Much-needed market survey reveals how much an energy storage system costs today and whether it is worth investing in

One of the most popular energy topics in recent years has been energy storage, which is only now beginning to gain traction. The electrification process, which is dominated by renewable energy producers, is posing an increasing challenge to electricity grids. Battery storage may offer an effective solution to this challenge. However, widespread adoption of this technology requires significant corporate investment. Government intervention could provide short-term support, but market-based solutions are likely to be necessary in the long term.

Therefore, it is crucial to understand the cost of an energy storage project and how long it takes to recoup the investment.

A market survey from 2025 based on real-world project experience provides the answer — and the figures are surprising.

They haven't hit rock bottom yet, but prices are falling dramatically

According to the study, battery storage has moved past its infancy, driven by rapid factory scale-up, fierce competition and oversupply that has pushed costs sharply down. 

After a 40% fall in 2024 in battery equipment costs, it’s clear we’re on track for another major fall in 2025. The economics for batteries are unrecognisable, and the industry is only just getting to grips with this new paradigm,

pointed out Kostantsa Rangelova, Global Electricity Analyst at EMBER.

"Solar is no longer just cheap daytime electricity, solar is now anytime dispatchable electricity. This is a game-changer for countries with fast-growing demand and strong solar resources," she added.

This report provides the latest, real-world evidence on the cost of large, long-duration utility-scale Battery Energy Storage System (BESS) projects. Drawing on recent auction results from Saudi Arabia, India and Italy, along with in-depth interviews with project developers, suppliers and analysts across global markets, it captures the most up-to-date picture of battery capex and the Levelised Cost of Storage (LCOS) as of October 2025. The analysis focuses on markets outside China and the United States, where competitive procurement of Chinese-manufactured equipment is reshaping global storage economics.

Despite differing geographical and market environments, the study revealed surprisingly similar cost levels. But how much is that?

Across global markets outside China and the United States, the total capex to build a long-duration (4 hours or more) utility-scale Battery Energy Storage Systems (BESS) project is

around $125/kWh (or HUF 41,250/kwh at usd/huf of 330),

of which around $75/kWh is for the core equipment shipped from China and around $50/kWh to install and connect the battery.

This means that the cost of purchasing a storage facility with a capacity of 1 MWh was approximately HUF 41 million . It is important to emphasise that this is an average reference value and that the actual cost depends on numerous factors. However, it can be used as a good starting point.

Procurement costs

The study breaks down the total cost into two main components: the purchase price of the core equipment, and installation and grind connection.

Based on their calculations,

core equipment costs around $75/kWh (huf 27,750) to deliver from China,

meaning that core equipment accounts for 60% of the total investment cost ($75/kWh or HUF 41,250/kWh).

The study was based on Chinese lithium iron phosphate (LFP) technology with a discharge time of at least four hours. The cost elements were divided into three main categories:

• Modules consisting of battery cells enclosed in containers, cooling equipment, and safety systems.

• The Power Conversion System (PCS), which connects the container to the grid.
• The Energy Management System (EMS), which controls the operation of the storage facility.

The enclosures account for close to 90% of the $75/kWh core equipment cost for long duration projects, with PCS and EMS costs making up around 10%.

They noted that the $75/kWh applies to larger, four-hour or longer BESS projects. Smaller projects may not get such competitive quotes from Chinese manufacturers. Additionally, total equipment costs are 10–15% cheaper for four-hour projects because several components are sized to power (MW) rather than energy (MWh), meaning the cost is spread over more storage hours. Beyond four hours, however, the marginal savings become progressively smaller.

Other related costs

Okay, the energy storage system has been delivered — but what now? Additional costs for planning, licensing, installation and grid connection must be factored in after purchasing the storage system, and these costs can amount to a significant sum.

The engineering, procurement and construction (EPC) services and grid connection required to turn this equipment into an operational project can vary widely,

but typically costs around $50 /kWh or huf 16,500/kwh.

This assumes land is provided by a tendering utility or purchased at a low cost. The largest variation in costs comes mainly from the grid connection fee. This results in costs ranging from as little as $30/kWh with inexpensive grid connection to $100/kWh in extreme cases, with more typical values around $50/kWh, according to experts. However, when the battery storage is built at an existing solar plant or installed behind the meter, the grid connection cost becomes negligible. However, the extent of this cost reduction heavily on local network conditions, available connection capacity, and the system operator's specifications.

Moreover, installation costs are also dropping as systems become increasingly “plug and play”. Integrating components such as the PCS directly into AC blocks has simplified deployment and reduced project risk, accelerating learning and further lowering costs.

If the price of electricity remains steady, it will be worth it

They also calcualted that capex of $125/kWh means a levelised cost of storage (LCOS), i.e. the cost of storing a unit of electricity, of $65/MWh.

