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Published on July 10th, 2012 | by Zachary Shahan

7

Grid Storage Battery Cost to Fall to $500/kWh by 2022, Lux Research Projects

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July 10th, 2012 by Zachary Shahan 

 
Market research firm Lux Research is projecting that lithium-ion and molten-salt battery costs will get down to around $500/kWh by 2022. The bad news, if Lux Research is right, is that $500/kWh is twice the targeted $250/kWh.

wind power energy storage

“Technology developers make bold claims about performance enhancements and economies of scale that will lead to dramatic cost reductions. Lux Research’s baseline scenarios for grid-tied systems indicate that by 2022 Li-ion batteries will reach $506/kWh; sodium nickel chloride, or ZEBRA, batteries will approach $473/kWh; and vanadium redox flow batteries (VRFBs) will hit $783/kWh.”

Note, however, that those are baseline scenarios.

“Molten-salt batteries hold the most potential to be the cheapest large-scale systems, with manufacturing improvements playing the largest role, accounting for 95% of the cost reduction,” said Brian Warshay, Lux Research Associate and the lead author of the report, Grid Storage Battery Cost Breakdown: Exploring Paths to Accelerate Adoption. 

“Li-ion batteries are dependent on cost reductions from mass production,” he added, “while molten-salt batteries and VRFBs rely on long discharge durations to reduce costs.”

Here are some more key points from Lux Research, and a quick summary of how it came to its conclusions:

To gain an understanding of the key cost components for each technology, Lux Research analysts built production cost models of Li-ion, ZEBRA, and VRFB systems for small- to large-scale grid storage systems, and assessed drivers that will facilitate cost reduction and constraints to innovative material and manufacturing approaches. Among their findings:

  • Cost of Li-Ion batteries will dip 45% by 2022. Li-ion batteries may lose market share to cheaper molten-salt batteries for large projects but will remain the system of choice for space-constrained projects because of their high energy density.
  • ZEBRAs need productivity gains. ZEBRA battery manufacturing accounts for between 50% and 60% of the total system costs, primarily because of the cost of processing its key raw materials. Improved manufacturing productivity and better capacity utilization will account for 95% of the expected reduction in costs by 2022 to $473/kWh.
  • Vertical integration is key to VRFB costs. Vertical integration and exclusive supply agreements will be key to managing the cost of vanadium pentoxide, a metal with a widely variable historical market price and uncertain future. Future cost estimates for vanadium pentoxide range from $15/kg to $30/kg, from the current $13.20/kg. At the upper end of the range, VRFB cost will actually increase to $1,205/kWh.

Let’s hope these projections are a bit off (on the high side).

Source: Lux Research
Photo Credit: A123 Systems

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About the Author

spends most of his time here on CleanTechnica as the director/chief editor. Otherwise, he's probably enthusiastically fulfilling his duties as the director/editor of Solar Love, EV Obsession, Planetsave, or Bikocity. Zach is recognized globally as a solar energy, electric car, and wind energy expert. If you would like him to speak at a related conference or event, connect with him via social media. You can connect with Zach on any popular social networking site you like. Links to all of his main social media profiles are on ZacharyShahan.com.



  • Ronald Brak

    In Queensland electricity retails for about 25 cents a kilowatt-hour while the feed in tariff for solar is 8 cents.  This means a $500 battery that is used to store 300 kilowatt-hours a year will have a return of about 10%.  So still worth it in this situation even at that price.  But with electric car battery packs down 14% from a year ago to $689 in the first quarter of this year, my guess is batteries for stationary storage will be under $500 a kilowatt-hour in a decade. 

  • Captivation

    A 5 second ebay search (more thorough searches would likely yield better deals) shows a 1 kWh lithium unit for $529.  But wait, it also includes free shipping from Asia and a free high power charging unit.  So I’m going to take $130 dollars off the price to arrive at $399 for a single unit plus further discounts for bigger quantity orders.  Todays prices are already well below $500/kWh.

    http://www.ebay.com/itm/48V-20AH-LiFePO4-Li-ion-Battery-Electric-Scooter-/290443861361?pt=Battery_Chargers&hash=item439fcd9d71

    • Ross

      Not completely apples for apples that as the cycle count is only 1k not 5k or 10k. So $0.50/kWh over its life instead of $0.05/kWh.

      • Captivation

         Agreed, not quite apples to apples, but not exactly oranges either.  Lets say McIntosh apples to Golden Delicious?  The 85% capacity after 1k is still good, but unfortunately, we don’t know the performance curve after that.  Does degradation slow down or speed up?  My guess is that durability could be improved if the chassis wasn’t made of duct tape :)  But my intent was to show that we’ve essentially arrived at affordable storage.

        • Ross

          I’d go along with that.

  • Dcard88

    How is this not a wasted predicition?  The idea that we wont have any improvements in technology is silly at best.  If we stop all R & D today we could still get to $500/kWh based on economies of scale and manufacturing refinements.  If on the other hand, 10% of the current lab experiments that have already been fully tested in labs, end up working as expected in production quantities, we could get to $500 by 2017 or even sooner. 
    I have to go with Elon Musk on this one.

  • Ross

    There was a story on Cleantechnica in May 2012 with a good discussion in the comments section also suggesting that $500 per kW.h of storage will be beaten a lot earlier than 2022.

    http://cleantechnica.com/2012/05/09/new-battery-system-could-reduce-buildings-electric-bills/

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