Grid-Scale Energy Storage Balance-of-System Costs Will Decline 41% by 2020
Today, grid-scale energy storage balance-of-system costs average $670 per kilowatt. These costs include hardware like inverters and containers, soft costs like customer acquisition and interconnection, and engineering, procurement and construction (EPC) expenses. According to the latest report from GTM Research, Grid-Scale Energy Storage Balance of Systems 2015-2020: Architectures, Costs and Players, these costs will fall 41 percent over the next five years.
“While batteries remain the most expensive component of an energy storage system and have the most room for price declines, savings will be found across projects’ entire value chain,” said Luis Ortiz, lead author of the report.
GTM Research expects the largest BOS decline to come from hardware costs, particularly inverters. Storage inverters are significantly more expensive than solar PV inverters, but the next five years should see that gap shrink. However, due to their bidirectional nature, storage inverters will likely always be more expensive than their solar counterparts.
The next most promising area for BOS cost reductions is in soft costs.
“Soft costs have been an area targeted by U.S. solar developers as a ripe territory for significant improvements in the near future, and similar gains are expected to kick in for storage projects closer to 2020,” said Ortiz. The report cites customer acquisition (project origination for utility-scale projects) as the area of soft costs with the greatest opportunity for reductions as best practices and momentum build up in a successful industry.
Finally, engineering, procurement and construction costs, including site preparation, rigging, shipping and installation, make up the smallest share of BOS costs and aren’t expected to drastically shrink. GTM Research forecasts these costs to fall 6 percent per year through 2020.