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A practical guide to using the climate law to get cheaper solar panels, heat pumps, and more.
The new rules are complicated. Here’s how to make sense of them if you’re shopping for an electric vehicle.
Your guide to the key technologies of the energy transition.
The basics on the world’s fastest-growing source of renewable energy.
The country’s largest source of renewable energy has a long history.
The same technology that powers your cell phone also helps expand the reach of renewable energy.
Batteries are the silent workhorses of our technological lives, powering our phones, computers, tablets, and remotes. But their impact goes far beyond our daily screentime — they’re also transforming the electricity grid itself. Grid-scale batteries store excess renewable energy and release it as needed, compensating for the fact that solar and wind resources aren’t always available on demand.
The price of the most ubiquitous battery technology — lithium-ion — has fallen remarkably in the past 15 years. That’s allowed for an enormous buildout of battery storage systems in the U.S. and beyond, which has in turn helped to integrate more renewables onto the grid than ever before. With the assistance of batteries, California ran entirely on clean energy for the equivalent of 51 days last year, while South Australia managed the same for 99 days.
Even as deployment accelerates, startups and other innovators are working to improve on standard lithium-ion tech — or in some cases, supplant it. We’ll get into all that soon, but first, let’s start with a little Battery 101.
All electrochemical batteries — that’s everything from your standard AA to grid-scale lithium-ion systems — work by turning chemical energy into electrical energy through what’s known as an electrochemical reaction. These batteries have three primary components:
Grid batteries charge when there’s excess renewable energy on the grid or when demand for energy is low. When a lithium-ion battery is charging, lithium ions move from the cathode to the anode, where they’re stored. When the battery discharges electricity back to the grid, lithium ions move from the anode to the cathode. This movement triggers the release of electrons at the anode, which move through an external wire that carries power to the grid.
There’s variation within the realm of lithium-ion batteries. For example, some use different cathode chemistries, a solid electrolyte, or a pure lithium metal anode. Within the broader world of electrochemical batteries, there are also a variety of alternate chemistries including sodium-ion, lithium-sulfur, and iron-air (more on those below).
But if one broadens the definition of a battery to include any system that stores energy, that’s when the possibilities really open up. In this sense, a battery could be a pumped hydropower storage system, in which energy is stored by moving water uphill into a reservoir and later releasing it to generate electricity through kinetic energy. A battery could also be energy stored as heat or compressed air. Many of these mechanisms rely on converting stored energy into electricity by turning a turbine or generator.
Batteries help to stabilize the electric grid and help communities and grid operators to take full advantage of their renewable energy resources by providing a reliable power supply when, as the saying goes, the sun isn’t shining and the wind isn’t blowing. New solar or wind plants combined with battery storage can also be highly cost-effective, achieving power prices that are competitive with or lower than those of new natural gas facilities in many cases.
Homes and businesses can also install their own personal battery storage systems to bank energy from rooftop solar panels or directly from the grid. This allows individuals and companies to lower their electricity bills by charging their batteries when grid prices are low and using stored energy when prices are high.
By the end of last year, the installed capacity of utility-scale batteries in the U.S. reached about 26 gigawatts, surpassing the cumulative capacity of pumped hydro for the first time. So while pumped hydro can still store a larger amount of total energy, batteries can now deliver more instantaneous power to the grid than any other energy storage resource. And though that 26 gigawatts represents a mere 2% of the U.S.’s total 1,230 gigawatts of generation capacity, the battery sector is growing rapidly. The International Energy Agency reported in February that planned capacity additions for this year totaled 18.2 gigawatts for the U.S. alone.
Lithium-ion batteries weren’t originally designed for grid-scale energy storage. Rather, they were commercialized in the early 1990s for use in portable consumer electronics such as camcorders, cell phones, and laptops. These batteries proved to be more energy dense, lighter, and longer lasting than their predecessors, and were thus eventually adopted for a whole host of applications, including the growing electric vehicle market in the 2010s.
As electric vehicle production ramped up throughout the decade, manufacturers scaled up their production of lithium-ion batteries, quickly driving down prices — from 2010 to 2020 the cost of battery packs declined nearly 90%. Production became primarily concentrated in East Asia, where companies such as CATL, LG Energy Solution, and Panasonic emerged as dominant players.
As the cheapest and most mature battery tech on the market, lithium-ion thus became the default for grid developers looking to manage the variability of intermittent solar and wind resources. As renewables deployment surged, adding battery storage to these facilities started to become more cost-effective than building new fossil-fuel facilities in some markets and provided a reliable way to regulate the grid’s frequency. Lithium-ion batteries can begin absorbing or delivering power at a moment’s notice, which is integral to keeping the grid balanced.
