How batteries will unlock solar’s true potential

Rapid advances in battery technology are making the delivery of round-the-clock solar electricity increasingly feasible. Modern lithium iron phosphate (LFP) batteries are a game changer and have taken over Nickel Manganese Cobalt (NMC) in the grid battery storage market, as they are cheaper, safer, and longer-lasting.

24-hour solar generation can unlock huge savings by helping overcome one of the biggest challenges to clean energy — building more grid. Batteries let solar be used when and where it is needed — without waiting years for costly grid expansions. That is a game changer for data centres, factories and remote infrastructure, where grid access is often delayed, restricted, or entirely unavailable. Battery-backed solar offers a fast, flexible way to overcome grid bottlenecks and get clean power online without being held back by the need to build more grid.

This is already happening. From the world’s first gigawatt-scale 24-hour solar project in the UAE to solar-powered data centres in Arizona and Dubai, real-world deployments are proving that 24-hour solar generation is not just possible — it is here.

1.1 Why this is a game changer

1.1.1 Solar with battery can meet electricity demand any time

Batteries can reshape solar generation to meet electricity demand anytime across the 24 hours of the day. This will unlock benefits far beyond what is possible with solar alone.

When solar is built without batteries, it can only meet electricity demand during daytime hours, leaving the rest of the power system to fill the gap after sunset. As a result, the same fossil-based power plants and grid infrastructure are needed to be maintained to meet the nighttime demand. Shifting some electricity demand from night to day can help reduce this reliance, but the potential is limited.

Other storage technologies such as pumped-hydro or long-duration storage options like compressed air can help, but they are often not readily available, not cost-effective or not ready to scale yet. It is essential to note that solar without batteries still delivers benefits like lowering fossil generation during the day, driving down electricity costs and reducing carbon emissions, but pairing solar with batteries can unlock its full potential.

When solar is built with batteries, it becomes possible to align its generation with electricity demand. It is also worth noting that solar with batteries does not need to deliver the same power every single hour of every day to bring major benefits. Even in less sunny regions battery storage can bring more solar electricity across all hours – meaning fewer power plants and grid infrastructure are needed compared to building solar without batteries.

This shift can significantly ease the high evening prices seen in many countries today, reduce the need for new fossil power plants and defer costly grid upgrades. In California, for example, batteries in 2024 routinely met close to a fifth of daily peak load in the evening hours, displacing gas generation.

1.1.2 Pushing solar penetration higher

Solar is the cheapest source of electricity ever, but its generation is limited to sunny hours. This means, without storage, solar can only meet as much of a region’s annual electricity demand, as can be realistically squeezed into daytime hours.

Batteries remove this constraint. With storage, solar is no longer limited by the sun — it can scale beyond daytime limits, even nearly 100% of electricity needs in the sunniest regions.

This provides a compelling pathway for solar to become the backbone of a country’s electricity system in places with abundant sunlight.

The opportunity may be even greater for electricity users than for the electricity system itself. Bigger consumers like data centres, factories and remote infrastructure require stable, uninterrupted power. For them, 24-hour solar generation can provide a clean, cost-effective alternative to fossil-based grids — available not just as a future ambition, but as a practical solution today.

Depending on grid electricity costs, these users can access cheaper solar power through a range of setups — from partial to near-full coverage, using onsite solar with batteries, or through PPAs with solar-plus-storage systems, especially where land is limited. In the case of PPAs, matching the supply with the consumer’s hourly demand level can also bring financial benefits by reducing their exposure to volatile spot market prices.

1.1.3 Bringing large savings on grid expansions

What makes the case for 24-hour solar generation even more compelling is its role in reducing the need for expensive grid expansions — one of the most difficult and expensive challenges in the clean energy transition.

Adding batteries can increase the impact of a single grid connection, meaning up to five times more solar panels can be installed using the same grid capacity as for just one. In sunny regions, a single solar panel has an annual capacity factor of 20%. However, if five times as many solar panels are installed and paired with batteries, solar electricity generated during the day can be stored and released after the sun sets, pushing that 20% towards 100% round-the-clock supply.

Grids are becoming a bottleneck for the deployment of clean power sources, with at least 3,000 GW of renewable projects worldwide stuck in grid connection queues – more than five times the total renewable capacity installed in 2024 (585 GW). Batteries can help reduce the need for grid investments.

Solar and battery systems are emerging as enablers of industrial development. For high-demand electricity consumers like factories and data centres, grid access may be non-existent, delayed for years, or too expensive to justify. Onsite gas power plants, once seen as a quick and affordable solution, no longer offer the same advantages, as lead times for new gas plants can exceed three years and the construction costs to build gas power plants in the US has tripled since 2022 – rising to $2,400/kW. Other markets are also seeing an upward trend, though less extreme, largely driven by material cost inflation.

