The Rapid
Expansion of
Battery Energy
Storage
Why the Saudi
Market Is Booming
Instant Insight
March 2025 I KS--2025-II01
Ahmed Albalawi and Muhammad Hayat
2BRICS+ and the Future of Commodity Markets
About KAPSARC
KAPSARC is an advisory think tank within global energy
economics and sustainability providing advisory services to
entities and authorities in the Saudi energy sector to advance
Saudi Arabia’s energy sector and inform global policies through
evidence-based advice and applied research.
This publication is also available in Arabic.
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3
The Rapid Expansion of Battery Energy Storage: Why the Saudi Market Is Booming
Context
Saudi Arabia has embraced utility-scale battery storage to the extent that
it now ranks third globally in announced battery storage energy project
capacities at 22 gigawatt-hours (GWh), behind only China and the United
States (U.S.), and it aims to achieve 48 GWh of battery energy storage
capacity by 2030 (MoEnergy 2025). This surge is mirrored globally, with
battery storage poised to grow exponentially as renewables penetration
rises, costs plummet, and advanced policy frameworks take shape. Global
battery prices have fallen dramatically – over 90% since 2010 – due to R&D
breakthroughs, economies of scale, and fiercer competition (IEA 2024).
Factors such as manufacturing overcapacity, low metal/component prices, and
the shift to lower-cost LFP (lithium iron phosphate) chemistry have squeezed
margins and driven prices down.
The global grid storage market in 2024 was at 160 GWh,
with China alone accounting for 67% of deployments due
to local mandates and record-low system costs (Hughes
2025). Driven by auctions and tenders in the U.S., Europe,
Africa, and Latin America, the rest of the world’s storage
market is also scaling to accommodate rapid solar and
wind expansions. For instance, in the United Kingdom
(UK), the battery storage “connection queue” illustrates
the sheer volume of proposed projects. The UK needs
27 GW of battery energy storage (BESS) by 2030 to meet
its Clean Power 2030 targets, yet the current connection
queue sits at 61 GW – more than double the requirement
(Ross 2025). It is worth noting that battery capacity can be
expressed in both power (GW) and energy (GWh), where
GW indicates the amount of power batteries can deliver
continuously and GWh refers to how long the system
can sustain that discharge. Actual GWh depends on the
system’s intended duration (e.g., two hour, four hours),
so a 1GW battery system with a four-hour duration would
store 4GWh.
4
The Rapid Expansion of Battery Energy Storage: Why the Saudi Market Is Booming
Figure 1. Learning curve for stationary battery storage costs.
Source: Authors, based on IEA (2024) and Colthorpe (2025) (reporting BNEF data).
Future of Battery
Storage
Behind every surge in energy technology lies a familiar pattern: as more units
are manufactured and installed, the cost per unit falls. This phenomenon is
quantified by the learning rate – the percentage cost reduction per doubling
of cumulative capacity. Figure 1 shows that battery costs have been falling
by around 19% with each doubling, with BloombergNEF reporting a 40%
decrease from 2023 levels to US$165/kWh in 2024 (Colthorpe 2025). The IEA
further notes that successful integration of renewables will require multiplying
the global storage fleet by six by 2030, reaching roughly 1,500 GW, with
batteries delivering 90% of that expansion (IEA 2024).
5
The Rapid Expansion of Battery Energy Storage: Why the Saudi Market Is Booming
Technological improvements go beyond chemistry: the
industry increasingly uses containerized or modular
solutions, where standardized 20-foot containers
house pre-integrated battery modules, cooling, and fire
suppression (Volta 2025). This simplifies installation,
shortens timelines, and makes projects easy to scale –
akin to stacking LEGO blocks.
The global battery boom is driven by renewable energy
integration. Intermittent solar and wind power require
batteries to shift excess generation to meet demand,
enabling round-the-clock renewable power. According
to the IEA (IEA 2024), as solar PV penetration increases
beyond 20%, storage becomes critical for grid stability.
Batteries also provide essential ancillary services like
frequency regulation and voltage support, replacing
traditional thermal plant roles. Furthermore, storage
reduces renewable energy curtailment by charging with
excess generation during low demand.
