SaurEnergy Explains: Energy Density in Batteries, From Technical Metrics to Cost Engine

Energy density shows how much electricity a battery can store relative to its size or weight. For example, if two battery containers look similar but one stores more electricity, that container has a higher energy density. In large Battery Energy Storage Systems (BESS), this determines how many such containers are required to build a storage project.

Modern lithium-ion batteries used in grid storage typically operate in the range of about 150 to 250 Wh/kg, meaning each kilogram of battery stores that amount of energy. 

This number directly affects the physical footprint, that is, the space required for installing such storagecapacity. When energy density improves, the same storage capacity can be installed using fewer containers, which reduces land use, logistics, and infrastructure cost.

Energy Density: A Cost Driver

One of the most important recent industry insights is that with the falling battery cell prices, other costs - especially balance-of-system (BOS) costs - are becoming more important. BOS includes containers, cooling systems, wiring, civil works, and installation.

Furthermore, density changes container economics. As analysed by energy storage expert Marek Kubik, a standard fully equipped BESS container can cost roughly USD 60,000 to 75,000, excluding batteries, in China. In a large 480 MWh project, increasing container capacity from 3 MWh to 8 MWh per container can reduce container count from 160 to 60. This can effectively cut BOS cost by more than 60 percent, from about USD 20 per kWh to roughly USD 7.5 per kWh purely through higher energy density.

This highlights a critical shift for energy density, from just a technical metric to a major economic lever.

Falling Storage Costs

Storage costs are falling quickly across the industry. Recent data shows turnkey energy storage system costs declined about 31 percent year-on-year to around USD 117 per kWh, nearly 70 percent lower than 2022 levels.

At the same time, improvements in cell size and design are increasing how much energy fits inside each container. Larger amp-hour cells and denser modules mean developers can build higher-capacity blocks, which further reduces cost per kWh at the system level.

This combination, cheaper cells plus higher density, compounds cost reductions.

ContraView: Higher-Density is Not Necessarily the Best Choice 

A key insight emerging across expert discussions is that the market is shifting from an “energy density race” to a “lifecycle value race.” Higher density alone does not guarantee lower cost if it affects safety, degradation, or replacement needs.

Energy density must improve alongside thermal management, lifetime, and efficiency. Developers ultimately evaluate storage using the levelised cost of storage, not just physical performance. This is why system integration — not only chemistry — is becoming the main innovation frontier.

Lithium Iron Phosphate (LFP) batteries dominate grid storage despite having lower energy density than nickel-based lithium batteries. The reason is simple: system economics.

Industry comparisons show LFP displaced NMC (Nickel Manganese Cobalt) in stationary storage because it offers lower cost per kWh, higher cycle life, improved safety, and fewer critical minerals such as cobalt and nickel.

This reflects an important lesson: the best battery is not the one with the highest energy density, but the one that delivers the lowest cost over its lifetime. LFP provides good enough density while optimising everything else.

Nickel-Based Lithium Batteries: Higher Density, Different Use Cases

Nickel-based chemistries such as NMC and NCA provide higher energy density, which makes them ideal for electric vehicles where space and weight are critical. They allow more energy in a smaller space, improving driving range.

However, these batteries depend on more expensive materials. For instance, NCA cells are often more expensive due to the higher cost of cobalt and the manufacturing processes required. 

For stationary storage, where land is often available and long lifetime matters more, the extra density does not always justify the higher cost. This is why high-density chemistries are less dominant in BESS, even though they perform well technically.

Sodium-Ion Batteries 

Sodium-ion batteries, while cheaper and abundant in raw materials, cells typically have lower energy density - often around 100 to 120 Wh/kg. But have lower cost.

Kubik notes that sodium-ion cells can be significantly larger for the same energy. For example, a sodium-ion cell may be about 2.2× larger in volume and 1.8× heavier than a comparable LFP cell at the cell level.

At first glance, this looks like a major disadvantage. But, if sodium-ion achieves a lower cost per kWh along with strong safety and cycle life, it could follow the same adoption pattern that allowed LFP to replace NMC in grid storage.

Bigger Cells, Higher Density, Faster Cost Decline

Another trend shaping BESS economics is the rapid increase in cell size. For instance, BYD recently unveiled a grid-scale battery energy storage system (BESS), named Haohan, with a capacity of 14.5MWh and powered by a new 2,710Ah blade cell. 

In early September 2025, the 400MWh/200MW Lingshou BESS project in China was commissioned using EVE’s 628Ah cells, the largest deployed in the world by then. Other larger formats above 500Ah started to emerge from Chinese suppliers in the past two-three years.

Larger cells improve material efficiency and reduce the number of components needed, which lowers cost. This is one reason energy density improvements are accelerating, and container capacities are increasing quickly across the industry.

Why Energy Density Still Matters

Even though cost per kWh drives decisions, energy density still matters because many project costs scale with volume. Footprint, enclosure size, thermal design, civil works, and installation all depend on how large the system is physically.

This means density improvements deliver indirect savings beyond the battery itself. Fewer containers mean fewer cranes, shorter cables, lower land requirements, and sometimes higher system efficiency - all of which improve project economics.