Fuel price volatility is an additional risk, especially in gas-importing countries. That means solar and battery might often be the only option (or at least the only clean option) to support new industries.

1.2 Batteries have suddenly got cheaper and better

Battery technology is advancing at lightning speed, leading to rapid cost reductions.

In 2024 alone, average battery prices fell by 40%, hitting a record low of $165 per kWh for a full battery system (excluding Engineering, Procurement and Construction and grid connection costs). Early 2025 data suggests that the trend is continuing, with two auction results in Saudi Arabia showing prices as low as $72KWh. As production scales and efficiency improves, prices are expected to fall even further.

The rise of Lithium Iron Phosphate (LFP) technology marked a major shift for grid storage. In 2023, LFP made up 80% of all new grid battery installations, leading to lower costs and better performance. LFP batteries use less critical minerals (no nickel or cobalt) and safety improvements have reduced the fire risk by two magnitudes since 2019. These batteries are more long-lasting, with some key manufacturers now providing 20-year warranties. This significantly improves the economics of battery projects, where previously developers often sought a pay back within just ten years.

New developments will enhance battery performance even more. For example, the improved container design allows denser packing with more cells, reducing land requirements, alongside better insulation, which cuts maintenance costs, especially in hot and arid conditions. Easier system integration also lowers the installation costs. The next frontier is sodium ion batteries — the world’s first grid-scale sodium ion storage plant has just been commissioned — potentially eliminating the need for lithium, which could drive prices down even further.

Deployment of grid batteries, however, is just getting started. There was 169 GWh of capacity installed in 2024. This was an incredible 17 times more than in 2020. However, this is very small compared to the 599 GW of solar installed in 2024.

There is ample manufacturing supply to maintain a high speed of deployment. There is already enough battery manufacturing capacity globally (1450 GWh, including EV batteries) to make over 2 kWh of lithium battery for every 1 kW solar panel added based on 2024 solar capacity additions (585 GW).

Ample supply of low-cost batteries is a game changer for solar.

1.3 Solar+battery is already happening

Less than five years ago, solar-plus-battery projects were mostly limited to a few demonstration sites. Today, they are rapidly becoming a mainstream commercial solution for dispatchable solar, with project sizes often exceeding 100 MW. These projects are now being rapidly developed across the world, both by utility solar farms and industrial consumers.

1.3.1 Utility solar farms embrace larger batteries

The first gigawatt-scale 24-hour solar project is also already under development in the UAE. The Masdar-led project was announced in January 2025 and will consist of a 5.2 GW PV plant coupled with a 19 GWh battery storage to provide 1 GW uninterrupted electricity supply to the grid.

This project is far from mainstream, but utility-scale solar farms are increasingly adopting large battery systems, either by adding them to existing assets or integrating them in the design of new projects. The US is a prime example of this — in 2023, 75% of all new solar projects awaiting grid connection were paired with battery storage.

In Hawaii, several solar-plus-battery projects are providing electricity through the night after the decommissioning of the last coal power plant in 2022, at a price between 9 and 13 cents per kWh, considerably below the cost of oil generation.

Batteries allow utility solar farms to match the load of industrial offtakers that aim for 24/7 carbon-free electricity – a growing trend among data centre giants such as Google and Microsoft. The 260 MW Sonoran Solar Energy Center in Arizona, the US, will use 1 GWh of storage to match the consumption of Google’s forthcoming Mesa data centre. In Australia, the 2.2 GWh of storage of the 500 MW Richmond Valley solar farm, will enable it to supply electricity for green zinc production.

Battery storage can also enable utility solar farms to expand without the need for additional grid connection capacity. In Portugal, the 220 MW Algarve Solara 4 has announced a 400 million euro investment to add 50 MW of solar and 150 MW of wind capacity, along with 320 MWh of battery storage. The project will leverage the complementary generation profiles of solar and wind, supported by a relatively small but effective battery storage solution “to produce electricity 24 hours a day, making the maximum of the 200 MW connection point”.

1.3.2 It also makes sense for large electricity consumers

Solar-plus-battery solutions are also becoming attractive to commercial and industrial electricity consumers, including behind-the-meter microgrids. These systems help avoid grid-connection queues and reduce exposure to power price volatility and outages – a compelling business case for data centres.

A prime example is the 100 MW Moro Hub in the UAE, world’s largest 100% solar-powered data centre, commissioned in 2022 and sitting in the middle of a large solar power plant.

Solar and batteries can also power even the most energy-intensive operations. In West Virginia, US, a 106 MW solar microgrid project with just 261 MWh of storage is set to demonstrate this by powering titanium melting furnaces, once it reaches full capacity in 2027.

At an even larger scale, in late 2023, Saudi Arabia completed a tourism mega project including 16 hotel resorts and supporting facilities, all powered entirely by solar electricity. The project features a large microgrid with 400 MW of solar capacity and 1.3 GWh of storage and has already been operating smoothly for over a year