In the case of investments in traditional power plants, the LCOE (levelised cost of electricity) model, which is similar but fundamentally different, shows how much it costs to produce one megawatt hour of electricity over the entire life cycle. In contrast, in this analysis, the LCOS reflects the cost of shifting one MWh to another time, such as moving daytime solar to night-time. Therefore, EMBER did not include the cost of electricity to charge the battery. Other LCOS definitions, such as Lazard’s, reflect the cost of discharging one MWh of electricity and do include the cost of charging the battery.

Accordingly, the return on energy storage facilities is primarily determined by price differences between different market periods, rather than by the absolute price level of electricity. Additional revenue opportunities based on these price differences also play a role.

The following conditions were used for modeling:

• These calculations are based on lithium iron phosphate (LFP) storage systems that can discharge for at least four hours. A 20-year lifetime is now the standard design life of the battery, as LFP technology has enabled higher cycle life.

• Performance guarantees can be expressed also in cycles. They are typically 10-12,000 cycles or more (which, at one cycle per day, is more than 25 years).
• 80% utilisation rate. Long duration systems (4 hours or more) can rarely achieve more than one cycle per day. EMBER's modelling suggests that 80% of one full cycle per day is a conservative estimate if the battery is used to shift solar electricity from light hours to dark hours every single day in a location with relatively consistent sunshine throughout the year.
• 2% degradation per year. By the end of its design life, the electricity delivered by the battery will be lower due to degradation. Manufacturers typically guarantee ≤2 % annual fade, meaning after 20 years, capacity remains at around 65% of initial usable energy. Higher cycling leads to faster degradation and a shorter lifetime. 

• 7% discount rate. For low-risk, contracted battery projects, experts point to a 5–7% discount rate, so EMBER used 7% as a conservative upper limit. Contracted, fixed revenue sources are increasingly common, especially for long duration projects.

• A 90% efficient battery (round-trip, AC to AC) is at the upper end of performance offered by leading suppliers, using high-quality PCS and optimized system integration typical of 2025 installations.

• 2% operational costs. Annual operational costs for utility scale battery storage projects are typically low - around 2% of capex. They assumed 2%, equivalent to $2.5/kWh/year, which covers routine maintenance, monitoring and performance guarantees, but excludes augmentation or extended warranties

EMBER noted that the LCOS presented above does not take into account other revenue sources. In practice, shifting energy is only one part of the value a battery delivers. It also keeps the grid stable by providing services like frequency control, voltage support and emergency black-start, each creating its own revenue stream. When these services are stacked alongside energy shifting, the effective cost of moving a megawatt-hour becomes even lower

Taking into account the annual average DAM price of approximately EUR 100/MWh in the 2024 domestic wholesale electricity market, the current market environment may create conditions in which

battery energy storage systems could generate revenue.

At the same time, it should be emphasised that return on investment is not determined by average annual prices, but by a combination of hourly and short-term price movements, as well as the revenue opportunities available in different markets. This makes market-based operations highly dependent on the operating strategy and risk management of the project in question.

Let's do some maths. Energy storage devices based on the lithium iron phosphate technology mentioned in the example typically have a technical lifespan of 20 years, and the majority of investment costs are capital expenditure (CAPEX). Assuming a conservative payback period of 4–6 years, the project will recoup the entire initial investment cost within this timeframe. It will then generate sustained positive operating cash flow for the remainder of its service life, with low, predictable operating costs.

However, price volatility and the difficulty of forecasting wholesale and balancing markets remain significant sources of uncertainty regarding revenue, which is why financiers often only consider these projects to be bankable if they are backed by state-guaranteed fixed-income schemes or long-term, predictable power purchase agreements (PPAs). The majority of projects included in the analysis were those that could commit to the long term and had a secure revenue base.

Storage takes solar energy projects to a new level

The study also examined how the economics of solar energy projects change when energy storage is added to the power plant. With the cost of storing electricity at $65/MWh, storing 50% of a day’s solar generation for use during the night-time hours adds $33/MWh to the total cost of solar. The global average price of solar in 2024 was $43/MWh, according to IRENA. Turning this cheap daytime electricity into a dispatchable profile that is closer to an actual demand profile,

would therefore result in a total electricity cost of $76/MWh.

Therefore, based on the calculations, solar projects supplemented with energy storage

could provide valuable new sources of revenue at relatively moderate additional cost.

The study stressed, however, that this is not the same as baseload solar. "Delivering constant power every hour of the year, including cloudy weeks and seasonal lows, requires solar overbuild and more battery storage. But shifting half of daytime solar is a major step. It aligns solar generation more closely with a typical demand profile, meaning solar can meet a much larger share of the evening and night-time demand and significantly increase its contribution to the power mix."

In regions with ultra-low-cost desert solar, oversizing and storing a larger share of solar is even more compelling.

Cover photo: Jan Woitas/picture alliance via Getty Images