Battery energy storage has entered a new era. Costs have fallen to historic lows, and deployments are accelerating across major markets. According to BloombergNEF’s (BNEF) Levelized Cost of Electricity 2026 report, the economics of grid storage shifted dramatically in 2025 — even as other clean energy technologies became more expensive.

• The global benchmark cost for a four-hour battery storage project dropped 27% year-on-year to $78 per megawatt-hour (MWh) in 2025.

That marks the lowest level since BNEF began tracking the data in 2009. As a result, batteries are now reshaping how power systems balance renewable energy and meet rising electricity demand.

At the same time, solar and wind projects faced cost pressures. Supply chain constraints, weaker resource quality in some regions, and policy reforms in mainland China pushed up benchmark costs. However, despite these short-term headwinds, BNEF expects long-term clean energy costs to continue declining through 2035.

Battery Storage Breaks Records While Solar and Wind Stall

In 2025, battery storage clearly stood out. The $78/MWh benchmark for a four-hour system reflected a steep and rapid decline. Lower battery pack prices, stronger competition among manufacturers, and better system design all helped drive the drop.

By contrast, solar and wind moved in the opposite direction. The global benchmark cost for a fixed-axis solar farm rose 6%, reaching $39/MWh. Onshore wind increased to $40/MWh. Offshore wind climbed sharply to $100/MWh due to tight supply chains and financing challenges.

Thermal power also became more expensive. The levelized cost of electricity (LCOE) for new combined cycle gas turbine (CCGT) plants jumped 16% to $102/MWh — the highest level recorded. Equipment price increases and strong demand for gas turbines, partly fueled by data center expansion, kept costs elevated. Coal plants also faced higher capital expenses.

Yet even with solar and wind costs rising in 2025, BNEF projects that innovation and scale will push prices down again over the next decade. By 2035, the firm expects:

• Solar LCOE to fall 30%
• Battery storage to decline 25%
• Onshore wind to drop 23%
• Offshore wind to decrease 20%

These projections suggest the current cost increases are temporary rather than structural.

China’s Cost Advantage 

Wind energy told a more mixed story.

Mainland China retained a cost advantage. However, projects built in lower wind-speed regions pushed up the global benchmark. Onshore wind projects outside mainland China saw a 4% cost decline, but the global average rose 2% due to Chinese market dynamics.

Offshore wind faced deeper challenges. Supply chain bottlenecks increased turbine and installation costs across major markets. In the United Kingdom, recently financed offshore wind projects now cost 69% more than they did five years ago. BNEF expects offshore wind costs to remain elevated until at least 2030.

Still, in the United States, wind power regained its position as the cheapest source of new electricity generation in 2025. Rising gas turbine costs pushed wind ahead of gas for the first time since 2023.

EV Overcapacity Slashes Battery Prices

One major factor behind the storage cost collapse is manufacturing overcapacity in the electric vehicle (EV) sector.

China’s lithium-ion battery production capacity surpassed 2 terawatt-hours in 2024. That was about 60% higher than total battery demand. As a result, manufacturers competed aggressively on price, which benefited grid-scale storage buyers.

Battery pack prices for EVs fell 8% in 2025 to a record low of $108 per kilowatt-hour, according to BNEF’s December survey. Lower pack prices directly reduced the cost of large storage projects. Meanwhile, system-level improvements — including better integration and optimized engineering — improved performance and reduced overall project expenses.

According to Amar Vasdev, senior energy economics associate at BNEF and lead author of the report, manufacturing overcapacity and better system designs are transforming the economics of large energy storage projects. In six markets, the LCOE of a four-hour battery system has already dropped below $100/MWh.

That threshold is critical. At those levels, battery storage becomes highly competitive with fossil fuel peaking plants.

• RELATED: China’s One Month Lithium Battery Energy Storage Installations Beat America’s One Whole Year

Lower Battery Costs Drive Renewables Plus Storage Boom Worldwide

Lower battery costs are accelerating hybrid renewable development. In 2025 alone, developers added 87 gigawatts of co-located solar and storage projects worldwide. These combined systems delivered electricity at an average cost of $57/MWh.

This model solves one of solar’s biggest challenges — intermittency. Batteries allow solar farms to store excess daytime generation and dispatch it later when demand peaks. As storage becomes cheaper, solar-plus-storage projects become more financially attractive and reliable.