While lithium-ion batteries have never been a very practical or economical option when it comes to long-duration storage — that is, the ability to dispatch energy for more than about four to eight hours at a time — they are well suited to applications such as storing excess solar produced during the day for use in the evening, or smoothing out the fluctuations in renewable resources throughout the day.
For one, China essentially has a virtual monopoly on the lithium-ion battery industry. The country made EV production a national priority beginning in the 2000s, and by the 2010s it was heavily subsidizing battery and EV manufactures alike. Thus, China came to dominate the supply chain at nearly every level, from raw materials refining to cell manufacturing, anode and cathode production, and battery pack assembly. Ideally, the U.S. would lessen its technological reliance on a nation that it’s long seen as an adversary, but building a domestic lithium-ion battery industry from scratch is an extremely complex and expensive endeavor.
In terms of technical drawbacks, most lithium-ion batteries use a flammable liquid electrolyte. That’s prone to catching fire if a battery component or surrounding equipment fails, if a cell is punctured or simply overheats, as illustrated by the Moss Landing fire in California, which broke out in January at one the world’s largest battery storage facilities. While the energy density of lithium-ion is a main selling point, the flipside is that in a fire, more energy equals more heat. And since grid-scale systems pack battery cells close together, a fire in one cell can spread quickly across an entire facility.
Finally, in terms of cost, there’s only so far lithium-ion batteries can fall due to the expense of the raw materials. The price of lithium itself has been notoriously volatile. After hitting record highs in 2022, the commodity price subsequently collapsed after a wave of new mining projects oversupplied the market. This type of volatility wreaks havoc for battery storage developers and their balance sheets, thus spurring interest in chemistries that offer lower, more stable costs, as well as technologies with potentially superior cycle life, energy density, discharge times, and safety profiles.
The most widely commercialized spin on conventional lithium-ion batteries, which are traditionally made with an NMC cathode, is a variant known as lithium iron phosphate, or LFP. The iron-phosphate bond in a LFP cathode is very strong, making it more thermally stable than those in NMC batteries. LFP materials are also more structurally durable than nickel and cobalt, meaning these batteries can be charged and discharged more times before wearing out. Finally, LFPs are also cheaper and more sustainable, as the cathode materials are plentiful and less environmentally damaging to mine. LFP’s main drawback is its lower energy density, but its many advantages have enabled it to overtake NMC as the leading chemistry for new battery energy storage systems.
All the other competitors have much lower levels of commercial maturity. But on the plus side, this means there’s an opportunity to build out domestic supply chains for them. Sodium-ion batteries, for example, replace lithium with sodium, which is far more abundant. They’re also more thermally stable. Unfortunately for U.S. manufacturers, China is already surging ahead in the race to scale up this tech. Then there’s the more nascent lithium-sulfur batteries. They have a very high theoretical energy density, which could lead to lighter and more compact energy storage systems if companies can overcome core technical challenges such as short cycle life.
Flow batteries are also an option that’s been studied for decades. These store energy in liquid electrolytes held in external tanks rather than in solid electrodes. This presents a promising option for longer-duration energy storage since the design can be scaled easily — more energy simply means bigger tanks. Because the active materials are liquid, these batteries also have a very long cycle life, and their water-based designs are non-flammable. Flow batteries are also much bulkier, however, and haven’t yet scaled enough to become cost-competitive with lithium-ion under most circumstances.
Getting into the realm of long-duration storage also opens up possibilities such as iron-air batteries, which are being commercialized by the Massachusetts-based Form Energy. In theory, these can discharge for 100-plus hours by taking in oxygen from the air and reacting it with iron to form rust, releasing electrons in the process. When the battery is charging, an electrical current converts the rust back into iron. Because iron is cheap and plentiful, this tech could also be significantly less expensive than LFP batteries. And since it uses a water-based electrolyte, these batteries aren’t flammable. The first iron-air battery plant is set to come online at the end of the year.
Beyond the electrochemical domain, there’s a wider, weirder world of energy storage technologies, many of which are being explored for their long-duration storage potential. Pumped hydro can only be built only in very specific geographies, so it’s not a main competitor in many regions today. But gravity-based storage companies such as Energy Vault often take inspiration from this approach, storing energy by using excess electricity to raise heavy objects such as concrete blocks. When energy is needed, the blocks are lowered, causing the motors that lifted them to run in reverse and act as generators to produce electricity.
Canadian company Hydrostor is pursuing another method, which involves using surplus energy to compress air and pump it into a water-filled cavern, displacing the water to the surface. To discharge, water is released back into the cavern, pushing the air to the surface, where it mixes with stored heat to turn an electricity-generating turbine.
