Household battery storage costs: So near and yet so far

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Our cost of energy charts for battery storage suggest Tesla is now in the middle of the pack, Enphase looks relatively cheap and none of them is cheap enough.

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Figure 3: Capital cost per KWh of lifetime energy A$ cents
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The main points:

  • SolarQuotes has done a great job putting together data on 28 different household storage systems on the market to date. The data shows a median capital cost of $9000 or $1800 per usable KWh (kilowatt hour), which translates to $0.39 of cost for every delivered KWh of electricity. We expect competition to really drive price. We think the installed base is less than 5000 grid connected systems, but based on Enphase orders expect that to explode to over 50,000 within the next 18 months.
  • EV battery costs on the other hand are about A$250 KWh of headline capacity or say A$350 KWh of usable capacity. That is just 20% of the cost of household storage. We think inverters and the supply chain account for most of the difference. We think purpose built stationary energy lithium storage could end up cheaper than for EVs because of different chemistry, less constrained form factors, and ultimately greater scale. The question is whether EV battery costs, which themselves are falling quickly, can be pushed through to installed residential costs.
  • Using EV costs on demand renewable energy wind+lithium has an LCOE of maybe A$160 MWh broadly comparable with say CST. In my view the global expansion of lithium makes it a much lower risk technology than CST, at least at this point of time. In addition there are other possibilities such as putting the storage at the fringe of the grid (behind the household meter).
  • From a policy perspective it seems that some policies that incentives EVs will also progress stationary energy lithium storage. We think that would be a good thing.

Does lithium storage energy cost $50 MWh, $100MWh, or $400MWh?

Today you get one answer, but always there is someone saying that at the “end of the rainbow” there will be another answer.

In our minds we don’t really know because as yet the volumes in the market are just not high enough to give a clear road map on costs.

We estimate less than 5000 grid connected systems NEM wide

Chatting around at last week’s excellent Clean Energy Summit conference in Sydney, we tried to get a vibe of how many batteries, connected to the grid (“hybrid”) have actually been installed to date.

The answer still seems to be ‘not many.’ We think less than 5000 and would not be surprised if it was less than 2000. But we don’t know. What we do know, thanks to SolarQuotes, is that that there are lots of brands and vendors. Here at ITK we rearranged SolarQuotes data, to highlight a few points.

First we can see 28 separate vendors. For consumers, that’s great. (Please click on graph to enlarge).

Screen Shot 2016-08-05 at 9.46.45 AM

We calculate the median cost of a system at $9100, the median capital cost per usable KWh at $1800 and the median cost per delivered KWh of electricity at $0.39.

We think the cost is falling at about 20% per year. Some of the systems include inverters, some include installation. Not all the names are using lithium but the vast majority are.

It can be argued that simply thinking about the capital cost per KWh is too simplistic and that the cost per delivered cycle, whether warrantied or not, is a better measure. We use SolarQuotes’ calculation of  warrantied cycles in Fig X. Our only caveat is that it’s easy to make your system look cheaper by promising a longer life. Time will eventually tell. In any case we show two charts – one for capital cost and one for cost (undiscounted) for delivered energy.

Figure 2: Capital cost per KWh of deliverable capacity
Figure 2: Capital cost per KWh of deliverable capacity

In looking at the delivered cost of energy chart what’s interesting is: (1) Tesla is now in the middle of the pack, (2) Enphase looks relatively cheap and (3) None of them is cheap enough.

Figure 3: Capital cost per KWh of lifetime energy A$ cents
Figure 3: Capital cost per KWh of lifetime energy A$ cents

Enphase appears to have been “clever” in that the absolute  capital cost to be a “player” is a relatively  low  $2000, versus a category median of $9000, and also the cost of delivered electricity is attractive.

On that basis, it’s not surprising that advance “orders” are as much as 50000 units. Perhaps Enphase will be the Tesla of residential storage. The implication is that even if Enphase is 80% of the 2017 market then the market will grow from say 5000 units to say 60000 units.