BNEF expects annual global energy storage additions to reach 220 GW by 2035, growing at a compound annual rate of nearly 15%. If that projection holds, batteries will become central to grid balancing worldwide.

The U.S. Storage Boom Accelerates

The United States is emerging as a key growth engine for battery deployment.

According to the February 2026 Electric Power Monthly report from the U.S. Energy Information Administration (EIA), 86 GW of new utility-scale capacity is expected to come online in 2026. Of that total, 26.3 GW will come from battery storage.

That represents the largest single-year capacity expansion in more than two decades. Solar and battery storage together account for nearly 79% of planned additions.

Texas has become a hotspot for battery development. As of July 2025, the state had 12.2 GW of storage capacity operating. Developers rushed projects online ahead of summer peak demand, including nearly 1 GWh brought online by esVolta across three projects.

California continues to lead nationally, with more than 12 GW of operational storage capacity. Projects such as the Rexford solar-plus-storage facility in Tulare County strengthened the state’s position as a grid storage pioneer.

Meanwhile, New England expanded its footprint with large-scale additions to the ISO New England grid. These projects demonstrate that battery storage is no longer confined to a few early-adopter markets.

Australia’s Breakout Year

Australia also delivered a major milestone in 2025. The country commissioned 4.9 GWh of utility-scale battery storage during the year — more than the combined total installed between 2017 and 2024.

In the fourth quarter alone, over 1,000 MW of new capacity came online. Large projects, including the 500 MW Liddell battery system in New South Wales, highlighted the rapid pace of expansion.

Australia’s experience shows how quickly storage can scale once policy support, market design, and financing align.

Data Centers Drive the “Race for Electrons”

A powerful new demand driver is reshaping electricity markets: data centers.

The rapid expansion of AI and cloud computing has triggered strong demand for reliable power. Gas turbine orders surged as operators sought firm capacity. This demand doubled U.S. turbine capital costs in just two years.

However, higher gas costs are improving the competitiveness of renewables and storage. In regions like California and parts of Texas, co-located solar and four-hour battery systems can already meet a significant share of data center demand at lower cost than new gas plants.

Grid interconnection queues and gas turbine supply constraints are also slowing fossil fuel projects. In contrast, solar and storage systems can often deploy more quickly.

As Vasdev explained, the world is in a “race for electrons” to meet rising demand from electrification and data centers. In many markets, renewables are not only cheaper for new builds — they are now undercutting the operating costs of existing fossil fuel plants.

Solar beats new coal and gas across most Asia-Pacific markets. Wind is the lowest-cost new generation source in the U.S. and Canada. Solar consistently outcompetes fossil fuels in Southern Europe, while wind dominates in Northern Europe.

From Niche Technology to Grid Backbone

Battery storage has moved beyond its early-stage niche. It is now central to power system planning.

As storage costs fall, batteries strengthen renewable energy revenues, stabilize grids, and reduce reliance on fossil-fuel peaking plants. Instead of building new gas capacity for short-duration peaks, operators can increasingly rely on storage-led balancing.

BNEF’s annual LCOE report analyzed more than 800 recently financed projects across over 50 markets and 28 technologies. Its expanded coverage of the Middle East and Africa highlights how storage economics are improving globally, not just in mature markets.

The broader message is clear. While 2025 delivered mixed signals for clean power costs, battery storage emerged as the clear winner. Manufacturing overcapacity, technological learning, and intense competition have driven prices to record lows.

Looking ahead, continued cost declines could accelerate the global shift toward renewable-dominated grids supported by flexible storage. In that transition, batteries are no longer optional. They are becoming the backbone of a reliable, low-carbon electricity system.

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The Mercedes-AMG PETRONAS F1 Team has stepped up its climate action strategy with a major expansion of its global carbon dioxide removal (CDR) portfolio. The team has added seven new projects across multiple carbon removal pathways, making it one of the most diverse portfolios in global sport.

This move is a long-term, multi-year investment designed to support high-integrity, science-backed climate solutions. While emissions reduction remains the top priority, the team recognizes that some emissions cannot be eliminated. That is where durable carbon removals come in.

The expansion marks another milestone in Mercedes’ broader Net Zero journey — one built on practical solutions, data transparency, and industry collaboration.

