Graham Foster ’21: Entrepreneurship Learning Competency

Future Costs of Energy Storage

One of the keys to energy storage, an essential part of the renewable energy transition, is cost. The United States Department of Energy has defined a goal to have a levelized cost of storage for long term stationary applications of five cents per kilowatt-hour ($0.05/kWh) of energy stored. This is a 90% reduction from 2020 baseline costs and the objective is to reach this goal by 2030 [1]. Cost is incredibly important when considering renewable sources, as providing affordable power that can compete with existing fossil fuels. The competitive advantage of renewables will ultimately drive the switch over to sources like solar and wind. With energy storage, the cost of a battery system is not calculated simply by adding up the cost of materials and labor – the lifetime of the equipment needs to be factored in as well. This is why it’s important to consider the levelized cost of storage (LCOS). The LCOS factors in the capital cost of the asset, operating costs, and energy output over the lifecycle of the equipment [1]. Flow batteries are a type of energy storage that benefit from a long-term view of energy storage, as the high cycle life of these batteries help bring down the LCOS over the life of the battery. 

The cost of an energy storage facility depends on a number of factors, some of the most important being lifecycle length and material cost. Lithium ion battery storage has a relatively low LCOS right now, around $0.15/kWh [2], but there are some factors associated with lithium ion that don’t make it well suited for large scale energy storage. One of the main issues with lithium ion is the charge degradation that these batteries experience over time which limits cycle life to about ten years [3]. As lithium ion batteries age, they lose their ability to hold a charge, which means that they need to be replaced more often than another type of energy storage – flow batteries. Flow batteries have a distinct advantage over lithium ion in terms of cycle life, but since they are less common than lithium ion, the projected LCOS is more difficult to calculate. Flow batteries can last up to twenty years or more because they are powered by electrolyte solutions that not only last much longer than the metals in lithium ion batteries but can be easily replaced if the solution loses its charge capacity. The projected costs for flow batteries right now range from $0.133/kWh to $0.467/kWh [3], but a few factors may be able to drive that price lower.

One of the most important design choices for flow batteries is deciding what metal needs to be dissolved in the electrolyte that allows the solution to store and discharge energy. Traditionally, flow batteries have used vanadium, which can be expensive and difficult to obtain. However, recently iron has been proven to work as a replacement to vanadium, which is great from an economic and sustainability perspective given the availability of iron. Iron based solutions do not have the ability to store as much energy per unit of volume as vanadium-based solutions, but that is not a prohibitive factor especially when considering how much iron could potentially drive down the cost of these systems. 

[1]“Energy Storage Grand Challenge.” Energy.gov, U.S. Department of Energy, Dec. 2020, www.energy.gov/sites/prod/files/2020/12/f81/Energy%20Storage%20Grand%20Challenge%20Roadmap.pdf.

[2] Colthorpe, Andy Andy. “Behind the Numbers: The Rapidly Falling LCOE of Battery Storage.” Energy Storage News, 6 May 2020, www.energy-storage.news/blogs/behind-the-numbers-the-rapidly-falling-lcoe-of-battery-storage.

[3] Battery Energy Storage Overview. NRECA, Apr. 2019, www.cooperative.com/programs-services/bts/documents/reports/battery-energy-storage-overview-report-update-april-2019.pdf .