Battery Storage Costs Plummet: Utility-Scale Projects Now at $125/kWh, LCOS Hits $65/MWh

A new analysis from Ember reveals that utility-scale battery storage has entered a new era of affordability, with capital expenditure (capex) for long-duration Battery Energy Storage Systems (BESS) now averaging $125/kWh outside China and the United States. This translates into a Levelised Cost of Storage (LCOS) of just $65/MWh, reshaping the economics of dispatchable renewable energy.

Sharp Decline in Costs

According to auction results in Saudi Arabia, Italy, and India, alongside expert interviews across global markets, the all-in cost of building a large-scale BESS project has fallen dramatically:

• Core equipment: Around $75/kWh, largely driven by Chinese-manufactured Lithium Iron Phosphate (LFP) cells and containerised enclosures.

• Installation and grid connection: Typically $50/kWh, though costs vary depending on grid fees and site conditions.

This marks a continuation of steep declines seen in 2024, when equipment costs fell by 40%. Analysts suggest 2025 has brought another major reduction, driven by oversupply, factory scale-up, and increasingly “plug-and-play” system designs.

Auctions Confirm Real-World Prices

• Saudi Arabia: Tabuk and Hail projects awarded contracts at $73–75/kWh for equipment and $47–48/kWh for EPC services.

• Italy: The MACSE tender implied capex of $120/kWh, with tariffs of €13/kWh per year.

• India: Auctions cleared at $12/kWh/year, supported by government subsidies of about $20/kWh, bringing effective capex close to $120/kWh.

LCOS Falls to $65/MWh

Ember’s modelling shows that a $125/kWh capex translates into an LCOS of $65/MWh, based on conservative assumptions:

• 20-year lifetime with one cycle per day

• 90% round-trip efficiency

• 7% discount rate for contracted projects

• 80% utilisation rate

• 2% annual degradation

• 2% operational costs

Performance improvements—longer lifetimes, higher efficiency, and lower financing risks—have cut LCOS by more than a third compared to earlier generations.

Solar Becomes Dispatchable

At this LCOS, storing half of daily solar generation adds just $33/MWh to the cost of solar. With the global average solar price at $43/MWh in 2024, dispatchable solar now costs $76/MWh—competitive with new gas power plants, especially in LNG-importing countries.

“Solar is no longer just cheap daytime electricity; with storage, it becomes dispatchable, anytime electricity,” said Kostantsa Rangelova, Ember’s Global Electricity Analyst.

Implications for Global Energy Growth

The International Energy Agency projects that 80% of global energy demand growth in the next decade will come from regions with strong solar resources. Cheap batteries enable these countries to meet demand growth affordably, enhance energy security, and reduce reliance on fossil fuels.

While China dominates battery manufacturing, oversupply has triggered new investments across Asia, Europe, and the Middle East. Emerging technologies such as sodium-ion batteries promise to further reduce reliance on critical minerals.

The rapid decline in battery storage costs marks a turning point for global energy systems. With LCOS at $65/MWh, solar-plus-storage is now economically feasible at scale, positioning renewables to meet the majority of future electricity demand growth.