Batteries A representative Li-ion system from AES Storage LLC’s Laurel Mountain Energy Storage supplies 32 MW of regulation in PJM using Li-ion batteries supplied by A123 Systems.

Published on January 25th, 2016 | by Jake Richardson

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70% Decrease In Energy Storage Costs By 2030, Says Report

January 25th, 2016 by  

Energy storage costs could decrease up to 70% in the next 15 years, according to a report called E-Storage: Shifting from Cost to Value, by Paul Gardner from DNV GL and other authors. PriceWaterhouseCoopers also contributed cost analysis, along with inputs from 23 experts.

A representative Li-ion system from AES Storage LLC’s Laurel Mountain Energy Storage supplies 32 MW of regulation in PJM using Li-ion batteries supplied by A123 Systems.

Another key point from the report is that the authors believe the true cost of energy storage hasn’t been documented very accurately, because it doesn’t factor in revenue benefits. They also say the metric that is generally used, the levelized cost of energy, is actually hampering the progress of energy storage.

“We found clear indications that a narrow focus on costs alone drives the common misperception that electrical energy storage is more expensive than it really is,” said Gardner.

It’s very good news that energy storage is likely to decrease in cost over the coming years, and by a large amount. Energy storage is the main missing piece of the renewable energy puzzle — one that solar and wind power enthusiasts have wanted for a long time.

In fact, a summary of part of the report said, “Solar storage will become more competitive as new battery technology drives prices down, and wind storage more attractive as technical advances in areas such as composite materials enables the power generated by wind turbines to increase.”

Some other key points are:

  • Go beyond just costs – cheapest is not always best
  • Examine storage through holistic case studies – generic cost estimates are not sufficient
  • Work with operators and regulators to accelerate the development of flexible markets.

The report contains a number energy storage project snapshots. For example, in one for an Enel Green Power PV storage project in Italy, the following benefits were noted:

  • Active energy management
  • Improved predictability of generation
  • Less volatile generation profile
  • Provision of ancillary services to the grid.

These were the benefits for a grid-connected energy storage project in Portugal:

  • Increase in grid reliability
  • Improvement of grid power quality
  • Reduction of grid losses.

It’s great to see benefits listed for these projects, because they generally aren’t talked about that much — at least by the press. One might get the idea that energy storage is exclusively for emergency backup or for storing excess electricity from a home solar power system.

Image Credit: Sandia.gov

 
 
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  • Julie Rosenthal

    Thank you for your easy to understand article

  • JamesWimberley

    Clear as mud. If you don’t use LCOE, what do you use instead? “Holistic” is handwaving.

    • Frank

      Oh I think the LCOE is fine for the battery cost side of the equation, but I think there is room on the value side for a “Holistic” look at the smarts and power eleecteonics.

  • RexxSee

    700% decrease, damned disinformation!

  • Harry Johnson

    Molten salt storage is half the cost of batteries and can be utilized with trough or Fresnel solar collectors to provide 24/7 base power.

    • Joe Viocoe

      Why aren’t more utility solar projects using it?

      • eveee

        Solar has flattened day night energy costs. Day night arbitrage is not profitable when the cost difference is eliminated. Storage can serve multiple functions. Storage value needs to be better assessed and better market methods are needed to reward the benefits.

      • JamesWimberley

        Doesn’t work with PV farms, where the solar energy is harvested as electricity not heat. Well, you could easily build a heat tank with an electric heater and power turbine, but it would be essentially a separate installation and there is no particular reason to site it next to the panels. You end up with low efficiency. The added cost of heat storage is much lower with CSP as you already have the expensive generator. The problem is that the basic CSP setup is still much more costly than PV.

        • Frank

          I have read about some hybrid plants that have PV, and CSP with thermal storage. We’ll see if that is competitive with PV and batteries long term.

      • Aku Ankka

        Basically because it does not work economically with PV, as per all reasons James lists, unlike for CSP where it is natural match.
        But additionally they tend to require bigger installations, due to economies of size, especially for turbines — typically 50MW being smallest unit size.