Then there’s thermal energy storage — essentially storing energy as heat in materials such as carbon blocks. This method has the potential to decarbonize industrial processes such as steel and cement production, which demand high temperatures that are difficult to achieve with electricity. Via resistance heating — the same technology as a toaster — electricity from renewable energy is converted into heat, which is then stored in thermally conductive rocks or bricks. When that heat is needed, it can be delivered directly as hot air or steam to the facility, or in some cases converted back into electricity for use at the facility or on the grid.
Experts say that none of the aforementioned technologies is likely to fully replace lithium-ion anytime soon. That’s in large part because lithium-ion is a fully mature technology with well-established supply chains, but also because it’s simply efficient and cost effective for what it can do.
Many of the technologies mentioned could, however, become effective complements to lithium-ion on the grid. For example, it’s possible that some combination of iron-air batteries, gravity energy storage, and compressed air energy storage could meet longer-duration needs — in some cases discharging continuously for days at a time. Thermal energy storage could also play a role here, as well as in decarbonizing high-heat heavy industries, which don’t make economic sense to electrify with lithium-ion batteries.
Sodium-ion batteries could eventually become cheaper than LFP, but because the tech has yet to scale and reach that price point, it’s still primarily viewed as a complementary solution. Having other viable battery chemistries such as sodium-ion would help reduce the overall demand for lithium, thus working to stabilize prices and risk in the battery supply chain as a whole. But because sodium-ion is less energy dense, it probably won’t make sense in space-constrained regions.
As for lithium-sulfur, the tech is just beginning to hit the market as companies such as Lyten focus on early applications in drones, satellites, and two- and three-wheelers. But it doesn’t yet have the cycle life to make sense for any grid-scale applications, and whether it will ever get there has yet to be discovered.
Yes, but battery recycling — especially for battery energy storage systems — is still a nascent industry. And it remains uncertain whether recycling and reusing battery materials is financially viable in an environment where lithium prices have plummeted and other key battery minerals such as nickel, cobalt, and graphite have become significantly cheaper. LFP’s cost efficiency improvements have further depressed interest in recycling their materials. But there’s still interest in this sector as it could help establish a domestic mineral supply chain, greatly reduce the need for environmentally disruptive mining projects, and ameliorate problems such as toxic chemical leaching and fire risk, which can occur when batteries are improperly disposed of.
Because grid-scale battery deployments didn’t begin to ramp in earnest until 2019, most systems have yet to reach the end of their useful life, which can last on the order of 10 to 20 years. As such, most leading battery recyclers — such as the well-funded startup Redwood Materials — are primarily focused on old EV batteries for now. Redwood says it can recover, on average, over 95% of battery materials such as lithium, nickel, cobalt, copper, aluminum, and graphite. Recently, the company has also been working to repurpose old EV batteries with some life left in them to make grid-scale battery storage systems, and it’s made forays into recycling grid batteries as well.
One of the industry’s former leaders, Li-Cycle, filed for bankruptcy in May, while another player, Ascend Elements, has paused construction on its recycling facility in Kentucky due to “changing market conditions.” As the U.S. seeks to develop a more localized battery supply chain, however, recycling will only become more critical.
It’s a mixed bag. On the one hand, President Trump’s steep tariffs on Chinese goods are set to substantially increase prices for domestic battery energy storage systems, given that the U.S. imports nearly all of its battery cells from China. This will threaten developers’ margins, potentially leading to project cancellations or delays.
Trump’s One Big Beautiful Bill maintained tax credits for battery energy storage projects through 2032, however stringent foreign sourcing rules now apply, withholding tax credits from projects that source a certain percentage of their components from Russia, Iran, North Korea, and most importantly, China. Given how China-centric the battery supply chain is, achieving the required sourcing levels could prove difficult, though exactly how difficult ultimately depends on forthcoming guidance from the Treasury department.
On the bright side, the administration is also bullish on bolstering the U.S. supply chain for critical minerals and rare earths. In a recent meeting, White House officials told a group of critical minerals firms that they would guarantee a price floor for their products. Such a policy could, of course, bolster the domestic battery supply chain, though at the risk of making this tech more expensive.
Assuming the U.S. navigates the current political headwinds and maintains a degree of momentum in its transition to clean energy, battery energy storage will play an increasingly critical role on the future grid, both domestically and globally. As electricity demand grows and renewables make up a progressively larger proportion of the mix, batteries will help ensure grid flexibility and resiliency. That will be increasingly important as extreme weather events become more common and severe.
