developed and owns the Hummingbird facility, which will store

electricity delivered by a nearby PG&E substation. EsVolta will sell the

energy back to grid customers as needed.

The deployment of grid-scale batteries in California began in 2013, when a

state commission established energy storage targets for large utilities. That

spurred utilities to issue contracts for battery installations to developers

such as esVolta, Tesla and Fluence Energy. But installations spiked after a

brutal August 2020 heat wave led to rolling blackouts and a reckoning

among policy leaders about the state’s preparedness for climate change.

From 2021 through 2023, the state installed 8,171MW of storage, according

to BloombergNEF. That’s more than all the power plants in Alaska and

Hawaii combined. There hasn’t been a rolling blackout since, despite plenty

of high temperatures.

Grid Batteries Keep Going and Going

Cumulative global energy storage capacity, in gigawatts

Source: BloombergNEF

“It would have been extremely difficult to have gotten through some of

these events without the battery fleet,” says Elliot Mainzer, chief executive

officer of the California Independent System Operator, which runs most of

the state’s grid. Batteries have also picked up slack as older, gas-burning

power plants close.

Although they don’t produce energy themselves, batteries have advantages

compared with renewable power arrays or gas-burning power plants, which

are how utilities have traditionally added to the electricity supply. A battery

farm can be set up almost anywhere, and homeowners rarely object to

living near one. They’re getting cheaper: Global prices for large-scale

energy storage systems have plunged 73% since 2017, according to BNEF.

Their ability to switch on and off instantly lets them recharge when

electricity is cheap and sell power when prices rise. And they’re relatively

fast to deploy, with the installation at the Hummingbird facility taking less

than a year. “Just the speed of that coming on has been amazing,” says

John Zahurancik, senior vice president for the Americas at Fluence Energy

Inc., one of the biggest battery developers in the US.

Batteries also address a problem specific to renewable energy. Solar plants

often generate more electricity in the middle of the day than California

needs. The state deals with some of that excess by selling it across the

Western US, but a lot of it simply goes to waste. Now some of that energy

recharges the battery fleet, and after the sun goes down, the batteries send

that electricity back to the grid, keeping lights, televisions and air

conditioners humming. The arrangement works so well that most new solar

and wind farms built in the US and elsewhere include giant batteries.

Texas started installing industrial-size batteries later than California but is

quickly catching up. By the end of 2023, it had enough storage to supply

electricity for about 758,400 homes, up from around 59,000 in 2020,

according to BNEF. A surging economy there is straining electricity

supplies, and when the summer heat arrives, grid managers need every

possible energy resource, says Woody Rickerson, chief operating officer at

the Electric Reliability Council of Texas, which manages the state’s grid.

The new storage capacity proved its worth last summer, when a series of

heat waves brought triple-digit temperatures to much of the state and kept

them high even at night. Without the batteries, “we would have been in

some pretty bad situations there,” Rickerson says.

Other US states, including Arizona, Colorado, Florida and Vermont, saw

large battery installations in 2024. Tesla Inc. developed an expansive

battery system in Australia. China, which requires batteries to be installed

at new solar or wind farms, overtook the US as the world’s biggest energy

storage market in 2023 and was expected to add 36 gigawatts of batteries in

2024, equivalent to the output of 36 nuclear reactors. The US, in contrast,

was on track to add almost 13GW in 2024, according to BNEF research,

with an additional 14GW coming in 2025.

Batteries have their limits. After several fires at large battery installations—

including a 2022 blaze that briefly shut down California’s Highway 1—

developers switched battery formulas so that cells are less prone to

overheating. (An adjacent energy storage facility caught fire on Jan. 16,

forcing the same highway to close once again and prompting evacuations of

nearby homes.) Beyond that, electricity demand in the US, little changed

for most of the 21st century, is expected to soar as data centers, new

factories and plug-in cars consume ever more power. Texas is spending

$5.4 billion to build more power plants burning natural gas, even as it’s

adding batteries, and efforts to build nuclear plants are gaining

momentum. “We could keep adding more solar, more wind, but when

you’re at 8:30 on an August evening, more solar won’t help,” says

Rickerson.

Now the test lies in extending the number of hours batteries can operate.

Extreme weather can cripple grids for days. Companies are racing to

develop batteries that can last as long, using chemistries quite different

from lithium-ion. Eos Energy Enterprises Inc., based in New Jersey, offers

a zinc-based battery that can supply power for as long as 16 hours. Form

Energy Inc. makes an iron-air battery that can discharge for 100 hours

straight. The såtartup has raised $1.2 billion and recently opened its first

factory, near Pittsburgh. Utilities in Colorado and Georgia have already

signed contracts for installations, with the first scheduled in 2025. The

challenge, says Form Energy CEO Mateo Jaramillo, is “to build a grid that

is larger than the weather.”

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