a ‘quiet revolution’ in the energy industry

Hello and welcome to Energy Source, coming to you today from London.

All eyes this week are on BP, whose chief executive Murray Auchincloss will lay out the company’s strategy at an investor day on Wednesday, as the oil major faces pressure from activist investor Elliott to cut spending on renewable energy to boost its lagging share price.

As my colleague Tom Wilson reports, people familiar with the plan say the FTSE 100 group will abandon its pledge to reduce oil and gas production, and announce at least one major divestment.

Any move is unlikely to satisfy all shareholders. As the Financial Times reported last week, a group of 48 institutional investors is calling on BP to give shareholders a vote on any plan to row back on its climate goals.

The event in London comes as energy executives are set to arrive for the Energy Institute’s International Energy Week, where the fallout from Donald Trump’s US presidency will no doubt be high on the agenda.

This week’s main piece looks at batteries. We need a lot more of them, but are they getting the recognition they deserve? Enjoy reading. — Rachel

A ‘quiet revolution’ in energy storage

On a five-acre patch of land in Hampshire, southern England, developer BW ESS last week started up a new battery capable of supplying 44,000 homes for 24 hours. 

The potential of the Bramley Battery Energy Storage System reflects sharp decreases in the cost of batteries since 2010 — lithium-ion batteries are down more than 90 per cent — and increases in energy density. 

“We built [what was] the largest battery project in Europe just four years ago — and this project that we just opened is 2.5 times the size and uses 40 per cent less land,” according to Erik Strømsø, chief executive and co-founder of BW ESS, which is part of BW Group. 

Those trends were the subject of an optimistic talk by Brent Wanner, head of the power sector unit at the International Energy Agency, at the Energy Storage Summit sponsored by Envision in London last week.

The subject is getting more and more attention from politicians and investors around the world, given the urgent need to be able to store electricity at far greater scale to smooth out intermittent wind and solar supply.

Describing batteries as a key “enabler” of wind and solar, Wanner highlighted rapid growth in recent years. An estimated 70 gigawatts were deployed in the power sector globally in 2024, up from roughly 43GW in 2023. 

Looking ahead to 2030, far more battery storage capacity is set to be added than new fossil fuel-fired power plants, according to the agency’s figures. 

“Battery storage is in many parts of the energy system, a bit of a quiet revolution,” Wanner said, highlighting how falling costs for both batteries and solar panels meant projects combining the two to smooth out intermittency were increasingly competitive. 

When it comes to the “value-adjusted levelised cost of electricity” — a metric that takes into account not just energy output but other measures such as an asset’s ability to operate flexibly to help power system operators balance out supply and demand — solar panels with batteries beat coal-fired power plants in India, gas-fired power plants in the US, and will overtake coal-fired plants in China in 2027, according to IEA analysis.

However, Wanner also cautioned that electricity markets were not always set up in the best way to compensate batteries, meaning investment might not end up being as high as needed. 

“Markets were designed in an era that was built [on] coal and gas, nuclear and hydropower,” he said. “And we’re moving into an area where wind, solar, storage and other technologies become the basis. But market designs are not necessarily fit for the future.” 

The IEA has highlighted problems such as batteries having to pay electricity network fees for both charging and discharging, as well not always getting paid for services to help maintain system stability.

In Britain, battery storage developers have at times been frustrated at being overlooked by system operators trying to balance power supply and demand. Changes have been introduced to alleviate the issue. 

Strømsø echoed the concern about fees for charging and discharging (outside Britain where it is not the case). “With a battery you are typically alleviating grid constraints by charging when there is a surplus, and discharging when there is a lack of power,” he said. 

“You are benefiting the grid — you could argue there should be no fees. At the very least, being charged twice is often an impediment to the economics of batteries in many countries where we could be rolling them out.” 

He is highly optimistic about the sector, however, noting that rising costs of construction and other equipment such as transformers have not been enough to offset the falling costs of the batteries themselves. 

“If you compare the major project that we delivered in 2021 with the [most recent] one, the cost reduction is in the order of 40 per cent,” he added. 

Falling costs and longer run times pointed to a world where batteries could enable electricity systems to become 90-95 per cent green, Strømsø argued. “That is much better than anyone imagined just a few years ago.” (Rachel Millard, data visualisations by Jana Tauschinski)

Power Points

Energy Source is written and edited by Jamie Smyth, Myles McCormick, Amanda Chu, Tom Wilson and Malcolm Moore, with support from the FT’s global team of reporters. Reach us at energy.source@ft.com and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.