In some markets, solar plus storage facilities have been more economical than so-called fossil fuel “peaker plants” for years. Peakers fire up during times of maximum electricity demand, and as batteries continue to fall in price, stored renewable power becomes an ever-cheaper way to supplement supply. As long-duration storage tech advances and comes down the cost curve, renewables will be able to provide firm baseload power over a period of days or even weeks, making fossil fuel infrastructure increasingly obsolete.
The International Energy Agency reports that in order to reach net zero emissions by 2050, global grid-scale battery storage needs to expand to nearly 970 gigawatts of capacity by 2030. That means annual grid-scale deployments must average about 120 gigawatts per year from 2023 to 2030. So while last year saw a record-setting 55 gigawatts of newly installed grid-scale capacity, that type of hockey-stick growth will need to accelerate even further if batteries are to pull their weight in the IEA’s net zero scenario.
Where there’s heat — like, say, the molten core of the Earth — there’s energy.
Could the answer to our energy demand conundrums lie beneath our feet? And no, I’m not talking about oil, coal, or natural gas. I’m referring to the fundamental stuff of energy itself: heat. Geothermal power is having something of a moment as a non-carbon-emitting source of electricity that everyone seems to like — including climate activists, the oil and gas industry, technology companies, and even the Trump White House and Republican-controlled Congress.
Geothermal energy has been in use for decades, but has seemingly faced fundamental geological and physical restrictions in how much of a resource it could ever be. Now, however, thanks to new technological and process developments, including some borrowed from the oil and gas industry, geothermal could become a pillar of the energy system, potentially making up as much as 90 gigawatts of capacity by the middle of the century, roughly equal to nuclear power today.
But I’m getting ahead of myself — let’s start with the basics.
At its most fundamental, geothermal energy is the heat from the Earth’s core made usable up here on top of the crust. The International Energy Agency estimates that the Earth holds 45 terawatts of continuous heat flow, thanks to a mixture of energy left over from the planet’s formation and the radioactive decay of isotopes in its core and mantle of layers, where the temperature is probably around 5,000 degrees Celsius. In general, temperatures go up around 25 degrees per kilometer you go beneath the Earth’s crust.
Any geothermal system needs three things: heat, fluid, and permeability. The energy comes from heat, which is transferred through fluid, and the fluid has to move through permeable rocks to reach the surface. Traditional geothermal involves finding fluid — typically water or steam — that can be brought to the surface and used to spin turbines that generate electricity. Sometimes this happens directly with underground steam; in other cases, extremely hot water under high pressure is converted to steam as it’s brought to the surface; in still other cases, geothermal heat is used to heat another liquid, which is then vaporized to spin a turbine.
Traditional geothermal is inherently limited, however — there’s only so much hot water already under the Earth’s surface that can be economically tapped. “It’s a great solution, but only in a handful of places on Earth where those conditions are met,” Drew Nelson, vice president of programs, policy, and strategy at Project InnerSpace, a geothermal nonprofit, told me. Iceland, Kenya, Indonesia, certain parts of the American Southwest have the ideal mix, but that still leaves a lot of untapped energy. “It’s hot everywhere underground,” Nelson said.
The number of hot rocks through which fluid can be pumped is far, far greater than the amount of naturally occurring hot steam or water. Enhanced geothermal systems bring fluid to already hot rocks, in a sense creating a reservoir that otherwise you’d have to rely on nature to supply. This is done using techniques borrowed from the oil and gas industry, including horizontal drilling and hydraulic fracturing, to run fluid through the hot rocks before bringing it back up to the surface.
A related technology, closed-loop geothermal (sometimes called “advanced geothermal”), runs fluid through underground pipes that harvest heat from rocks, instead of turning the rock themselves into a reservoir for hot fluid.
The United States is the once and perhaps future champion of geothermal power. We still have the world’s largest installed base of geothermal generation — but it’s largely from projects that were built between 1980 and 1995, according to the International Energy Association. About half of the United States’ roughly 4 gigawatts of geothermal capacity came online in the 1980s alone, according to Energy Information Administration data. Most of this is in California and Nevada.
The Department of Energy has estimated that geothermal could provide at least 90 gigawatts of power, or around 4% of total U.S. generation capacity, by 2050. In practice, however, geothermal could be more valuable on the grid than other more plentiful energy sources because it’s not weather dependent, meaning that much more of that capacity is consistently available.
Either way, the geothermal industry by 2050 will look very different from the one today. Recent growth has been concentrated in California, where utility regulators and the state legislature have instituted aggressive mandates for geothermal procurement, seeing it as a round-the-clock source of non-carbon-emitting power. Future growth, however, has started throughout the American West, and could, thanks to new technologies, flourish all over the world.
