The optimism in the energy storage industry is based on soaring demand, rapid technological advances, expanding capacity and, for some, what will likely be a scary competitive environment.
First, the good news. Lithium ion battery packs over the last ten years have declined faster than the cost of solar, said John Carrington, CEO of Stem, which makes behind-the-meter storage systems for hotels and other commercial customers looking to shave peak power costs, during a hallway meeting at Finance West sponsored by the American Council of Renewable Energy this week.
Solar panels have declined by 50% or more in the last five years. Batteries have declined by 80% in three years, he said. Battery packs hit the under $300 per kilowatt hour mark last December, Carrington added. By 2020, battery pack prices could drop to $190 per kilowatt hour. (In 2007, lithium ion battery packs in the wholesale markets sold for around $1,000 per kilowatt hour.)
The volumes of batteries shipped at the same time is expected to grow by 6x 2025, he added, citing a Goldman Sachs report, fueled in part by the rapid adoption of solar, wind and microgrids. Stem has approximately 75MWh under management. Stem doesn’t generally sell batteries: it installs them at commercial sites and charges a subscription fee based on a formula that takes into consideration the cost of power minus rebates and fees received from utilities for grid balancing. Everybody wins.
Goldman Sachs also predicts energy density will increase from 200 watt hours per kilogram to 500 Wh/kg by 2025 before the still experimental solid-state batteries take over for lithium ion.
Declining prices, improving technology and growing demand—what could go wrong?
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