A Clear Net Zero Roadmap

Mercedes tracks its carbon footprint in two ways. First, it measures Race Team Control emissions (RTCe). These include Scope 1, Scope 2, and selected Scope 3 emissions that the team can influence directly. Second, it reports its total emissions across Scopes 1, 2, and 3.

Unlike many companies that only focus on direct emissions, Mercedes extends its control boundary to include upstream transport, waste, fuel-related activities, business travel, employee commuting, and energy use. This broader approach aligns with Formula 1’s 2030 Net Zero commitment.

The team has set two major targets:

• Achieve Race Team Control Net Zero by 2030
• Reach Full Net Zero across all scopes by 2040

For its 2030 goal, Mercedes plans to cut 75% of RTC emissions compared to its 2022 baseline. The remaining 25% will be addressed through high-quality carbon removals, following the Oxford Offsetting Principles.

Progress so far is significant. By 2024, the team had already reduced its Race Team Control emissions by 35% compared to 2022.

Where the Emissions Cuts Came From

The 35% reduction came from targeted operational changes. During the European race season, 98% of logistics used HVO100 biofuel. This low-carbon fuel helped slash transport emissions. Meanwhile, 68% of aviation emissions were addressed through Sustainable Aviation Fuel certificates (SAFc).

At its Brackley factory in the UK, Mercedes reduced gas consumption and improved energy efficiency. The team also continued electrifying its company vehicle fleet.

However, not everything went smoothly. In 2024, an F-gas leak at the factory temporarily increased Scope 1 emissions. F-gases have high global warming potential, so even small leaks can have an outsized impact. While the team has already transitioned to lower-impact refrigerants where possible, some cooling systems still rely on high-impact gases. Mercedes has tightened monitoring systems and plans to shift to better alternatives as soon as viable options become available.

Despite this setback, the overall emissions trend remains downward. The team now aims to fully eliminate Scope 1 and 2 emissions by 2026, with any small residual amounts neutralized through removals.

Building a Long-Term Carbon Removal Strategy

Even with aggressive cuts, some emissions remain hard to eliminate — especially across global supply chains. Purchased goods and services represent a large share of Scope 3 emissions. These are complex and often outside direct control.

That is why Mercedes is investing in durable, verifiable, and scalable carbon removals.

In total, the team is investing in roughly 18,900 tonnes of CO2 equivalent across nature-based, hybrid, and engineered removal projects. These investments support the 2030 Race Team Control Net Zero goal.

Importantly, the strategy follows the Oxford Offsetting Principles. This means prioritizing permanent removals and gradually shifting from short-term nature-based offsets toward long-term engineered solutions.

A Diverse Portfolio Across Technologies

To reduce risk and build resilience, Mercedes has spread its investments across several technologies and geographies. The portfolio now spans:

• Direct Air Capture
• Biochar, Biomass Storage
• Bioenergy with Carbon Capture and Storage (BECCS)
• Ocean Alkalinity Enhancement
• Enhanced Rock Weathering

Frontier: One key partner is Frontier, supporting durable removal technologies. Through this agreement, Mercedes backs solutions such as direct air capture and enhanced weathering. These technologies aim to store carbon for more than 1,000 years and eventually reduce costs below $100 per tonne. The team expects to begin receiving credits from Frontier-backed projects as early as 2027.

Blaston Farm: In the UK, Mercedes works with Blaston Farm near Silverstone to support regenerative agriculture. This project removes carbon while restoring soil health and boosting biodiversity. The team signed a three-year agreement and used 2,000 tonnes of removals from the project against its 2024 footprint. Advanced soil monitoring combines direct sampling with AI-driven image analysis, improving both accuracy and scalability.

Chestnut Carbon: In the US, Mercedes partnered with Chestnut Carbon to restore degraded agricultural land in the southeastern region. The first project will convert 200 hectares into biodiverse forests by planting more than 260,000 native trees. Since 2022, Chestnut Carbon has planted over 17 million trees across 30,000 acres. The collaboration is expected to deliver 1,000 to 1,500 tonnes of carbon removals annually starting in 2027.

The broader portfolio also includes projects in Brazil, Canada, Denmark, and India. This geographic spread reflects the team’s goal to create impact in regions connected to the Formula One race calendar.