EV battery prices imply residential costs are still 2-3X too high

We know that battery packs for EVs  cost around US$200 MWh. That is the wholesale price and does not include the inverter, but it does include the BMS.

These numbers can be supported from multiple sources, of which the most detailed is from Argonne Lab BatPacC spreadsheet and documentation. Alternatively just typing “Chevvy Bolt battery cost” into Google produces in 0.73 seconds of research:

“Electric-car battery costs: Tesla $190 per kwh for pack, GM $145 for cells. Lithium-ion cells and the battery packs that hold them are the single most costly part of modern electric cars.” Source: Google search July 2016

To our way of thinking if there was enough volume, stationary energy storage using LiFe4 would be cheaper than automotive storage which mainly uses some variant of LiNiCo.

The Chevvy Bolt battery will be warrantied for 10 years or 100,000 miles. This is roughly about 3500 cycles. However, the expectation in the industry is that the battery will still have a lot of life in it, maybe not enough to provide the same power and range than an EV requires. In a household (stationary energy) context it would likely have more life. The number of cycles has a major impact on the economics of such a battery used for stationary energy.

At EV battery prices “on demand” renewable energy LCOE is $160 MWh

We assume a low 6% WACC for our calculations. Actually at 6% its likely the LCOE of wind is less than $85 MWh but no matter. The LCOE of storage is around $80-$105 MWh depending on the assumption of the number of cycles, ignoring tax and ignoring maintenance costs. So it’s definitely a best case number. We also ignore round trip energy losses. The basic motivation for the calculation was as a comparison with CSP.

Figure 4: LCOE of storage and "on demand" renewables using EV battery costs
Figure 4: LCOE of storage and “on demand” renewables using EV battery costs

Although the combined wind/lithium, PV/lithium  is over A$160 MWh it works from an assumption that all of the renewable energy needs to be stored and then released. It may be that only some fraction of storage is required.

Secondly it works from the assumption that all the energy is being produced and stored on a utility scale with the associated transmission and distribution infrastructure. If we get down to the micro grid (and the household is the ultimate micro grid), then the grid infrastructure costs become relevant.

(note: the main graph has been updated since original publication).

David Leitch is principal of ITK. He was  formerly a Utility Analyst for leading investment banks over the past 30 years. The views expressed are his own. Please note our new section, Energy Markets, which will include analysis from Leitch on the energy markets and broader energy issues. And also note our live generation widget, and the APVI solar contribution.

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20 Comments
  1. Jon 3 years ago

    Hi David, it looks like your c/kWh data is actually c/cycle. Don’t you need to divide by the delivered kWh per cycle to get the c/kWh…this would change the order somewhat I think.

  2. Peter Sermol 3 years ago

    Hi David, just an observation but the battery pricing seems on the high side…

  3. MaxG 3 years ago

    Numbers are bogus… first line: 28105 cycles… divided by 365 days (one cycle per day) gives a battery life of 77 years…. not the 6 stated.

    • David leitch 3 years ago

      Hi Max. You need to adjust for the KWh of the pack.

      • MaxG 3 years ago

        Happy to be proven wrong… I am not getting it… what am I missing?
        Where are the cycles coming from?
        Not sure, why I should adjust for kWh?
        The cycles are usually provided by the manufacturer and are independent of kW or kWh.

      • juxx0r 3 years ago

        He’s right, numbers are bogus, so are the units. Entire tables are ‘shakes head’

        • juxx0r 3 years ago

          @disqus_emUhmxjtYR
          Exhibit B

  4. Finn Peacock 3 years ago

    Great work David. If anyone sees any errors or has any updated pricing for the table – just let me know and I’ll get it updated. The pricing in the table is our best guess of retail prices after speaking to the manufacturers, distributors or solar installers installing the stuff.

