Energy storage moves toward next-gen lithium cells as price volatility drives interest in alternatives

This is mostly industry news, but it touches on costs behind home battery systems. Lithium prices peaked in May 2026 and are now falling, according to a price-tracking report, and are expected to keep dropping through 2027. That decline is large enough to offset rising costs for copper, another key battery material. The industry is also shifting toward a newer, larger battery cell format (587Ah), which packs more energy into less space and costs less per site than older equipment, pushing prices down further, especially in China.

Even so, cheaper cells don't translate directly into much cheaper home battery systems. Battery cells make up less than 40% of the total cost of a large battery installation — the rest comes from other hardware and engineering work. In the U.S., battery equipment also costs more than in other countries because of labor, financing, and import tariffs. Federal tax credits from the Inflation Reduction Act can lower those costs, but new rules requiring batteries to avoid certain foreign suppliers (called Foreign Entity of Concern, or FEOC, rules) make those credits harder to qualify for, since manufacturers must prove a high share of domestic content, a requirement that rises over time.

A few U.S. companies are expanding domestic battery cell production, which could eventually make American-made batteries more competitive. For now, tariffs and these domestic-content rules make U.S.-made cells the cheaper option, but that could change again by 2028 or 2029 if global prices keep falling and policies shift.