2024 was one of the most successful years in America’s clean energy transition. So what will 2025 hold?
The Inflation Reduction Act’s provisions spurred hundreds of billions in new manufacturing investments across the country, passing nearly $600 in total private investment since it was passed in 2022. Solar energy, wind energy, battery storage, and electric vehicle deployment all hit new highs across the United States, pushing clean energy job growth to twice the national job growth rate. And the cumulative effect of federal, state, and local government policies along with corporate action put the U.S. on track to more than double its emissions reduction pace this decade compared to the decarbonization rate achieved in the 2010s.
But the federal policy outlook has changed, with an incoming presidential administration and some members of the 119th Congress calling for repealing the IRA, in part to pay for extended tax cuts, and expanding fossil fuel production.
Last year’s prediction column accurately foresaw a fight over the 45V clean hydrogen production tax credit, EVs becoming an election year issue, and surging EV charging infrastructure investment.
Policy experts and clean tech executives share four predictions for the year ahead: EV battery prices dropping below cost parity with gas-powered cars, increased demand for grid-scale battery storage, carbon dioxide removal hitting scale, and permitting reform becoming a priority of Congress and the federal government.
Battery prices will drop below long-sought threshold of $100/kWh
SatKartar Khalsa, Senior Initiative Director, Climate Imperative Foundation
As the market for electric vehicles grows, analysts are watching for signs of a major inflection point: the sticker price of an EV becoming as cheap as a gas-powered car. As anyone who’s shopped for an EV knows, the battery is one of the costliest components – but the good news is battery packs are getting cheaper. A battery pack price of $100 per kilowatt-hour is considered the crucial point at which EVs become price competitive with gas-powered cars, a shift that is key to mainstream EV adoption.
Many expect to reach this inflection point in the next several years – we think it will happen as soon as this year.
In 2024, global average battery prices fell 20% to $115 per kWh, driven by excess production capacity in China and burgeoning low-cost battery chemistries like lithium iron phosphate. In 2025 these conditions will persist and aided by low lithium prices, will continue to put downward pressure on battery prices. In China, battery prices already dipped below $100 per kWh in 2024. Whether we see these low prices around the world in 2025 will depend on trade dynamics for major auto markets, including tariffs.
Once EVs are as cheap as gas-powered cars, the trend won’t stop there. Battery prices have fallen over 90% in the past 15 years and will continue to fall as production costs decline and emerging battery technologies mature. EVs will be the most economical option for consumers, and by a growing margin. Add to that the considerable cost savings from not filling up with gas, and it’s easy to predict EVs will become the default choice for mainstream consumers in the next few years.
Battery Energy Storage System Demand Continues Growing Amidst Geopolitical Challenges
Sonia St-Arnaud, President & CEO, EVLO
We foresee a more dynamic battery energy storage system project execution pace in 2025 with FERC’s Order No. 2023 and approval of the cluster study process that will streamline the interconnection process and reduce delays. The energy storage industry will also benefit from the U.S. Department of Energy’s equitable cost-sharing initiatives for required grid asset upgrades, so new storage projects are evaluated on realistic financial models.
We’re seeing rapid growth for large-scale BESS solutions across the U.S., driven by states like Texas, Nevada, Arizona, and California, where EVLO has expanded this year to meet demand. The Midwest is also emerging as a significant region which should gain further velocity in 2025.
Lithium-iron phosphate batteries will continue dominating the market due to affordability and high safety profile. As domestic manufacturing ramps up driven by Inflation Reduction Act incentives and its Section 45X Advanced Manufacturing Production Credit, as well as tariffs on Chinese-made components, the North American market will have to strategically balance local production with global supply chains to prevent bottlenecks.
For energy storage integrators, strategic balance is an intricate and evolving balance between using Chinese components and shifting toward emerging American manufacturing driven by protectionist measures. Our approach comes down to choosing the best components available from an increasingly diverse set of options to meet client requirements on criteria like domestic content and production, security, and pricing.
In 2025, tariff negotiations and geopolitical challenges will remain pivotal factors in shaping procurement strategies for North American BESS integrators like EVLO.
Carbon Removal = The Great New American Industry
Nora Cohen Brown, Head of Market Development and Policy, Charm Industrial
In 2024, we saw an increase in the number and scale of companies in the carbon dioxide removal industry, which remove atmospheric CO2 and store it permanently or convert it into useful products.
In 2025, the carbon removal sector is going to hit scale, creating new economic opportunities including energy, forestry, and agriculture jobs in rural communities. CDR is as much about protecting the environment as it is about reshoring American jobs, rebuilding American industrial capabilities, investing in oil and gas communities, and diversifying income streams for farmers. Carbon removal is becoming the great new American industry, with projects being deployed across the U.S. providing many tangible economic and conservation benefits for rural communities.
For example, at Charm, the feedstocks we use for our process are either residues from wildfire prevention efforts or agricultural residues that are currently discarded. We use orphaned and idle wells for storage, which means we can clean up waste streams and repurpose under-utilized resources, all while reducing wildfire risk. Other carbon removal approaches reduce coastal water acidification, improve soil health, or reuse waste from industrial industries like mining. And across the carbon removal industry, project deployments create new manufacturing, agricultural, forestry, and oil and gas jobs.
2025 will see more focus on American competitiveness and innovation. While current policies incentivize massive, centralized facilities, we can further support conservation of our land, forests, and spread the economic and conservation benefits to the entire country by removing barriers to entry for new technologies and level the playing field to ensure that a much wider range of CDR approaches have access to incentives to help scale the industry.
This is no time for the government to pick winners and losers – let’s unshackle CDR and see who can scale quickly and deliver the most public benefits for our country and economy. Gigatons or bust!
Federal Permitting Reform Will Be A Top Priority
Heather Reams, President, Citizens for Responsible Energy Solutions
As the new Congress and Administration begin, a top priority is finding meaningful consensus and enacting durable permitting reform. Today, our federal permitting process stifles innovation and economic growth, with approvals taking four to ten years.
There is bipartisan recognition our federal government’s permitting processes should be modernized to meet the moment—enabling innovative clean energy technology deployment, building manufacturing facilities and basic infrastructure enabling modern life. The task is turning that bipartisan recognition into legislative action, so investors and developers have certainty regardless of who occupies the White House.
Without predictable project timelines and expedited access to resources and energy, the U.S. risks falling behind its growing energy needs. The incoming Trump Administration seeks to unleash American energy and lower energy costs. Achieving this requires cutting bureaucratic red tape and implementing processes that foster new solutions and encourage domestic production—this can be done while upholding critical environmental safeguards and ensuring public input.
For the U.S. to remain competitive in the century ahead, whether winning the AI race or bolstering domestic manufacturing, we need reliable, resilient and affordable energy. Industries rely on low energy costs, which requires using our domestic resources. We must continue championing energy policies focused on an all-of-the-above approach to create jobs, foster innovation, strengthen our economy and curb foreign reliance—all while lowering emissions.
I am optimistic about the clean energy progress we have already made, and I’m confident this bipartisan work will continue in the 119th Congress and with the new Administration. Together, we can secure abundant, clean and reliable domestic energy to meet our nation’s growing demand.
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