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.
“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).
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