Featured in Building resilience – 04-2026

The battery cost disconnect

For years, the battery energy storage (BESS) story has followed a familiar script: costs fall, deployment accelerates, economics improve. Even when cell costs rose and system prices briefly flattened during the 2021-22 lithium price spike, the narrative largely held. Paola Perez Peña, senior principal analyst at S&P Global Energy, examines why the latest jump in lithium prices has only had limited impacts on overall BESS costs so far.

By

Paola Perez Peña

02 Apr 2026

CATL’s Yibin factory in Sichuan, China. Battery cells no longer dominate cost trends for BESS installations, with cells and modules accounting for 25% to 45% of total BESS capex in 2026. Larger-format cells and higher capacity racks are also helping to reduce internal system complexity. | Image: CATL

When lithium prices began to surge in late 2025, headlines warned of runaway battery inflation, threatened project pipelines, and a storage market on the brink. Then something unexpected happened. Despite lithium carbonate prices rising more than 102% in six months, and lithium ferrous phosphate cell costs jumping 15% to 30%, total utility-scale BESS project capex …

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