How Energy Storage Could Disrupt Energy As We Know It
The biggest criticism of wind and solar energy has long been their variability as sources of energy for the grid. The sun is only out during the day, and the wind doesn’t blow 24/7. They’re not great “baseload” sources of electricity, and their variability can make the rest of the grid harder to manage (see California’s “duck curve”).
To solve this challenge, cheap and abundant renewable energy needs to be moved from when it’s produced to when it’s needed. Energy storage is the answer, and it’s becoming big business faster than you might think.
Energy storage growth
The estimates of energy storage’s growth are incredible. According to GTM Research, energy storage installations in the U.S. totaled 260 MW in 2016 and the industry will grow to 478 MW in 2017 and 2,045 MW in 2021.
Furthermore, Bloomberg New Energy Finance projects that 25 GW of energy storage will be installed worldwide in the next 12 years from less than 1 GW today. But that’s assuming battery prices fall to $120 per kWh by 2030.
These are high growth estimates, but they may not be bullish enough. Estimates are that Tesla’s (NASDAQ:TSLA) costs are already below $190 per kWh and GM has reportedly gotten cell prices as low as $145 per kWh, and prices on the market are already trending lower than industry experts think.
New, cheaper batteries
Eos Energy, which makes a zinc hybrid cathode Znyth battery, recently announced that it’s taking orders for energy storage systems at $160 per kWh for delivery this year and at $95 per kWh for 2022 shipments.
This is the lowest price I’ve ever seen quoted, but it’s probably just the beginning. Tesla has been an industry leader so far, and with the company projecting lower costs from the scale of the Gigafactory, it could be below $100 per kWh for utility-scale projects by 2022. The $100 per kWh level would only be a reduction of 12% annually based on costs reported in 2016, which is very manageable for an industry cutting costs rapidly.
The economics of energy storage are compelling
At $95 per kWh, Eos estimates the levelized cost of energy storage is approximately $50 to $60 MWh, or $0.05-$0.06 per kWh. With wind and solar prices now at $0.02-$0.05 per kWh, energy storage could be economical in many states in the U.S. and countries around the world.