Falling battery prices unlocking new opportunities in electric grids, says Deloitte
Battery storage prices are coming down, resulting in changes to the business model for consumers in the electricity market. The technology has a broad breadth of possible uses, including the enabling of distributed energy and grid frequency regulation. While prices are coming down, barriers remain – including poor standardisation, fast-changing market conditions, and uncertain regulatory frameworks.
Battery storage offers access to a range of benefits, from more efficient electric vehicle charging to grid optimisation and backup. Yet the trajectory of the market remains a key uncertainty. Growth is expected, though the rate is debated: optimistic analysis points to 46% CAGR to 2022, when the market will be worth $26 billion, while more pessimistic analysis suggests 16% growth with a market valued at $7 billion by 2025.
Deloitte recently released a report, titled ‘Supercharged: Challenges and opportunities in global battery storage markets,’ into the industry to examine how nations across the globe are approaching energy storage in electric power grids.
Energy storage is decades old technology, although the in-vogue medium has changed throughout the period. Recent years have seen rapid advances as various applications drive the need for high-density energy in small packages. Lithium-ion batteries are now the main form of energy storage for devices, though other forms exist like pump-hydro and energy-to-gas.
The lithium-ion battery is the main source of battery technology in everything from user electronics to electric vehicles; high demand, scale, and innovation have seen the price per kw hour fall by 80% in eight years, from $1,000 per kWh to $209 per kWh. One estimate found that once the price hits $170, expected before 2022, the technology becomes highly competitive in a total cost of ownership model for electric vehicles. Meanwhile, cheaper home battery packs can provide the opportunity to create distributed energy systems or off-the-grid systems with solar or wind.