Energy storage enters a new global phase in 2026 with falling costs and technological advances

The global energy storage market begins 2026 at a decisive turning point. After an intense cycle of regulatory changes, industrial expansion and geopolitical realignment, the sector is now operating at a new scale more affordable, more strategic and increasingly essential to global energy security.

Global installed capacity of battery energy storage systems is expected to surpass 100 gigawatts in 2026, excluding pumped hydro facilities. This growth is being driven by declining battery costs, the accelerated deployment of intermittent renewable energy and the rising electricity demand from data centers and digital infrastructure.

Falling prices reshape the economics of energy storage

Cost reduction remains the main force transforming the storage sector. In 2026, energy storage systems are expected to see an additional cost decline of 10% to 20% in major markets, including the United States and Europe.

Lithium-ion battery prices reached historic lows in 2025, with stationary storage systems experiencing the sharpest declines. Despite trade tariffs and higher raw material prices, a combination of manufacturing overcapacity, intensifying competition, and the widespread adoption of lower-cost battery chemistries continues to push prices downward.

This dynamic significantly improves the economic viability of large-scale storage projects, particularly those paired with solar and wind generation.

Cheaper batteries underpin renewable energy expansion

The rapid growth of solar and wind power increases the need for solutions capable of managing generation intermittency. Energy storage is becoming the critical link between renewable production and grid stability.

Beyond enabling higher renewable penetration, storage systems play a strategic role in energy security, reducing blackout risks, smoothing demand peaks and improving supply reliability.

As a result, energy storage is no longer just a technical asset — it is increasingly central to energy geopolitics.

Global deployment accelerates beyond traditional markets

While China, the United States and Europe remain the leading markets, 2026 marks a broader geographic expansion of energy storage deployment. Latin America is emerging as a relevant growth region, supported by strong solar and wind project pipelines and the need to strengthen grid resilience.

Emerging markets are beginning to treat energy storage as core infrastructure rather than a complementary solution, especially in power systems with high renewable penetration and grid constraints.

Policy shifts reshape global supply chains

Regulatory changes introduced in recent years continue to shape the energy storage landscape in 2026. In the United States, industrial and trade policies are encouraging companies to seek alternative supply chains, reducing direct reliance on China and supporting domestic and regional manufacturing.

China, meanwhile, is moving toward a more market-driven approach, reducing mandatory storage requirements tied to renewable projects and relying on price signals to stimulate demand.

These contrasting strategies are reshaping investment decisions, factory locations and technology roadmaps worldwide.

Supply chains seek diversification, but China remains dominant

Despite growing diversification efforts, China remains a central pillar of the global energy storage supply chain, particularly in lithium processing and refining, which are critical steps in battery production.

Even when battery cells are manufactured outside China, sourcing upstream materials remains challenging due to the concentration of refining capacity. This creates strategic hurdles for countries seeking greater industrial autonomy.

At the same time, more manufacturers are shifting toward chemistries optimized for stationary storage, leveraging industrial maturity and lower production costs.

LFP batteries consolidate their dominant position

Lithium iron phosphate (LFP) batteries have firmly established themselves as the leading technology for stationary energy storage. Safer, more durable and more cost-effective, LFP systems are increasingly replacing nickel-based chemistries.

This transition reduces exposure to critical metals and makes large-scale storage projects more economically and operationally attractive, reinforcing storage as a foundational element of modern power systems.

Sodium-ion batteries emerge as a strategic alternative

Among emerging technologies, sodium-ion batteries are gaining attention as a potential medium-term alternative. Sodium is abundant, low-cost and does not rely on lithium, making it strategically appealing.

Although energy density remains a limitation, sodium-ion technology is well suited for stationary applications where size and weight are less critical. Its future competitiveness will depend on production scale and the ability to diversify manufacturing beyond China.

Long-duration energy storage moves into focus

Another key trend is the shift toward storage systems capable of delivering energy over longer durations typically six to eight hours exceeding the traditional four-hour benchmark.

As renewable generation dominates power grids, the need for solutions that can shift large volumes of energy across longer periods becomes increasingly important. Alongside conventional batteries, alternatives such as thermal storage, flow batteries and gravity-based systems are gaining attention.

In this context, the market is no longer focused solely on cost per kilowatt-hour, but also on flexibility and discharge duration.

2026 marks the strategic maturity of energy storage

More than a technological trend, energy storage reaches strategic maturity in 2026. Falling costs, growing scale, regulatory evolution and technological diversification position the sector at the center of decisions related to energy policy, industrial strategy and national security.

For governments, utilities and energy developers, energy storage is no longer optional it has become a fundamental pillar of the global energy transition.

Energy storage enters a new global phase in 2026 with falling costs and technological advances