Batteries Are Now a Foundational Technology of the 21st Century
First it was EVs. Then power grids. Which sectors will be transformed by batteries in the coming decades?
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For years, batteries were treated as a supporting technology in the energy transition. They made electric vehicles possible. They helped renewable energy projects smooth out fluctuations in wind and solar output. Important, certainly, but not central. That era is ending. According to two recent analyses (here and here) by the International Energy Agency, batteries are rapidly becoming one of the defining technologies of the global energy system.
Batteries are reshaping everything from electricity grids and industrial policy to international trade and energy security. As costs continue to fall and deployment accelerates, batteries are evolving from a clean-energy accessory into critical infrastructure, joining oil, natural gas, transmission networks, and power plants as assets that determine economic competitiveness and geopolitical influence.
Batteries: From Niche Technology to Critical Infrastructure
The energy industry has a long history of underestimating technologies that eventually become indispensable. Electricity itself was once viewed as a niche alternative to steam power. The internet began as a communications tool before becoming the backbone of the modern economy.
Batteries appear to be following a similar trajectory. For much of the past decade, they were discussed primarily in the context of electric vehicles, where they served as a substitute for gasoline.
Today, their role is much broader. Batteries are now essential components of electricity systems, helping balance power grids, integrate renewable energy, improve reliability, and reduce the need for expensive new generation capacity. The IEA argues that battery storage is now scaling rapidly enough to take on a much larger system role. That shift matters because infrastructure technologies do more than solve technical problems. They reshape markets, influence investment decisions, and alter the competitive position of nations.
Batteries are beginning to do all three.
Batteries also exhibit many of the characteristics of a disruptive innovation. They began as an expensive technology with limited applications, unable to compete directly with incumbent energy systems on cost or scale. Over time, however, rapid improvements in manufacturing, performance, and deployment drove costs sharply lower while expanding the range of potential uses.
The result is a technology that increasingly challenges established business models across multiple sectors. In transportation, batteries threaten demand for petroleum products by enabling electric vehicles. In electricity markets, they reduce reliance on gas-fired peaking plants by storing low-cost power and releasing it when needed. In energy security, they shift strategic attention from fuel supplies toward manufacturing capacity, mineral processing, and supply chains.
Disruptive innovations rarely replace existing systems overnight. They gradually capture functions that incumbents once dominated, until the market structure changes.
Batteries appear to have entered that phase of development.
Scale Is Driving a New Era of Industrial Competition
The battery industry is entering a phase familiar to students of industrial history.
The early years were defined by innovation, research, and competing technologies. The next phase will be defined by manufacturing scale. The IEA notes that battery production capacity is expanding much faster than demand, creating intense competition among producers and putting downward pressure on prices. That dynamic rewards companies and countries capable of building large, efficient supply chains while squeezing weaker competitors.
China has emerged as the clear leader, accounting for the vast majority of global battery manufacturing capacity and benefiting from deep integration across mining, processing, component manufacturing, and final assembly. The implications extend far beyond the battery sector itself. Nations increasingly view battery manufacturing as a strategic industry because it sits at the intersection of transportation, electricity, advanced manufacturing, and energy security.
In the coming decade, the battle for leadership in batteries may resemble earlier contests over steel, automobiles, semiconductors, and oil—a competition not merely for market share, but for economic influence.
China’s Dominance Is Reshaping Global Energy Economics
China’s dominance in batteries is the result of industrial strategy, scale, and timing. While many countries debated whether electric vehicles and clean technologies would mature quickly enough to justify major investment, China built the supply chains, factories, mineral-processing capacity, and domestic markets needed to turn batteries into a strategic industry.
That early lead now gives Chinese companies a powerful cost advantage. It has also made China central to the economics of the global energy transition. Lower battery prices accelerate electric vehicle adoption and make grid storage more affordable.
But they also expose a hard reality for countries such as Canada, the United States, and members of the European Union: clean-energy security increasingly depends on manufacturing systems they do not yet control.
The old energy-security question was who controlled the fuel. The new one is who controls the technology, the supply chain, and the industrial capacity to build it at scale.
Grid Batteries Are Becoming the Multi-Tool of the Power System
The most visible battery story has been electric vehicles, but the most important long-term story may be unfolding on power grids.
Electricity systems were designed around the assumption that power must be generated the moment it is consumed. Batteries challenge that assumption. By storing electricity when supply is abundant and releasing it when demand rises, they add a new layer of flexibility to the grid. That flexibility becomes increasingly valuable as wind and solar generation expand because it helps smooth fluctuations in output and reduces the need for backup generation.
