Batteries are surging ahead and arriving in scale efficiency and cost five years ahead of the anticipated schedule. And even better, they’re in a price free fall.
The global energy transition began a quarter of a century ago. Leading countries undergoing an energy transformation. Saul Griffiths’ Sankey diagrams help us understand the big levers in global emissions in energy and transport. Tackle the electrification of energy and transport and there’s a direct impact on 75 per cent of the global challenge.
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Over the past 20 years, I’ve had a ringside seat on the global energy transition, primarily in the Australian solar sector. Australia has played an outsized role in deploying extremely low cost rooftop solar, to nearly 35 per cent of households. I’ve also seen the shift of influence from Europe to China, and in 2024 learned two big lessons. Battery technology is far more advanced than I expected, and I watch the space closely, while some countries are still attempting an energy transition, some are leaping ahead into an energy transformation.
As we’re constantly reminded, the sun doesn’t always shine, and the wind doesn’t always blow. Fair point, until now. Battery storage is here. In September 2023 I attended Solar + Storage, the big annual solar conference in the UK.
I saw what I expected, bigger, cheaper solar panels and lots of battery storage and inverter companies displaying household 13.5kWh size batteries. In 2024, I attended the same conference in Birmingham, now called Solar and Storage (great tell there), and suddenly batteries were containerised. What I thought would take five years, took 12 months.
Batteries are in price free fall. I’ve seen this movie once before in the solar sector.
When I first joined the industry in 2006 solar panels were ~US$5/watt, they’re now US$0.10/watt.
Our global energy system is shifting from fossil fuel molecules that drove the 20th century economy to cheaper, cleaner 21st century electrons. The next engine is building the electrification of everything. Clean electrons are now cheaper, much cheaper, and combined with low cost battery storage, the change is coming faster than I expected.
The Electro state has been in the works for some time, with China taking the lead. In a recent Cleaning Up episode, Petrostate USA versus Electrostate China – Place Your Bets, Michael Liebreich and Bryony Worthington discuss the step change in China’s manufacturing and deployment of solar, batteries and EVs and how the US is stuck in 20th century drill baby drill.
What’s now become clear is the stark contrast between economies in transition and those in transformation.
Let’s support these ideas with battery storage data points. Base load batteries are here, in the Middle East the UAE’s 24/7 19 gigawatt-hour battery project is a recent example, big Petrostates are taking low-cost clean energy seriously. And in California, which has some of the cheapest LNG gas on the planet.
A natural advantage for the 7.1 gigawatts (GW) of gas peaker plants in the Californian ISO. The combination of low cost grid scale solar and GW scale battery storage is making gas peakers uneconomic. Gas peakers in California are “Dead Assets Peaking”.
So, if battery storage is the key why has it taken so long for there to be a step change in months not years? Hint, the engine underneath battery storage is the entire road transport sector. High end sports cars are a good example.
The recently launched BYD Yang Wang U9 costs USD$236,000. The McLaren or Ferrari equivalent, and not as nice to drive, costs USD$2.5 million. Half the cost against unfamiliar Chinese brands is not an issue for European and American buyers. One tenth of the cost, and better build quality and technology, we got a problem, Houston. 100 per cent tariffs, same problem, Houston.
The pushback against electric transport will continue for those economies in transition. The vested interests in the legacy internal combustion engine (ICE) economy will hold on until it snaps. China saw the potential and installed 6 million EV charging stations, over the same period the US installed 146,000.
The challenge for the West is the disconnect between how mainstream media portrays the energy transition and the stats that support a very different picture. To understand this better I invited Tim Buckley from Climate Energy Finance to my Spark Club podcast.
From our regular conversations I’ve come to understand China sees every country as a market, with no exceptions.
China is building an Electrostate, and they’re committed to it economy wide. What may have started out as a state project to reduce their dependence on foreign fossil fuels has now unlocked the engine for the modern Chinese economy?
Making and selling solar, wind, batteries and EVs for a global market taking advantage of cheaper cleaner electrification of everything makes China the dominant Electrostate, now and into the future.
We’re starting to see fast followers. Nation states who have come out of nowhere, and on a similar accelerated path. Pakistan’s spiking electricity costs, rising 155 per cent over three years, are the main driver. In 2023 Pakistan had a strong solar PV market, however, 2024 was a step change growing to 17GW of solar panels imported from China, making Pakistan its third biggest market. A leap from energy transition to energy transformation in just 12 months.
Andrew Birch has run the numbers and the future is bright. Solar energy is projected to go from 5 per cent of global energy generation in 2025 to 50 per cent by 2035. Birchy’s work on the S-Curve projects over 100 million jobs will be created across the global solar industry over the next decade, that’s not a typo.
Extremely low-cost clean energy plus battery storage, and EV transport on the horizon, provides a clear choice for all global Nations. The choice to adopt a slow pace of energy transition, or unlock the value for their economies, their citizens and the planet. The opportunity for Nations to leap from transition to an energy transformation and electrifying everything is more achievable than ever.
For the drill baby drillers, the energy transition is a slow walk. It’s time to set a higher bar.