It was hailed as a small sign of progress in an otherwise lacklustre set of talks. At the COP29 climate negotiations held in Baku, Azerbaijan, in 2024, leaders signed a global energy storage and grids pledge to help decarbonise electricity production worldwide.
The pledge set an end-of-decade target of increasing global energy storage capacity six times above 2022 levels, equivalent to an installed base of 1.5 terawatts (TW) by 2030. So, with the next round of climate talks fast approaching, how are we doing? It’s a mixed bag, according to analysts.
In Asia Pacific, for example, “energy storage revenues are poised for explosive growth, surging from USD$14 billion in 2024 to USD$184 billion by 2035 as storage’s share of on-grid sales expands from less than 1% to over 11%,” says Wood Mackenzie.
This means energy storage projects could capture 14% of all Asia Pacific power market investments between now and 2034, surpassing the levels invested in coal and gas.
North American markets, meanwhile, are seeing robust demand growth but are also subject to regulatory uncertainty, particularly in the US. The region is expected to see 2.4 TW of combined solar and storage additions, but will not reach that installation level until 2060, Wood Mackenzie estimates.
European power markets, the analyst says, “face a more challenging outlook in 2025's second half, as global trade tensions dampen economic growth and investor confidence. While political commitment to decarbonisation remains strong, policymakers confront mounting complexities in delivering the energy transition.”
Macroeconomic factors aside, grid players are increasingly having to invest in batteries to stabilise electricity networks as the proportion of intermittent renewable generation grows.
Wood Mackenzie estimates that more than 5.9 TW of new wind and solar capacity could be installed around the world by 2034, representing a USD$5 trillion investment. This will require a further USD$1.2 trillion to be spent on grid-forming battery storage systems.
Plugging the energy storage gap
The analyst firm says the global power sector faces a capacity gap of 1.4 TW for grid-forming battery installations between 2024 and 2034. Its forecast for global battery storage capacity additions sees the market expanding with an average annual growth rate of 12%, mostly through increases in Asia Pacific.
The growth rate is impressive, but not nearly enough to meet the COP29 pledge. Come 2030, based on Wood Mackenzie’s charts, global the cumulative installed battery capacity between 2024 and 2030 would likely amount to somewhere near 700 GW.
Even adding the 159 GW of global battery capacity that had already been installed by 2024, the expected 2030 level is barely half of what was pledged at Baku. And it should be emphasised that the forecasts are highly speculative.
In June 2025, before lawmakers complicated the outlook for federal clean energy incentives, Wood Mackenzie warned that the US utility-scale battery market could be “at risk for a potential 29% contraction in 2026 due to policy uncertainty.”
The US community-scale, commercial and industrial battery segment has already seen a 42% reduction in its five-year outlook, Wood Mackenzie says, while the forecast for distributed storage—essentially residential systems—has fallen even further, dropping 46% compared to a base case with no regulatory changes.
On the other hand, it is also true that the proposed 1.5 TW of energy storage need not be made up entirely of batteries. Pumped hydro storage, for example, has the potential to deliver major capacity additions if built out at scale.
And the International Hydropower Association expects to see a 50% increase in pumped hydro capacity between now and 2030. But in gigawatt terms this means just 90 GW of new capacity, taking the global total from 189 GW to around 280 GW by 2030—not even a fifth of the way to achieving the COP29 pledge.
Low-carbon hydrogen has also been touted as a potentially important form of energy storage. But the clean hydrogen project market has recently imploded and it is unclear how much of the gas, if any, will be available for energy storage come 2030.
As for other types of storage, while there is plenty of hype around technologies ranging from gravity systems to flow batteries the chances of any of these scaling up to have a significant impact by 2030 are slim. Realistically, most of the energy storage needed by the end of the decade will come from lithium-ion battery systems.
In its Net Zero Emissions by 2050 Scenario, the International Energy Agency estimated batteries would make up 1.2 TW of the 1.5 TW of storage needed by 2030, with pumped hydro accounting for a further 293 GW.
It is important to note that the capacity gap facing battery storage is even greater than it might seem from these numbers. The COP29 pledge relates only to power capacity, whereas in fact the actual amounts installed will need to be higher to provide energy services.
Here’s why: a 1 MW battery system that provides two hours of storage will require twice as much capacity as one that only has to deliver energy for an hour.
Time is running out to meet the pledge
Until now, most battery systems have only been called upon to provide modest amounts of storage, so their power and energy capacities have often been the same—10 MW and 10 MWh, 100 MW and 100 MWh, and so on. That picture is changing, however.
According to an October 2024 report from the UK’s Faraday Institution, in the UK “a large amount of long-duration energy storage will need to be deployed to help cope with lengthy periods of low wind or solar supply known as dunkelflaute.
“An analysis of historical weather data from the North and Baltic Seas found that such events occur most frequently from November to January, with 50 to 100 hours of dunkelflaute occurring in each of these months.”
The Faraday Institution defines long-duration energy storage as having discharge times of between six and 160 hours. This sort of capacity is best served with pumped hydro or exotic technologies such as compressed air energy storage and redox flow batteries.
But these options are expensive, which makes it hard to justify developing them for applications that might be used at most for around 300 hours a year.
Because of this, storage applications at the lower end of long duration—say between six and 24 hours—might ultimately end up being met with low-cost lithium-ion battery technology.
If so, the amount of battery capacity required to hit the COP29 target might be much more than the 1.5 TW headline suggests. With time running out to meet the pledge, it is clear there is still much to be done—which is good news for battery project developers, particularly if lithium-ion gets used for long-duration storage.
Publish date: 15 July, 2025