Coal and Gas Use Ending as World Moves to Cheap Batteries to Power Grids

A global surge in large-scale battery projects is set to reshape power systems in 2026, with installations planned across regions including Texas, Inner Mongolia, and New South Wales.

Falling costs, rising electricity demand, and geopolitical tensions are driving rapid growth, positioning battery storage as a key part of the future energy mix.

According to BloombergNEF, global battery installations are expected to rise by about one-third this year, with strong expansion across Europe, the Middle East, Africa, and Latin America. Demand could grow even further if disruptions in fossil fuel supplies continue.

The shift is being supported by a sharp decline in battery costs, which have dropped around 75% since 2018 and are expected to fall further in the coming years. At the same time, electricity demand is increasing, especially from data centers, pushing energy systems to adopt faster and more flexible solutions.

Battery storage allows operators to store electricity when it is cheap, such as during peak solar or wind generation, and supply it when demand is high. This reduces reliance on coal and gas, while improving grid stability.

Large-scale projects are already coming online. In Inner Mongolia, multiple battery sites with a combined capacity of 7.4 gigawatt-hours have been activated. In Australia, the Waratah Super Battery has already demonstrated its impact by supplying more power during peak demand than gas-fired plants shortly after partial operation. The project is expected to be fully operational in 2026.

China plays a central role in this expansion, accounting for most global battery production and a large share of installations. Oversupply from its manufacturing sector has pushed prices down, making battery projects more affordable worldwide.

In the United States, the rise of data centers is increasing pressure on the electricity supply. Many facilities are turning to renewable energy combined with battery storage, as traditional power plants face delays. Batteries are expected to make up more than a quarter of new power capacity added in the country in 2026.

Europe is also seeing rapid growth, as increasing renewable energy generation creates challenges for existing grids. Battery storage is being adopted to manage fluctuations in supply and reduce energy losses.

New technologies are emerging as well. Companies such as Form Energy are developing long-duration batteries that can store energy for extended periods, offering additional reliability during supply shortages.

Despite strong momentum, challenges remain. The industry depends heavily on China’s supply chain, while grid connection delays, regulatory hurdles, and high financing costs can slow project development.

Even so, energy storage is becoming increasingly important. As electricity demand rises, renewable energy expands, and fossil fuels decline, batteries are expected to play a central role in ensuring stable and reliable power systems worldwide.