All projects are curated and verified by CUR8, a carbon removal marketplace that assesses durability, transparency, and methodology. This adds an extra layer of credibility to the portfolio.

• FURTHER READING: Frontier’s $31.3M Offtake with Planetary Signals a New Era for Ocean Carbon Removal

Collaboration Beyond the Track

Mercedes understands it cannot solve climate challenges alone. The team actively collaborates within and beyond motorsport.

It participates in the F1 ESG Working Group, sharing best practices across the grid. Internally, its Sustainability Working Group connects team partners to exchange ideas and tackle shared challenges.

Notably, Mercedes was the first motorsport team to sign The Climate Pledge, committing to Net Zero across total emissions by 2040.

Team partners such as Signify, UBS, and Nasdaq support high-integrity climate solutions as well. Meanwhile, companies like Meta and Microsoft have played a major role in scaling the carbon removals industry, helping create demand for early-stage technologies.

Speaking at Economist Impact’s Sustainability Week, Head of Sustainability Alice Ashpitel emphasized that emissions reduction remains the priority. However, she stressed that high-quality removals are essential for dealing with residual emissions. By investing early across different technologies and regions, the team aims to help scale durable climate solutions while delivering benefits to communities and ecosystems.

Engineering Change On and Off the Track

Formula One has committed to Net Zero by 2030. As one of the sport’s most prominent teams, Mercedes is positioning itself at the forefront of that transition.

The team’s approach combines aggressive emission reductions, early investment in permanent carbon removal technologies, and strong governance. Instead of relying on short-term offsets, it is helping build a long-term carbon removal market capable of delivering climate impact at scale.

This strategy reflects the same engineering mindset that drives success on the track: test, refine, optimize, and scale.

By cutting emissions where it has control and investing in durable removals where it does not, Mercedes is shaping a credible path toward Net Zero. The goal is not just to meet targets but to help raise standards across motorsport and beyond.

In a sport defined by speed and precision, Mercedes is proving that climate leadership also requires bold action and long-term thinking.

• READ MORE: Mercedes-Benz Goes Electric: Biggest Model Launch Set for 2026 & Zero-Emission Commitment 

The post Mercedes-AMG PETRONAS Expands Carbon Removal Portfolio to Accelerate Net Zero Push appeared first on Carbon Credits.

On February 16, Hirono Town signed a comprehensive partnership agreement with Fager Co., Ltd. to promote decarbonized agriculture and strengthen the local rice brand. The agreement focused on cutting greenhouse gas emissions while improving rice quality and farmer incomes.

Hirono’s mayor, Kazuma Komatsu, and Fager’s CEO, Takahiro Ishizaki, formalized the deal at a ceremony marking a new step toward linking climate action with rural economic revival.

A Climate Challenge Turns Into Opportunity

Rice farmers across Japan have struggled with extreme heat in recent years. High temperatures during the growing season have reduced grain quality and increased the risk of damage. In Fukushima’s coastal Hamadori region, growers have felt this pressure directly.

At the same time, Japan’s agricultural sector has begun to see decarbonization not just as an environmental duty but also as a business opportunity. Farmers can now generate carbon credits by reducing emissions from rice paddies and other farm activities. These credits create a new income stream while supporting national climate targets.

Hirono Town had already declared its ambition to become a Zero Carbon City by 2050. This partnership aligned with that goal. It aimed to make local agriculture more resilient, profitable, and climate-friendly.

How the Carbon Credit Model Works

Under the agreement, farmers in Hirono will adopt proven methods to reduce methane emissions from rice paddies. One key technique involves extending the mid-season drainage period. Farmers temporarily drain water from paddy fields during cultivation. This process lowers methane emissions, which normally form in flooded conditions.

Growers will also consider using biochar, a carbon-rich material that stores carbon in soil and improves soil health. Together, these measures can generate government-certified J-Credits.

Japan’s J-Credit system is a national carbon offset program. It certifies emission reductions or removals from activities such as renewable energy use, energy efficiency, forest management, and low-emission farming. Companies buy these credits to offset their emissions or meet climate goals. As a result, farmers and local governments gain a new source of revenue.

Fager has built strong experience in this field. The company supports J-Credit creation in 36 prefectures across Japan. In 2024 alone, it generated about 136,000 tons of CO₂ credits from agricultural projects. Now, it will bring that expertise to Hirono.