    • michelle mapel 3 years ago

      Finn – The sonnenBatterie information is incorrect. We have a use of at least 10 years, not 3 years. Also what system are you basing our pricing on as we have multiple products in multiple sizes across the world. Please contact me to clear this up….my contact information is on our website under press, http://www.sonnen-batterie.com.

      • Finn Peacock 3 years ago

        Jonathon who maintains the table has sent you an email.

    • Mike A 2 years ago

      Time this was redone with latest figures and any corrections. This is a huge focus to tens of thousands.

      • Finn Peacock 2 years ago

        Mike – it is up to date – we maintain this table with figures from the manufacturers.

  5. Jonathon 3 years ago

    A number of columns in that table are incorrect. For example, the sonnenbatterie is listed as having 3 years use – when it has 10,000 cycle life on the SolarQuotes table. 10,000/365 = 27 years, assuming one cycle per day.

    The $ per nominal/useable kWh should be expressed as a $ figure, not as an unformatted number. It should also clarify that this number is based on warranted kWh, not total claimed kWh.

    ‘Cycles’ column should be warranted kWh – and it should also clarify if it’s using the ‘warranted kWh (multiple cycles per day)’ number from the SolarQuotes table or the ‘ warranted kWh (one cycle per day)’ number

    • solarguy 3 years ago

      Gee who is correct?

  6. Geoff 3 years ago

    ….. For the price of a cup of coffee each day (for some people plus a toasted cheese Sandwich) you get reliable 24/7 On Demand electricity. No capital outlay, no capital replacement cost, no batteries, no risk. Base load electricity is my lowest cost of living item and gives me the best addition to my lifestyle and comfort.
    You guys are crazy.

    • nakedChimp 3 years ago

      Do we bitch about your lifestyle?
      What are you afraid of – that people buy a Ferrari or or a diamond necklace or an expensive gaming rig?
      Some people want freedom of mind and not to depend on some others for their things… that’s why we go camping or do extreme stuff.
      Just relax and enjoy the ride from the sideline.

  7. James 3 years ago

    Unfortunately when demand for Solar PV reduced and other quote brokers come into the market Finn Peacock and Solar Quotes started playing the google ratings game. Content is just content for the sake of generating the $90 odd he get per enquiry. I would be very aware of advice that comes from someone who has relationships with the suppliers of these battery retailers he is reviewing. As per Finns Linkedin he is now a digital marketer NOT an impartial, third party advisory service.

  8. solarguy 3 years ago

    Just a word of warning for punters wanting a battery system. Not all will provide power in a blackout scenario. Added to that if you need 3 phase, for say your Air Con most don’t do that, like Enphase. And if you have single phase set up and want it to power your AC you won’t have much joy with Enphase as each battery will only produce 270watts.
    Do your home work guys and choose wisely.

  9. Mark Roest 3 years ago

    We calculate the median cost of a system at $9100, the median capital
    cost per usable KWh at $1800 and the median cost per delivered KWh of
    electricity at $0.39.
    We think the cost is falling at about 20% per year. Some of the
    systems include inverters, some include installation. Not all the names
    are using lithium but the vast majority are.
    You can expect it to drop to less than 10% of what it is now by 2020, and maybe by 2018 some time. LG Chem is building capacity to stay ahead of the Gigafactory, and startups will chase them into extending GM’s sweet deal to other mobile customers, then to stationary.
    The batteries themselves should sell for $100 to $160 per kWh by 2018, and if people are smart about inverters, or all-dc, or are otherwise creative, it should be possible to hold down the balance of system cost to less than 50% of the cost just for batteries.

  10. Miles Harding 3 years ago

    I think elimination of the extremes may be a good idea.

    Looking at the service life in the first table, it is clear that some of the vendors are not to be trusted. None of the Lithium offerings should be quoting a service life greater then 10 years, yet several are.

    The effect is seen in the cost per kwh tables, improbably long service life will affect the per unit cost.

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