The IEA argues that battery storage is moving beyond its traditional role as a niche balancing tool and becoming a core system asset.
In effect, batteries are transforming electricity from a real-time commodity into a resource that can be managed, shifted, and optimized. That capability has profound implications for grid reliability, system costs, and the pace of electrification.
The Battery Revolution Is Expanding Beyond EVs
Much of the public conversation about batteries remains tied to electric vehicles, but the market is becoming far more diverse. The IEA projects that grid-scale storage will be one of the fastest-growing segments of the battery industry over the coming decade, creating a second engine of demand alongside transportation.
That development is important because it broadens the industry's economic foundation. Battery manufacturers will no longer depend primarily on vehicle sales. Utilities, grid operators, industrial facilities, data centres, and renewable energy developers are all emerging as major customers.
As battery costs continue to decline, new applications are likely to emerge that are difficult to predict today, just as falling semiconductor costs unlocked entirely new industries over the past half-century. The battery revolution is therefore not simply about replacing internal combustion engines. It is about creating a versatile energy technology platform capable of transforming multiple sectors of the economy at the same time.
Batteries Are Foundational Technology of the Energy Future
The battery story is often told as a chapter in the clean-energy transition, but that framing may be too narrow. Batteries are emerging as a general-purpose technology with applications that extend across transportation, electricity systems, manufacturing, and national security. Their rapid adoption is changing how energy is produced, stored, moved, and consumed.
It is also reshaping competition between firms and countries, creating new industrial leaders while challenging established business models.
None of this means that batteries will replace every existing energy technology. Energy transitions are additive as much as they are substitutive. But the evidence assembled by the IEA suggests that batteries have crossed an important threshold.
They are no longer a promising technology of the future. They are becoming a foundational technology of the present, one that will help determine the economic and geopolitical landscape of the twenty-first century.
a supporting technology in the energy transition. They made electric vehicles possible. They helped renewable energy projects smooth out fluctuations in wind and solar output. Important, certainly, but not central. That era is ending. According to two recent analyses (here and here) by the International Energy Agency, batteries are rapidly becoming one of the defining technologies of the global energy system.
Batteries are reshaping everything from electricity grids and industrial policy to international trade and energy security. As costs continue to fall and deployment accelerates, batteries are evolving from a clean-energy accessory into critical infrastructure, joining oil, natural gas, transmission networks, and power plants as assets that determine economic competitiveness and geopolitical influence.
Batteries: From Niche Technology to Critical Infrastructure
The energy industry has a long history of underestimating technologies that eventually become indispensable. Electricity itself was once viewed as a niche alternative to steam power. The internet began as a communications tool before becoming the backbone of the modern economy.
Batteries appear to be following a similar trajectory. For much of the past decade, they were discussed primarily in the context of electric vehicles, where they served as a substitute for gasoline.
Today, their role is much broader. Batteries are now essential components of electricity systems, helping balance power grids, integrate renewable energy, improve reliability, and reduce the need for expensive new generation capacity. The IEA argues that battery storage is now scaling rapidly enough to take on a much larger system role. That shift matters because infrastructure technologies do more than solve technical problems. They reshape markets, influence investment decisions, and alter the competitive position of nations.
Batteries are beginning to do all three.
Batteries also exhibit many of the characteristics of a disruptive innovation. They began as an expensive technology with limited applications, unable to compete directly with incumbent energy systems on cost or scale. Over time, however, rapid improvements in manufacturing, performance, and deployment drove costs sharply lower while expanding the range of potential uses.
The result is a technology that increasingly challenges established business models across multiple sectors. In transportation, batteries threaten demand for petroleum products by enabling electric vehicles. In electricity markets, they reduce reliance on gas-fired peaking plants by storing low-cost power and releasing it when needed. In energy security, they shift strategic attention from fuel supplies toward manufacturing capacity, mineral processing, and supply chains.
Disruptive innovations rarely replace existing systems overnight. They gradually capture functions that incumbents once dominated, until the market structure changes.
Batteries appear to have entered that phase of development.
Scale Is Driving a New Era of Industrial Competition
The battery industry is entering a phase familiar to students of industrial history.
The early years were defined by innovation, research, and competing technologies. The next phase will be defined by manufacturing scale. The IEA notes that battery production capacity is expanding much faster than demand, creating intense competition among producers and putting downward pressure on prices. That dynamic rewards companies and countries capable of building large, efficient supply chains while squeezing weaker competitors.
China has emerged as the clear leader, accounting for the vast majority of global battery manufacturing capacity and benefiting from deep integration across mining, processing, component manufacturing, and final assembly. The implications extend far beyond the battery sector itself. Nations increasingly view battery manufacturing as a strategic industry because it sits at the intersection of transportation, electricity, advanced manufacturing, and energy security.