In addition, the intermittent nature of renewable
energy sources increases the probability of periods
of low electricity demand coinciding with periods of
mild weather. In future power systems, low demand
periods will pose a risk comparable to peak demand.
Consequently, the increasing frequency of negative
daytime demand and high evening spot prices creates
profitable opportunities for battery storage systems to
engage in both charging and discharging cycles.
6
The Rapid Expansion of Battery Energy Storage: Why the Saudi Market Is Booming
Saudi Arabia has also introduced Independent Storage
Provider (ISP) auctions, mirroring the Independent
Power Producer (IPP) model that spurred solar and wind
development. This competitive approach should drive
further cost reductions and attract local and international
bidders, reinforcing Saudi Arabia’s leadership in energy
storage. Saudi Arabia’s broad grid modernization strategy
includes advanced metering, smart grids, and digital
controls that pair seamlessly with large-scale batteries.
Smart meters enable real-time consumption data, allowing
battery systems to optimize charging and discharging in
response to grid conditions, and their near-instantaneous
response enhances reliability in ways that older,
centralized designs could not.
Saudi Arabia’s rapid deployment of battery storage
closely mirrors the success factors observed in the
world’s largest storage markets, while also adding its
own advantages. Like China (IEA 2022), the Kingdom has
strong governmental backing and centralized planning,
but instead of mandates that co-locate storage with every
renewable project, Saudi regulators rely on centralized
auctions and a principal buyer model. This framework
gives private developers a clear pipeline of opportunities:
once the government or its procuring entity signs a
long-term commitment, there is immediate bankability.
In eect, the system resembles the stability seen in U.S.
states with dedicated capacity targets and contracts, yet it
combines that transparency with the rapid execution often
associated with China’s industrial policy.
Saudi Arabia is
Among the World’s
Top Battery Storage
Markets
Saudi Arabia is on track to deploy over 33 GWh of battery capacity, with some
sites exceeding 2 GWh each (Kubik 2025). A notable example is Bisha’s 2.5
GWh system, energized in about 11 months – demonstrating how container-
based solutions compress construction schedules. Leading integrators such
as BYD, Sungrow, and Huawei supply modular LFP-based systems that
can handle Saudi Arabia’s high temperatures. With multiple gigawatt-scale
projects underway, the Kingdom is evolving into a global energy storage
leader, further complementing its rapid transition toward a 50% renewable
energy mix by 2030.
7
The Rapid Expansion of Battery Energy Storage: Why the Saudi Market Is Booming
Meanwhile, evolving regulations on environmental impact
and ethical sourcing add further challenges for battery
storage. The production of lithium-ion batteries depends
on a supply chain that is highly concentrated in a few
regions, exposing storage deployment to geopolitical
and economic risks. Over 80% of global lithium refining
and battery-grade graphite processing is controlled by
China, while nickel and cobalt production are dominated
by Indonesia and the Democratic Republic of the Congo,
respectively (IEA 2024). This concentration creates
vulnerabilities in pricing, availability, and trade policies,
making it critical to diversify supply chains and invest in
alternative chemistries, such as sodium-ion and vanadium
flow batteries.
Nevertheless, as power systems transition toward clean
energy, energy storage becomes an indispensable tool
for ensuring that grids remain both stable and cost-
eective. Traditionally, grid operators have balanced
electricity supply and demand by adjusting output from
large, dispatchable generators. However, the rapid
expansion of clean energy – alongside the electrification
of transport and industrial processes – calls for new
strategies to manage periods of both surplus and scarcity.
Beyond technology, economies of scale and market
validation feed back into each other: as more projects
succeed, more capital flows in, spurring further cost
declines. While solar-plus-storage remains key, several
other factors continue to propel battery adoption:
1. Climate Goals and Carbon Markets: Batteries cut
reliance on high-emitting peaker plants and can
benefit from carbon credits.
2. Enhanced Grid Resilience: This supports microgrids
and provides backup during extreme weather events
or outages.
3. Technological Spillover: Advances in EV batteries
– improved energy density, materials, and cooling –
flow into stationary storage (and vice versa).
