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Study finds storage prices falling faster than PV and wind technologies

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PV Magazine

Energy storage projects may bring the cost per kWh of a lithium-ion battery down from $10,000/kWh in the early 1990’s to $100/kWh in 2019, according to a new study written by a research team from University of California and TU Munich in Germany, and published in Nature Energy.

Source: PV Magazine

Tesla’s gigafactory near Sparks, Nevada, United States. Source: PV Magazine

This result, if confirmed, would indicate that prices for lithium-ion storage systems are dropping faster than PV or wind technologies, the scientists claim, and that the new combination of solar, wind and storage will soon be able to outcompete coal and natural gas plants on cost alone, due to this price fall.

The achievement of the $100/kWh target, however, may be endangered by a recent lack of investment for basic and applied research, the researchers stated.

According to the research, in fact, US federal R&D spending declined over the past four decades from about 1.2% to 0.8% of the US GDP.

The scientists have developed a two-factor learning curve model to analyze the impact of innovation and deployment policies on the cost of storage technologies, which includes production volumes and patent activity.

This model, according to the research team, explains the recent plunge of battery prices better than both conventional models using economies of scale or a classic experience curve approach, as these usually overestimates prices.

Using this two-factor model the scientists concluded that long-term R&D spending and innovation were crucial to cost reductions.

“Our framework supports prevailing technological learning literature that describes innovation as a more critical component of cost reductions compared to deployment” said the research team in its paper.

Furthermore, the team stressed the need for more research in new storage technologies, claiming there is currently no clear prevailing technology, and that a diverse range of options may outlast lithium-ion batteries.

“There may be room for a number of different battery chemistries that all provide different services on an evolving grid, some providing voltage regulation and frequency control, and others serving long duration outages and providing back-up for buildings and communities”, the researchers said.

Source: PV Magazine. Reproduced with permission.  

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  • GlennM

    Be great if it was true….Where I live actual retail battery prices are still $1000 /KWh, so I cannot see $100 any time soon

    • Joe

      Home battery installs went from 500 to 6,000 plus in a year. If that sort of momentum keeps going then decent price falls should follow. Rooftop Solar installs started out expensive but now they are steal.

    • Andrew Roydhouse

      The cost for the battery packs in the various hybrids are a fraction of the cost quoted for PV storage for homes etc.

      A friend of mine built his own for a few hundred $$ per KWh using parts available online.

      That is extreme but can be done currently.

    • Mike Westerman

      Plus PV doesn’t have the recycle and resource scarcity issues lurking around the corner, which doesn’t even seem to be figuring in these type of calculations yet. A halving I could believe, even with these costs included, and that would make solar plus batteries economical throughout Australia (5y return, 7% cost of money, 30c/kWh grid price, 6kW solar + 13.5kW storage). Li price has jumped from $2k to $9k in 15y, tho’ Co is cheaper and graphite wanders up and down over the same period, ditto phosphorous and iron.

      • Alastair Leith

        no inherent Li resource shortage though. many produces scaling up atm/

        • Mike Westerman

          Have you been reading your backlog of blogs Alastair 😉

          I have read that copper may well be the constraining resource, with demand in all areas of transformation: distributed generation and storage, large scale PV, wind and PHES, and electrification of the transport sector. The bottom line is that silicon is cheap and bountiful, whereas battery demand is related to a range of metal supplies that are less so.

          • Alastair Leith

            Can’t we have both PV and batteries (And CST + TS and PHES)? PHES uses tonnes of cement and currently it’s a massive embodied energy and GHG emissions source. 8% of global emission come from portland cement. ( Stat from the recent BZE Zero Carbon Australia | Cement Plan).
            http://bze.org.au/rethinking-cement-plan/

          • Mike Westerman

            No doubt in my mind we will have both, but the issue is which is scaleable and long term reliable. Modern roller compacted concrete uses a fraction of the cement in rich concrete, but the CO2 emissions during calcining is an issue. Interestingly recent studies show a large proportion – from memory about 45% of the emissions reabsorb as the concrete ages and calcifies. A key emission reduction strategy with cement will be to electrify the calcining heating to eliminate NG.