        And as to why CSP isn’t done more: partly its price, but as big a problem is that it is very dependant on direct solar insolation (unlike PV which can benefit from diffuse light), and is only practical in some of industrialized countries. Notably markets of Germany, UK, Canada, Japan and most of France are too north for CSP to be viable. And since studies have suggested that success of solar is strongly influenced by economic resources of the economy (that is, rich countries are more likely to support it), this means that countries that could afford it are not places; and countries that are optimal places can’t necessarily afford them.

        And CSP plants are still very complex, and not nearly as mature as solar PV or wind. So I wonder whether they will play a big part, ever, or not. Other types of storage getting cheaper can easily kill the whole CSP field.

  • vensonata

    I like these articles. Guys in suits, MBA etc, telling us good news. But then when I look into these reports I begin to question. A similar or perhaps the same report talked about “residential storage prices in 2015 being $1623 kwh” And falling by 80% by 2040. Now if you are a battery geek your jaw will already have hit the floor. $1623 is from another planet, not earth. Tesla’s powerwall is $428 kwh for the 5000 cycle 7 kwh powerwall, $350 kwh for the 1500 cycle 10 kwh powerwall, and $250 kwh for the 100 kwh Powerpack. If we apply a 30% tax rebate we go below $200 kwh… and falling, and falling. This is why these strange corporate reports leave me wary. It should be made into a sci-fi movie called BatteryWorld.

    • Karl the brewer

      I suspect that they have only seen one of these – http://www.tritec-energy.com/en/storage-systems/bosch-bpt-s-5-hybrid-solar-inverter-with-integrated-battery-c-197/ and that this, to them, constitutes what all batteries must be like. Ergo $ridiculous per kwh.

    • S Herb

      This is not a ‘guys in suits’ report. I have made an extremely cursory run-through of the paper, and it is a serious attempt to project the future utility of storage. It agrees with the recent claims from RMI that cost/value relations are complicated and context dependent. The cost projections for 2030 appear to be based on experience curves, and at least plausible. The storage game is just beginning and 15 years is a long time, even for battery development.

    • vensonata

      Actually…I take it back. Their figures are reasonable. Lithium range is $700 Mwh down to $170 mwh in 2015. Falling to $190 – 140 mwh in 2030. So that is 70 cents kwh high, low 17 cents kwh for lithium battery storage in 2015. Well, not a train wreck, but Morgan Stanley gives the LCOE of the Tesla 7 kwh powerwall at just under 12 cents kwh in 2016. The Gardner report predicts the low price will be 14 cents kwh by 2030. I won’t entertain you all with my guess about the future, but it is 70% less than theirs.
      So maybe I only half take back my initial comment. Their figures are only half way reasonable.

  • newnodm

    Does a 70% cost reduction get us to the goal of $.14/kwh for solar plus storage?

    • vensonata

      Good question. But they seem to think that actually using price per kwh is beneath mention.

    • Marion Meads

      $0.14/kWH price including storage would be a rip-off for me. My solar is going to be paid off within a few months.

      • Andy

        How will you paying for your setup in a few months? I’m genuinely curious.

        • Marion Meads

          Easy. My pay-off from the electricity bills that I saved is just 2 years and 4 months. I’ve been into this for 2 years and 2 months. Instead of money for the electric bills, they go to pay down my solar panel amortization.

          • Andy

            You got a pretty good deal. My installed cost was $3.50/watt. Prices are higher out here compared to Cali. Payoff period is about 4 years on paper, but will take longer because the net metering here isn’t 1 for 1.

          • NRG4All

            Glad you shared, we’ve had solar for 5-1/2 years and consider that it just paid for itself. A thing to consider beyond the actual costs are the opportunity costs. For example, going total electric allowed us instead of buying air conditioners, we bought heat pumps. That was an opportunity cost savings of over $500 per winter that we used to spend on propane for heat.

    • Jamset

      Why do you have to mix up the cost of storage with the cost of generating?

      The price of solar power is $0.06/kWh in 2016.

      The cost of storage is a mystery but is falling.

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