The cost of four-hour lithium-ion (Li-ion) battery systems could decline from $334/kWh in 2024 to as low as $108/kWh or remain as high as $307/kWh by 2050, according to the National Renewable Energy Laboratory (NREL).

The update focuses on four-hour Li-ion systems as they have become the benchmark for grid-scale storage.

The report notes that the analysis was completed in January and February 2025, meaning that subsequent tariff changes are not reflected in it.

NREL calculated the prices using a bottom-up cost model that dissects every part of a utility-scale project with 2024’s benchmark of $334/kWh. This figure represents the overnight capital cost for a complete system.

By 2035, storage costs are expected to decrease to $147/kWh in the low-cost scenario, $243/kWh in the mid-case scenario, and $339/kWh in the high-case scenario.

By 2050, the numbers drop further to $108/kWh, $178/kWh, and $307/kWh across the three scenarios. These trajectories encompass a range of outcomes, from a modest 2% reduction to a 56% decline by 2035, and from 8% to 68% by mid-century.

System Costs

The choice of this starting cost is central to the projections. NREL acknowledges that its estimate is somewhat higher than some other published values, yet it falls well within the range of industry data. By normalizing all future projections to this benchmark, the report avoids inconsistencies that arise from differences in assumptions about system design or dollar-year accounting. This normalization ensures that what matters most are the trends over time rather than the quirks of individual studies.

In the 2024 cost breakdown, Li-ion cabinets built with LFP cells account for the largest share at $210/kWh. Inverters add another $128/kWh, while structural balance of system costs contribute $26/kWh, and electrical balance of system costs $19/kWh. Smaller but still important amounts come from installation labor, permitting and interconnection, sales taxes, contingency allowances, developer overhead, and profit margins. Hardware dominates the picture, but soft costs remain a meaningful component of total system pricing.

The report separates energy-related costs, which scale with storage duration, from power-related costs, which scale with capacity. In 2024, energy components are priced at $241/kWh, while power components are estimated at $372/kW. This distinction allows NREL to project systems with different durations more accurately.

A two-hour battery is more expensive on a per-kilowatt-hour basis but cheaper on a per-kilowatt basis compared with a six-hour system. The report notes that the cost per kilowatt-hour decreases with longer durations, while the cost per kilowatt increases.

According to a Wood Mackenzie report, nearly $1.2 trillion must be invested globally in battery energy storage systems to support the installation of over 5,900 GW of new wind and solar capacity through 2034.

15-Year Lifetime

Performance assumptions are equally important. NREL sets a conservative lifetime of 15 years for four-hour Li-ion batteries, reflecting the lack of long-term operating data for existing projects. Round-trip efficiency is fixed at 85%, a value consistent with published ranges. For operations and maintenance, variable costs are assumed to be negligible, while fixed costs are set at 4% of capital cost per year.

The report clarifies that this high-end assumption includes capacity augmentation and degradation mitigation, effectively ensuring that a battery can deliver its rated output for the full 15-year period.

The projections extend beyond 2050 through a simple assumption: after mid-century, cost declines continue at half the previous rate. By 2060, this method yields outcomes of $94/kWh in the low-cost scenario, $157/kWh in the mid-case scenario, and $297/kWh in the high-case scenario. Each trajectory maintains its own slope, meaning the shape of the cost curve varies across scenarios, not just the final values.

NREL also provides a year-by-year data, detailing normalized and absolute costs from 2024 through 2060. For example, in 2026, the model predicts costs of $255/kWh, $308/kWh, and $366/kWh in the low, mid, and high cases, respectively. By 2040, these costs are projected to decrease to $134/kWh, $221/kWh, and $329/kWh. These figures reveal the gradual shape of decline that is less visible when focusing only on milestone years like 2035 and 2050.

India installed over 341 MWh of battery energy storage systems in 2024, marking an over sixfold increase from the 51 MWh installed in 2023, according to Mercom India Research’s newly released report, India’s Energy Storage Landscape.