As with any source of power, especially if it can be used 24/7, the answer is likely technology companies. The Rhodium Group estimated that geothermal could supply “up to 64%” of future data center demand.
Last year, Meta signed a deal for 150 megawatts of geothermal power from Sage Geosystems, a Texas-based next-generation geothermal startup that specializes in long-duration power generation, and specifically energy storage. That would likely come online in 2027.
One of the leading enhanced geothermal companies, Fervo, has been providing power from a site in Nevada since 2023, and is developing a substantially larger, 500-megawatt project in Beaver County, Utah, near an existing Department of Energy research facility. That should be online by 2026. More recently, Fervo has inked deals with the likes of Google and Nevada utility NV Energy, and is working with the Department of Energy to expand its drilling and bring down costs.
The company has also hinted that it has a megadeal in the works, but even without that, Fervo has achieved impressive scale and results. The company has reported steadily decreasing drilling costs, falling from over $9 million per well to under $5 million from 2022 to 2024, and raised hundreds of millions of dollars from investors including Breakthrough Energy Ventures, DCVC, and Devon Energy.
What has made geothermal distinctive among the array of non-emitting energy sources is that Republicans like it, too. Tax credits accessible to geothermal developers were largely spared in the One Big Beautiful Bill Act, which featured deep cuts to wind and solar incentives. A gaggle of Republican lawmakers have visited Fervo’s Utah site, and Fervo Chief Executive Tim Latimer recently spoke alongside fossil energy executives with the American Energy Dominance Caucus, a bipartisan House caucus. Past bills to streamline permitting for geothermal exploration have had Republican and Democratic sponsors, often from Mountain West states.
Even Trump likes geothermal. The White House’s new AI Action Plan, released in July, calls on policymakers to “prioritize the interconnection of reliable, dispatchable power sources as quickly as possible and embrace new energy generation sources at the technological frontier,” including, by name, “enhanced geothermal.”
One major near-term risk for the geothermal buildout is Trump’s tariff regime, which will likely mean higher input costs for geothermal producers on materials like steel. Another is the new restrictions on tax credits established in the One Big Beautiful Bill Act, which penalize companies with supply chain or financial connections to so-called “foreign entities of concern,” a list of countries that includes North Korea, Iran, Russia, and most importantly in this context, China.
While the exact nexus between China and geothermal is not entirely clear, “there are parts of geothermal technologies, such as pressure valves and drill casings and well casings and the like, that are not unique to geothermal that are very much part of the fracking industry that could be exposed to Chinese investment or Chinese supply contracts,” Advait Arun, senior associate for energy finance at the Center for Public Enterprise, told me.
There’s also the issue of getting next-generation geothermal projects financed. While geothermal companies themselves are able to raise money from investors — Sage Geosystems raised a $17 million series A round last year, for instance, while XGS, a closed-loop geothermal startup, raised $13 million — getting normal project financing from banks and other traditional entities is more of a challenge compared to mature technologies like fracking for oil and gas.
“There was and remains an inherent risk in traditional hydrothermal that the financial community has been very aware of,” Project InnerSpace’s Nelson told me — that is, the scarcity of existing underground water resources. Next-generation geothermal could hopefully see less risk, though, because developers aren’t not searching for a particular reservoir of steam or fluid.
“Getting the financial community to understand that there’s far less risk there is an important piece of it,” Nelson added.
Industry estimates put conventional geothermal’s levelized cost between $64 and $106 per megawatt-hour, while the DOE has estimated that first of a kind of enhanced geothermal comes in at around $200 per megawatt-hour. Compare that to between $38 and $78 for solar, the fastest-growing source of new zero-carbon energy, and between $48 and $107 for natural gas, and you’ll see a challenge to be overcome.
The Biden administration’s goal was to drive next-generation geothermal costs down to $45 per megawatt-hour by 2035. Project InnerSpace projects that “enhanced geothermal can achieve an $88 per megawatt-hour levelized cost of energy” using first of a kind technology, assuming the project can access the investment tax credit and assuming some technologies of scale and efficiencies, which would make it competitive with many other non-carbon power sources. Those costs could come down to “between $50 and $60 per megawatt-hour” by 2035.
At that level, according to the IEA, geothermal would be “one of the cheapest dispatchable sources of low-emissions electricity, on a par or below hydro, nuclear and bioenergy,” and “would also be highly competitive with solar PV and wind paired with battery storage.”
Yes, so it would seem. As Carnegie Endowment researchers have pointed out, these levelized cost projections may not reflect the true value of geothermal. Key to geothermal’s appeal is its dispatchability, not dependent on the weather, and can be turned on or off or ramped up and down as needed.
