2025 Energy Outlook: Slumps in Battery Costs, Unprecedented Energy Storage Expansion, Carbon Capture Surges, Federal Push for Permitting Simplification
2025 promises to build upon the successes of America's clean energy transition in 2024. The Inflation Reduction Act (IRA) has stirred an impressive $600 billion in private investment in new manufacturing across the nation. Solar energy, wind energy, battery storage, and electric vehicle deployment all recorded unprecedented heights in the United States, igniting a wave of clean energy job growth that doubled the national job growth rate.
However, the federal policy landscape has shifted with the incoming presidential administration and some lawmakers advocating for the IRA's repeal--in part to finance extended tax cuts and boost fossil fuel production.
Last year's prediction piece correctly anticipated a contentious debate over the 45V clean hydrogen production tax credit, the emergence of electric vehicles as a hot-button election topic, and a surge of EV charging infrastructure investment.
Policy experts and clean tech executives weighed in on the four most promising predictions for 2025:
- Battery prices hitting below cost parity: Analysts anticipate battery prices to drop below $100/kWh in 2025, driven by excess production capacity in China, low-cost battery chemistries like lithium iron phosphate, and beat-down lithium prices.
- Rise in grid-scale battery storage demand: Geopolitical challenges and FERC's order to simplify the interconnection process will spark growth in large-scale battery energy storage system projects in the U.S.
- Carbon dioxide removal reaching scale: The carbon removal sector will scale in 2025, providing new economic opportunities in energy, forestry, agriculture, and manufacturing jobs in rural communities.
- Permitting reform becoming a priority: Congress and the federal government will prioritize permitting reform to boost energy innovation, promote economic growth, and cut regulatory red tape for clean energy technology deployment.
The shift in policy discussions has led some businesses to reconsider their investments in renewable energy, as the potential repeal of the Inflation Reduction Act could impact the sector's financial outlook. Despite these challenges, the continued decline in battery prices is expected to bolster the energy business, making electric vehicles more affordable and increasing the demand for energy storage solutions.