          • Alastair Leith

            Take a look at the BZE Cement Plan for me some time. Be interested in what you make of it. http://bze.org.au/rethinking-cement-plan/

          • Mike Westerman

            Thanks mate – will have a read. Clearly processes that fix the carbonate back in the rock would be welcome but I suspect, like CCS for power, are just too expensive. I understand the Romans had a type of saltwater resistant concrete that didn’t involve so much clinker.

            I do like some of the highrise timber buildings that are being designed and built.

          • Mike Westerman

            Earth and rockfill embankments can be cost effective if the right materials are available, with geotextile or concrete upstream face.

          • Alastair Leith

            Yes timber high rise and medium rise are very good way to lock up carbon and avoid emissions.

          • Mike Westerman

            Were you able to actually download the report – I subscribed but then go round in circles in trying to get the report.

          • Alastair Leith

            Yes you can. I found that the first time. You get emailed the DL link, even though they never told you that would be the process.

            Stupid, I’ll mention it to staff.

            Here is the direct link in case you’re still having problems: http://media.bze.org.au/ZCIndustry/bze-report-rethinking-cement-web.pdf

          • Mike Westerman

            Yes – the second link was delayed but came thru a bit later 😉

          • Alastair Leith

            Copper price is back to where it was 10 years ago.

            Thieves began removing power lines and rail power conduits at night after the 2009 spike ago with the rapid gain in price and “perceived value” (and general decline in Western civilisation as we approach the apocalypse 😉 ).

          • Alastair Leith

            Copper price is back to where it was 10 years ago.

            Thieves began removing power lines and rail power conduits at night after the 2009 spike with the rapid gain in price and “perceived value” (and general decline in Western civilisation as we approach the apocalypse 😉 ).

            http://www.infomine.com/investment/metal-prices/copper/all/ https://uploads.disquscdn.com/images/ba1ed9f5e5b2d5b8e25b878795aa28733e52379e9214cab65c9751e4320839b6.png

    • Ian

      A quick look at battery prices in the USA showed wholesalesolar.com a site which lists various battery prices that they offer, sure enough their lithium batteries also come in at about $1000/KWH or more. The vehicle and utility scale demand for lithium battery manufacture is overwhelming so we may have to wait for battery manufacturing capacity to ramp up before we see any home battery prices drop to the $100/KWH range. The $100 looks like the potential price in a mature market, The $1000 looks like the actual price. Let’s see what the prices are like in 1 year’s time

      • Mike Westerman

        I think you’ve nailed it Ian: batteries face manufacturing and resource constraints, plus lucrative alternative markets – it will take 20y+ to convert the vehicle market – so even if the price could fall faster, it won’t. There just won’t be the oversupply we saw with panels.

        • GlennM

          Agree, I suspect that the research was about theoretical manufacturing cost coming down not the retail cost. For each small drop in sales price the Market expands significantly. We are now in a supply/demand cycle and in the last 9 months cell retail price has gone up. I suspect it will take many years before supply outstrips demand and then price will fall. The advice I was given for my home system was to but lead acid, much cheaper and by the time it wears out in 7-10 years lithium retail prices might be where we all want.

        • Alastair Leith

          The oversupply in panels was partly driven by Chinese SOE and affiliated production being tooled up to met internal govt contracts and then when filling those orders dumping their huge capacity on the international market to keep the doors open. There’s no reason why China will not do the same again with batteries. Supply constraints on raw inputs are only constraint that I can see.

      • Carl Raymond S

        So huge profits to any company that can produce a quality battery. That’s what we want – Adam Smith’s invisible hand does the rest – and we can already see it happening. The battery industry is going gangbusters.

    • Alastair Leith

      If it’s true it ‘averages out’ as a 14.5% decline every year. and to be at $100/kWh in 2019 it would need to be at around $199/kWh today for smooth (geometric) trend. Obviously learning curves jump around quite a bit but it is a bit optimistic.

    • Ed
  • George Darroch

    Here’s hoping, that it happens, and that Australia is among the countries properly funding R&D.

  • Mike Dill

    I think the researchers are missing the boat on the investment that is happening in research and development. Tesla and the other battery manufacturers are putting a lot into their research.
    As to prices: I am willing to bet that the big battery in SA that Tesla is putting in costs them less than AU$250/kWh all in. The basic batteries are probably half that right now. An extraordinary amount is added in ‘sales and marketing’ for smaller units.