BNEF: Battery storage costs have ‘plummeted’ in past year
The average costs associated with building and operating large-scale lithium-ion battery storage arrays has fallen by 35% since last June, paving the way for more government and business support for the technology.
That is a key finding of new research by Bloomberg NEF (BNEF), which claims that both battery storage and offshore wind have made “spectacular gains in cost-competitiveness” in recent months.
Published on Tuesday (26 March), the analysis reveals that the global average benchmark levelised cost of electricity (LCOE) for large-scale lithium-ion battery projects has fallen by more than one-third (35%) since mid-2018 to hit $187/MWh. This finding is based on the LCOE of more than 7,000 energy generation and storage projects across 46 nations.
BNEF states in the report that battery costs have been dropping for several years, with average lithium-ion prices having fallen by 76% since 2012, based on recent project costs and historical battery pack prices. This trend, however, is now happening at a far swifter pace, it claims, as Governments seek to overcome the variable output of renewable arrays as they progress towards key climate goals.
The report additionally states that the LCOE of offshore wind, onshore wind and solar photovoltaic (PV) projects have undergone a similar transformation in recent months, with year-on-year reductions of 24%, 10% and 18% respectively having been recorded.
BNEF’s head of energy economics Elena Giannakopoulou argued that these trends have set the scene for “technologies that were immature and expensive only a few years ago” to receive greater backing from governments, investors and businesses, enabling them to play a larger role in the low-carbon transition.
“Looking back over this decade, there have been staggering improvements in the cost-competitiveness of these low-carbon options, thanks to technology innovation, economies of scale, stiff price competition and manufacturing experience,” Giannakopoulou said.
“Solar PV and onshore wind have won the race to be the cheapest sources of new ‘bulk generation’ in most countries, but the encroachment of clean technologies is now going well beyond that, threatening the balancing role that gas-fired plant operators have been hoping to play,” BNEF’s energy economics analyst Tifenn Brandily added.
Battery boon or ‘bullish’ predictions?
The LCOE update builds on the findings of BNEF’s long-term energy storage outlook, which is published on an annual basis after extensive analysis of the storage market across 50 global markets.
Published last November, the latest outlook states that global investment in all energy storage technologies is set to reach $1.2trn by 2040 as technology costs fall. This prediction is based on a forecast that lithium-ion batteries will have an upfront cost which is 52% less in 2030 than it was in 2017.
Similarly, some experts in the industry are now predicting that the energy storage sector will grow on a trajectory comparable to the solar industry during the early 2000s, as more large-scale renewable arrays come onto the grid.
The early signs of this battery boon are now beginning to emerge in the UK, with RenewableUK and the Solar Trade Association (STA) having recently published research revealing that planning permission applications to install energy storage facilities in the UK have quadrupled since 2016. This trend has shown no sign of slowing down in recent times, with projects currently in the pipeline including a 27MW battery array to be co-located with two industrial-scale solar parks in Warrington, a standalone 20MW battery near Liverpool and a smaller array made from used electric car batteries in Northumbria.
However, financing challenges persist. Energy market analyst Aurora Energy Research recently published a report claiming that more than £6bn will need to be invested in the UK’s energy storage market by 2030 if the nation is to decarbonise at the rate necessary to meet legally-binding carbon targets.
In response to the issue, the UK Government is providing £20m through a “Storage at Scale” competition, to help commercialise energy storage projects that would be able to compete with more established technologies. The department is hoping to test three demonstrator projects by 2021 under the competition. In the private sector, investment firm Thrive Renewables and renewable project developer Aura Power are similarly offering businesses the chance to access to battery storage installations at no extra cost in a bid to boost uptake.
© Faversham House Ltd 2023 edie news articles may be copied or forwarded for individual use only. No other reproduction or distribution is permitted without prior written consent.
Please login or Register to leave a comment.
There is a widespread belief which this article fosters, that "green" technology is actually clean and therefore is in some way, more moral and deserving of uncritical support than coal, oil and gas. This is certainly the case with the (wonderful) lithium ion battery and its much hyped use, on a TWh scale, in grid storage. TWh-scale storage will certainly be needed if intermittent renewable energies are to contribute anything more than a very small fraction of the energy needed by the World’s burgeoning population.
In fact, the cost of the lithium ion battery depends increasingly on the cost of the materials of which it is composed, as the costs of its manufacture in vast giga-factories heads toward an asymptote. At https://www.nature.com/articles/d41586-018-05752-3, you will read a carefully researched paper on the facts of life as regards the availability of the relatively scarce metals needed.
In Deutsche Welle’s well researched documentary "The true cost of electric cars" (https://www.dw.com/en/the-true-cost-of-electric-cars/av-46457917 ), you will see a small fraction of the appalling damage to the environment already caused by mining lithium in the Atacama desert at only the start of global EV manufacturing.
Furthermore, as you must know already, 50 years after the invention of the lithium ion battery, there is not a single, commercially viable process anywhere in the world, that can recycle these at the end of their relatively short lives, no matter which battery chemistry is used. By "commercial", I mean a process that can deliver the metals used in their manufacture as economically as freshly mined metals at the (usually Chinese) refinery where the mined metals are refined to the purity needed to make these incendiary batteries safe.
I would welcome Edie’s corrections, if I am wrong!
No! lithium ion batteries are not about to