2025 Clean Energy Outlook: Predictions and Challenges Ahead
Key Ideas
  • The Inflation Reduction Act drove significant manufacturing investments, leading to record highs in solar energy, wind energy, electric vehicles, and battery storage deployment.
  • Predictions for 2025 include EV battery prices dropping below $100/kWh, increased demand for grid-scale battery storage, carbon dioxide removal scaling up, and permitting reform becoming a priority.
  • Battery prices are expected to continue decreasing due to excess capacity and low lithium prices, making electric vehicles increasingly economically competitive with gas-powered cars.
  • The growth of large-scale battery energy storage systems faces geopolitical challenges but is expected to accelerate in 2025, driven by incentives and the need for grid asset upgrades.
In 2024, the United States witnessed significant progress in its clean energy transition, with substantial private investments and advancements in solar, wind, electric vehicles, and battery storage. This growth was fueled by federal, state, and local policies along with corporate actions that doubled the pace of emissions reduction compared to the previous decade. However, the incoming government is considering repealing the Inflation Reduction Act, which could impact the clean energy momentum. Predictions for 2025 include EV battery prices dropping below $100/kWh, increased demand for grid-scale battery storage, carbon dioxide removal reaching industrial scale, and permitting reform becoming a key focus. The decreasing battery prices are expected to make electric vehicles more affordable, leading to mainstream adoption. The battery energy storage sector is set to grow in 2025, with streamlined project execution processes and financial support from the U.S. Department of Energy. Lithium-iron phosphate batteries are projected to dominate the market, supported by local manufacturing incentives and tariff considerations. Geopolitical challenges and tariff negotiations will play a crucial role in shaping procurement strategies for battery energy storage integrators. The carbon dioxide removal industry is expected to expand in 2025, creating new economic opportunities and jobs in energy, forestry, and agriculture sectors. Carbon removal is viewed as a burgeoning industry with positive environmental impacts and economic growth potential, particularly in rural communities.
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