Tesla’s PowerWall will be leading the charge on cheap batteries.

A report from the Australian Renewable Energy Agency this month indicates it’s likely:

The 130-page report prepared by AECOM predicts a “mega-shift” to energy storage adoption, driven by demand – from both the supply side, as networks work to adapt to increasing distributed and renewable energy capacity, and from consumers wishing to store their solar energy – and by the rapidly changing economic proposition; a proposition, the report says, that will see the costs of lithium-ion batteries fall by 60 per cent in less than five years, and by 40 per cent for flow batteries.

This projection is more bullish than most analyses I’ve seen, which suggest price declines of 8-10% a year. If true, the impact on both our energy and transportation system will be enormous. Cheap batteries paired with solar will lead to customer “grid defections” from utilities, plus a proliferation of microgrids that can run independent of the grid. And of course electric vehicles will become ubiquitous with the cheaper price and better range.

Another reminder that batteries are the most critical clean technology right now in the effort to decarbonize our economy.