A recent report from Bloomberg New Energy Finance has found that the supply cost of lithium-ion batteries is falling a lot quicker than previously expected. This is good news for the energy storage sector and the process of low-carbon energy transition, marking out lithium-ion batteries as a real competitor against coal and gas in terms of cost. Most importantly, in terms of the blooming relationship between solar power and energy storage, this lower cost for lithium-ion batteries makes integrated clean energy systems increasingly affordable.
According to the research, which took into account data from over 7,000 projects worldwide, the levelized cost of energy (LCOE) has fallen by a sizeable 35% since the first half of last year (2018). This reduction in cost puts the benchmark LCOE for lithium-ion batteries at $187 per megawatt hour. In addition, the LCOE has fallen in a number of other areas as well — offshore wind, as well as onshore wind and solar PV. Of course, the falling cost of all these different components of low-carbon energy sources becomes even more interesting when you consider the impact it could have on their relationships to one another.
As things stand, technologies capable of generating energy — like the aforementioned wind and solar — are still, all things considered, relatively cheaper in terms of LCOE. However, it’s notable that the falling cost of lithium-ion batteries has outpaced the falling cost of these other renewable energy processes, in terms of percentages, in recent years. With this declining battery cost outpacing the decline of energy generation costs, the potential cost-competitiveness of energy storage systems becomes apparent.
Popular energy storage approaches like solar-plus-storage will see the benefit of lower lithium-ion battery costs. Indeed, in recent times, other cost research findings from the likes of Wood MacKenzie have noted record-low prices for large-scale energy storage and lower cost bids for solar-plus-storage RFPs. This is certainly an indication that the falling prices of lithium-ion batteries have turned co-located battery storage & solar/wind projects into real competitors against non-renewable energy generation such as coal and gas — and this is before you consider the possible subsidies and incentives available for renewable-led energy storage projects.
To develop your own energy storage project, or add battery storage to your current solar panel installation, reach out to YSG. You can contact us here or call the office at 212.389.9215 to speak directly to a member of our team.
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