A Study - How the Cost of Storage per MWh Varies with Different Storage Technologies and Different Applications

Grid Scale Energy Storage - Storage Costs

06 October 2017

A study conducted by Lazard Financial Advisory in 2016 demonstrated how the cost of storage per MWh varies with different storage technologies and different applications (i.e. transmission, distribution, island grid, etc.).  Generally speaking, the cost of storage decreases as the scale of the application increases.  For example, the cost of storage to support an island grid is more than that of a transmission system.  In the case of reducing fossil unit start/stop cycles, Lazard reports that the average capital cost needed to integrate a compressed air, pumped hydro, thermal, or lithium ion battery storage system is $159/kWh, $263/kWh, $331/kWh, and $652/kWh, respectively. 

The report also reveals that the average unsubsidized levelized costs of storage for compressed air, pumped hydro, and lithium ion batteries are $128/MWh, $175/MWh, and $414/MWh, respectively, keeping in mind that the average retail price of electricity in the United States is $120/MWh.  Their levelized cost analysis accounts for capital costs of the storage module, balance of systems, power conversion system, engineering procurement and construction, operation and maintenance, charging, taxes, and other costs related to warranties, interest, etc.  Costs that have not been included are land use value and disposal. 

Like any investment, there is a level of risk associated too with integrating energy storage.  The advantages and disadvantages of the available storage technologies need to be weighed.  For example, although batteries are more expensive than traditional storage technologies, they are also more versatile and can be used to replace peaker units and well as perform frequency regulation.  On the other hand, batteries are a new grid-storage technology and long-term success or failure rates are unknown.  Furthermore, unlike traditional electromechanical storage systems, the chemical component of battery systems makes them more unpredictable and potentially dangerous under the right conditions.

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Dr. Taylor Kelly, Director, Energy Storage, earned her Ph.D. in Materials Science and Engineering from the University of Houston, where she developed an expertise in lithium ion batteries and energy storage. Her Ph.D. thesis investigated the mechano-electrochemical coupling behavior of stretchable lithium ion batteries. Dr. Kelly has not only brought to Intertek her energy industry expertise in the areas of electrochemical testing, mechanical testing, and heat transfer, but she also provides consulting and technology assessment services to energy storage manufacturers, developers, and consumers.

Tags: 2017 | Asset Integrity Management | Batteries & Energy Storage | Energy | Taylor Kelly