Even Without Subsidies, Energy Storage Is Starting to Rival Conventional Resources
The economics of storage aren’t easy to model.
The technology can be used for so many applications — frequency regulation, equipment upgrade deferral, backup power, renewable energy integration, or peaking power — that it can be hard to compare storage to conventional generation. The technologies themselves are just as diverse.
But the analysts at the financial advisory firm Lazard just did it. And their work yielded some promising results.
This week, Lazard released its first-ever analysis of the levelized cost of storage. The study is a reproduction of Lazard’s earlier work on the levelized cost of renewables, which has documented the steady improvement in the economics of renewables compared to fossil fuels and nuclear on an unsubsidized basis.
There’s a lot of debate about whether megawatt-hour costs are the most helpful way to measure competitiveness, since they leave out dispatchability characteristics and specific use cases for technologies. But they do provide a helpful guide for where technology costs are today, and where they’re headed in the future.
When calculating megawatt-hour costs, storage doesn’t rival renewable generation in its competitiveness with conventional alternatives. But some of the leading technologies are showing the same “rapid declines” in cost, concluded Lazard. And the downward trend isn’t likely to slow any time soon.
“Although in its formative stages, the energy storage industry appears to be at an inflection point, much like that experienced by the renewable energy industry around the time we created the LCOE study eight years ago,” said George Bilicic, the head of Lazard’s energy and infrastructure group, in a release about the report.