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.

Issue 04-2026 Issue 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.

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