4. Corporate Commitments: Companies aiming for 100%
renewable power rely on battery storage for flexibility
and reliability.
None of this growth is guaranteed without regulatory
frameworks that reward flexible resources. If markets pay
fairly for services like frequency regulation or capacity
Emerging Challenges
and Opportunities
Beyond the technical aspects of the battery system, a major challenge
in many jurisdictions is the lack of a clear regulatory framework that fully
integrates battery storage into electricity markets. In some countries, energy
storage is not explicitly recognized as a distinct asset class, leading to issues
such as double taxation, where storage is charged both for drawing power
from the grid and for injecting it back, which places it at a disadvantage
compared to other technologies (Volta 2025). Additionally, many power
markets were designed around conventional generation, limiting the ability of
battery storage to participate in capacity mechanisms, energy arbitrage, and
ancillary services.
8
The Rapid Expansion of Battery Energy Storage: Why the Saudi Market Is Booming
shifting, private capital will continue to flow. Saudi Arabia’s
ISP auction model is one example of forward-looking
policy, and as battery costs keep declining, global
competition in storage markets should intensify.
Looking ahead, removing regulatory and market barriers
will be just as critical as technological breakthroughs,
ensuring that flexible resources like batteries are fully
allowed to compete. For example, in California, once
storage was permitted to compete in resource adequacy
and ancillary-service markets, battery deployments
expanded rapidly (CAISO 2024). When flexible resources
like batteries can fully participate, faster decarbonization,
better resilience, and steeper cost declines follow. Saudi
Arabia’s forward-looking and proactive announcement of
the deployment of battery storage presents substantial
opportunities to leverage battery storage potential
for a wide range of benefits, including enhanced
power system security, stability, and reliability, while
also simultaneously maximizing the feasible share of
renewable generation.
9
The Rapid Expansion of Battery Energy Storage: Why the Saudi Market Is Booming
References
California Independent System Operator (CAISO). 2024.
Special Report on Battery Storage. https://www.caiso.
com/documents/2023-special-report-on-battery-storage-
jul-16-2024.pdf.
Colthorpe, Andy. 2025. “Behind the Numbers: BNEF Finds
40% Year-on-Year Drop in BESS Costs.” Energy Storage
News, February 5. https://www.energy-storage.news/
behind-the-numbers-bnef-finds-40-year-on-year-drop-in-
bess-costs/.
Hughes, Iola. 2025. “Cutthroat Competition: The Race to
the Top of the BESS Supply Chain.” Energy Storage News,
January 14. https://www.energy-storage.news/cutthroat-
competition-the-race-to-the-top-of-the-bess-supply-chain/.
International Energy Agency (IEA). 2022. “Guiding Opinions
on Accelerating the Development of New Energy Storage.”
June 23. https://www.iea.org/policies/14117-guiding-
opinions-on-accelerating-the-development-of-new-
energy-storage.
International Energy Agency (IEA). 2024. Batteries and
Secure Energy Transitions. https://www.iea.org/reports/
batteries-and-secure-energy-transitions.
Kubik, Marek. 2025. “A Fork in the Road for Energy
Storage.” PV Magazine, February 11. https://www.
pv-magazine.com/2025/02/11/a-fork-in-the-road-for-
energy-storage/#:~:text=Faster%2Dthan%2Dexpected%20
price%20falls,Kubik%20considers%20the%20key%20
issues.
Ministry of Energy (MoEnergy). 2025. “Saudi Arabia Among
Top 10 Energy Storage Markets: Advancing Leadership
in Renewable Energy.” https://www.facebook.com/
MoEnergy.Saudi.EN/photos/saudi-arabia-ranks-among-
worlds-top-10-energy-storage-markets-advancing-
leadersh/617090854384543/?_rdr.
Ross, Kit Million. 2025. “BESS Connection Queue Double
the Grid’s Requirement for 2030.” Cornwall Insight,
February 17. https://www.current-news.co.uk/cornwall-
insight-bess-connection-queue-double-the-grids-
requirement-for-2030/.
Volta. 2025. Battery Report (2024). https://volta.foundation/
battery-report-2024.
10 BRICS+ and the Future of Commodity Markets
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