Reinventing “Hirono Rice”

Beyond carbon markets, the initiative aims to build a strong premium brand. Farmers will market locally grown Koshihikari rice as “Hirono Rice.” The brand will highlight three features: environmentally friendly cultivation, heat resilience, and high quality.

As extreme heat becomes more common, Japanese consumers are paying closer attention to how food is produced. Climate-smart branding could give Hirono’s rice a competitive edge.

One participating farmer, Toshirei Suzuki, already extended the mid-season drainage period in his paddies. He reported no negative impact on yield or grain quality. In fact, his rice ranked first in taste within Hirono Town, and all of his harvest met first-class standards. He said he joined the program smoothly and wants to continue if it benefits the environment.

His experience offered early proof that emission reductions and quality improvements can go hand in hand.

Digital Tools and Heat Countermeasures

The agreement goes beyond carbon credits as it also promotes agricultural digital transformation, often called agricultural DX.

Hirono and Fager will explore installing water-level and water-temperature sensors in paddy fields. These tools help farmers monitor conditions in real time. With better data, growers can respond quickly to heat stress and water management challenges.

Revenue from carbon credits will fund these upgrades. The partners aim to create a circular model. Farmers reduce emissions, generate credits, sell them, and reinvest the proceeds into better cultivation systems and climate adaptation measures.

This cycle connects environmental action directly to farm income and resilience.

A Model Linked to National Reconstruction

The partnership also fits into broader reconstruction efforts in Fukushima. Fager joined the national “Fukushima Reconstruction Living Lab” initiative led by Japan’s Reconstruction Agency. The program matches private firms with local governments to solve regional challenges.

In this case, agriculture stood at the center. By combining decarbonization, branding, and digital tools, Hirono aims to strengthen its rural economy while supporting recovery in the Hamadori area.

If successful, the model could expand beyond Hirono to other parts of Fukushima and eventually across Japan.

Japan Scales Up Carbon Markets to Hit 2050 Net Zero

Japan has pledged to achieve carbon neutrality by 2050. It also aims to cut greenhouse gas emissions by 46 percent from 2013 levels by 2030. To reach these goals, the government has steadily expanded carbon markets and sector-based policies.

In April 2026, Japan will introduce a full-scale emissions trading scheme (ETS). Around 300 to 400 companies that emit more than 100,000 tons of greenhouse gases per year must participate. The system is expected to cover roughly 60 percent of national emissions.

To support this shift, the government launched the Green Transformation (GX) Promotion Strategy. The plan outlines more than 150 trillion yen in public and private climate investment over the next decade. It includes a 20 trillion yen early-stage package backed by GX Economic Transition Bonds. The goal is to stimulate new markets while keeping economic growth stable.

Japan has taken a cautious and pragmatic approach. Policymakers design climate rules that businesses can realistically follow. The Japan Business Federation, known as Keidanren, plays a key role in shaping legislation. Its involvement helps ensure that new climate policies remain practical and economically viable.

The Role of the J-Credit Scheme

The J-Credit Scheme plays a central role in Japan’s domestic carbon market. Three ministries jointly manage it: the Ministry of the Environment, the Ministry of Economy, Trade and Industry, and the Ministry of Agriculture, Forestry and Fisheries.

As of May 2025, the scheme had registered 1,262 projects. It had certified a total of 12.08 million tons of CO₂ credits. The government now targets 15 million tons of certified J-Credits by fiscal year 2030.

Projects can register individually or as programmatic bundles that group many small activities into one larger project. This structure makes it easier for small farmers to participate.

Hirono’s rice initiative fits well within this framework. It visualizes emission reductions measurably and links them directly to local economic benefits.

A Blueprint for Sustainable Rural Growth

The Hirono–Fager partnership showed how climate policy can work on the ground. It connected national carbon markets with everyday farming practices. It turned methane reduction into income. It funded heat countermeasures with carbon revenue. And it built a premium rice brand around sustainability.

If the project delivers as planned, Hirono Town could become a model for climate-smart agriculture in Japan. The town’s rice would stand not only for taste and quality, but also for environmental responsibility and resilience in a warming world.

• LATEST: 2026 Could Redefine Voluntary and Compliance Carbon Market Convergence, with Japan Leading the Way

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