Some energy storage already cost competitive, new valuation study shows
A new report from Lazard breaks down the costs of 8 different storage technologies
Asessing the value of energy storage is one of the burning issues facing the electricity sector today, and a new valuation matrix from the firm Lazard could give utilities and policymakers a more accurate idea of the costs and benefits various storage technologies provide.
“The battery industry in the recent past has been focused on small batteries for consumer electronics, not on issues like integrating renewables and regulating frequency,” said Matthew Tappin, a spokesperson for Lazard and contributing author for the consultancy’s recent report, “Levelized Cost of Storage Analysis 1.0.”
“Now people are taking on these industrial scale challenges because the cost of renewable energy is dropping and wind are solar beginning to be widely integrated into the grid,” he added. “We believe this will lead to an increase in battery and other energy storage manufacturing capacity.”
The resulting increase in storage capability and capacity will open a “virtuous cycle” for storage and renewables, Tappin said. As storage improves, it will allow for more renewables on the grid, which will in turn lead to a faster ramp-up in storage manufacturing.
Although the global battery industry is large, the energy storage system manufacturing sector is “tiny” compared to other industries, and costs will come down “dramatically” as it scales up, Tappin said.
“We think storage is at an inflection point,” he said, “like renewables were in 2008.”
Some storage technologies are already cost-competitive with conventional alternatives in certain applications like frequency regulation or deferring distribution investment. Others, for other applications, are close.
Energy storage system technologies are “not very close [to price parity] in relatively high duration, low power/capacity use cases, like putting a battery in a factory or in a garage to charge an EV,” Tappin said.