The levelised cost of electricity (LCOE) that can be achieved today for battery energy storage means that “batteries are not going to need subsidies to be competitive for short to mid-term balancing” applications, according to Bloomberg New Energy Finance (BloombergNEF).
Our sister site PV Tech reported yesterday that according to analysis BloombergNEF’s newly-published LCOE reports, solar’s levelised cost of electricity has fallen below US$30/MWh with the PV industry expected to break the US$20/MWh average in a decade.
New-build utility-scale solar and onshore wind are the cheapest options in much of the world, putting existing coal and gas power plants at risk, with BloombergNEF assessing 25 different technologies and 7,000 projects in 47 countries.
The LCOE of battery storage systems meanwhile has halved in just two years, to a benchmark of US$150 per MWh for four-hour duration projects. In an interview, BloombergNEF analyst Tiffen Brandily, the report’s lead author, told Energy-Storage.news that below two-hours duration, batteries are already cheaper for peak shaving than combined cycle gas turbines (CCGT), traditionally the go-to technology for that purpose.
“If you need to shave a peak in the load, it’s going to cost less to install a battery than CCGT or gas reciprocating power plants, peaking plants,” Brandily said.
‘Tremendous’ reductions driven by both upstream and downstream market dynamics
BloombergNEF has only been tracking the battery storage space for the past couple of years as the market went from being “relatively limited,” the analyst said, but “since then we’re really seeing a trend now – the LCOE has come down quite tremendously, actually faster than PV or wind”.
While the report said that manufacturing scale and standardisation, as well as technology improvements on the upstream side have contributed to this rapid decline in costs, the other big piece of the puzzle is on the downstream end – battery projects are getting bigger and bigger, both in megawatt (MW) and in megawatt-hour (MWh) metrics.
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