As solar adoption accelerates worldwide, energy storage has become its indispensable partner. By stabilising supply, enabling self-consumption, and supporting grid resilience, batteries are essential for solar’s long-term viability.
Yet behind the headlines of falling lithium-ion prices and increasing installation rates lies a more complex question: are we accounting for the full cost of solar storage?
Highlighting hidden costs
Lifecycle costs and emissions
According to IEA-PVPS, adding storage increases the greenhouse gas footprint of residential PV systems. A PV-only setup emits ~54 g CO₂-eq/kWh, while adding batteries raises this to 80–88 g CO₂-eq/kWh depending on system size.
Battery chemistry and lifetime are major factors – shorter-lived batteries can increase emissions by up to 16%. Research suggests that alternative PV technologies (e.g. CIS instead of silicon) or longer-lasting batteries can significantly reduce lifecycle impacts.
This highlights how technology choice influences the “true cost” of storage.
Production and end-of-life impacts
Battery manufacturing is resource- and energy-intensive – mining lithium, cobalt, and nickel contributes to water pollution, biodiversity loss, and produces greenhouse gas emissions. However, some batteries produce more emissions to create than others.
Recycling remains limited and expensive, particularly for critical and sometimes toxic components like cobalt and nickel. Recycling and disposal methods also produce emissions, but utilising advanced recycling processes can reduce this.
Making savings
Despite the costs of adding storage to solar solutions, the savings make storage an invaluable resource.
- Infrastructure savings: Batteries can lower the need for costly grid infrastructure, particularly where bottlenecks prevent renewable energy from reaching demand centres.
- Curtailment reduction: Curtailing solar due to grid constraints results in wasted energy and lost revenue. Implementing storage alongside solar sites could help tackle oversupply and prevent curtailment.
- Hybrid value creation: In the US, solar-plus-storage is booming. As of May 2025, around 162 GW of projects were planned, with 42% of capacity allocated to BESS. Hybrids allow operators to capture arbitrage opportunities, store surplus solar, and provide capacity services.
- Fossil fuel costs: Lazard’s 2024 analysis found fossil fuel costs are double those of utility-scale solar, with the levelized cost of storage (LCOS) ranging from $29–$92/MWh compared to $69–$169/MWh for coal and $110–$228/MWh for gas peakers.
- Cheaper over time: Storage is becoming cheaper as time goes on. LCOS for a 100 MW/4-hour system has fallen from $170–$296/MWh pre-IRA to as low as $124/MWh post-IRA.
To the future
Solar storage is essential to a clean energy future – but its true cost extends far beyond installation price tags.
Research shows that battery size, chemistry, and lifespan all shape emissions outcomes, and industry data reveal how storage reduces grid costs, captures new revenues, and still outperforms fossil fuels economically.
To ensure the energy transition is both sustainable and affordable, frameworks need to account for lifecycle environmental impacts, recognise both grid and market benefits, support recycling and circular design, and compare costs to fossil fuels.
In doing so, the industry will fully optimise the benefits of BESS.
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