LONDON/OSAKA — February 4, 2026 — For over a century, pumped hydropower was the undisputed king of energy storage. By moving water between reservoirs, it provided the “bulk” storage necessary to balance the grid. However, a landmark report from Rystad Energy and SolarQuarter confirms that 2025 was the year the crown shifted.

Global operational BESS capacity has now officially surpassed pumped hydro, exceeding 250 GW by the end of last year.

The Engine of Growth: Speed and Cost

While pumped hydro projects often take a decade to permit and build, large-scale battery farms can be deployed in under 12 months. This speed has allowed BESS to keep pace with the exponential rise of solar power.

• Record Additions: In 2025 alone, the world added over 100 GW of new battery storage—nearly triple the volume added just two years prior.
• Cost Deflation: Turnkey costs for four-hour lithium-ion systems have plummeted to roughly $200/kWh in Europe and as low as $150/kWh in China, making them the most competitive source of grid flexibility.

“The global energy sector crossed a major turning point in 2025 as battery energy storage systems became the largest source of operational energy storage in the world… It is now a core part of modern electricity systems, helping grids manage the fast growth of solar and wind energy.”

— Rystad Energy, February 4, 2026

From “Backup” to “Baseload” Replacement

The most startling trend for 2026 is that batteries are no longer just supporting renewables—they are actively killing off gas-fired “peaker” plants. In markets like California and Victoria, Australia, battery generation has begun to consistently outperform gas during evening peak demand.

In April 2025, California saw batteries account for more than 20% of evening generation, effectively extending the reach of solar energy well into the night.

The 2026 Outlook: Grid-Forming Revolution

As we move through 2026, the industry is shifting toward “grid-forming” inverters. Unlike older systems that simply followed the grid’s lead, these new batteries can independently maintain voltage and frequency. This technology allows grids to run on 100% renewable energy without the need for traditional, rotating fossil-fuel turbines to keep the system stable.

Metric	2025 (Actual)	2026 (Projected)
Total BESS Capacity	250+ GW	360+ GW
Annual Additions	100 GW	130 GW
Dominant Tech	LFP (Lithium Iron Phosphate)	LFP & Emerging Sodium-ion