In the coming decade, the battle for leadership in batteries may resemble earlier contests over steel, automobiles, semiconductors, and oil—a competition not merely for market share, but for economic influence.
China’s Dominance Is Reshaping Global Energy Economics
China’s dominance in batteries is the result of industrial strategy, scale, and timing. While many countries debated whether electric vehicles and clean technologies would mature quickly enough to justify major investment, China built the supply chains, factories, mineral-processing capacity, and domestic markets needed to turn batteries into a strategic industry.
That early lead now gives Chinese companies a powerful cost advantage. It has also made China central to the economics of the global energy transition. Lower battery prices accelerate electric vehicle adoption and make grid storage more affordable.
But they also expose a hard reality for countries such as Canada, the United States, and members of the European Union: clean-energy security increasingly depends on manufacturing systems they do not yet control.
The old energy-security question was who controlled the fuel. The new one is who controls the technology, the supply chain, and the industrial capacity to build it at scale.
Grid Batteries Are Becoming the Multi-Tool of the Power System
The most visible battery story has been electric vehicles, but the most important long-term story may be unfolding on power grids.
Electricity systems were designed around the assumption that power must be generated the moment it is consumed. Batteries challenge that assumption. By storing electricity when supply is abundant and releasing it when demand rises, they add a new layer of flexibility to the grid. That flexibility becomes increasingly valuable as wind and solar generation expand because it helps smooth fluctuations in output and reduces the need for backup generation.
The IEA argues that battery storage is moving beyond its traditional role as a niche balancing tool and becoming a core system asset.
In effect, batteries are transforming electricity from a real-time commodity into a resource that can be managed, shifted, and optimized. That capability has profound implications for grid reliability, system costs, and the pace of electrification.
The Battery Revolution Is Expanding Beyond EVs
Much of the public conversation about batteries remains tied to electric vehicles, but the market is becoming far more diverse. The IEA projects that grid-scale storage will be one of the fastest-growing segments of the battery industry over the coming decade, creating a second engine of demand alongside transportation.
That development is important because it broadens the industry's economic foundation. Battery manufacturers will no longer depend primarily on vehicle sales. Utilities, grid operators, industrial facilities, data centres, and renewable energy developers are all emerging as major customers.
As battery costs continue to decline, new applications are likely to emerge that are difficult to predict today, just as falling semiconductor costs unlocked entirely new industries over the past half-century. The battery revolution is therefore not simply about replacing internal combustion engines. It is about creating a versatile energy technology platform capable of transforming multiple sectors of the economy at the same time.
Batteries Are Foundational Technology of the Energy Future
The battery story is often told as a chapter in the clean-energy transition, but that framing may be too narrow. Batteries are emerging as a general-purpose technology with applications that extend across transportation, electricity systems, manufacturing, and national security. Their rapid adoption is changing how energy is produced, stored, moved, and consumed.
It is also reshaping competition between firms and countries, creating new industrial leaders while challenging established business models.
None of this means that batteries will replace every existing energy technology. Energy transitions are additive as much as they are substitutive. But the evidence assembled by the IEA suggests that batteries have crossed an important threshold.
They are no longer a promising technology of the future. They are becoming a foundational technology of the present, one that will help determine the economic and geopolitical landscape of the twenty-first century.
And to top it older car batteries can be used store electricity in bulk.
Thanks Markham. I am gradually learning to see energy, and the structures supporting the energy that runs my household, differently. It’s a big jump. I have an electrically heated household, in Northern Ontario — the house I have lived in for 35 years. That’s the heating system that came with the house, not one we chose out of any great principle or prophetic vision. We have been regarded with indulgent pity by all our neighbours, pretty much, because everyone else uses cheaper “natural” gas. We could never bring ourselves to switch, even though we learned to keep the heat down, wear sweaters all winter, and huddle around the fireplace.
Now I think there is hope that we may be in the vanguard of something new.
But I also think we may have kept a certain principle alive. We don’t expect to be able to ignore the seasons. We know when it is winter, because we dress differently. We know when it is summer ( we don’t have air conditioning either, that electricity bill has to balance out somehow) because we open the windows and welcome in the cool night air with glee. We interact, in all seasons, with our environment.
I’m glad the shifts you describe are happening. I’m also proud of the way our household is alert, winter and summer, to where the sun is, when it is and is not a good idea to turn on the oven and bake something which heats up the kitchen, and who needs to run and shut the windows because it is raining.
Probably foolishly nostalgic. But I like it. Thanks for your excellent Substack. I’m learning a lot.