Lithium-ion battery storage prices continue to drop each year
The market for energy storage is rapidly gaining momentum around the world. The growing cost-competitiveness of carbon-free energy sources, coupled with improving technology and more environmentally conscious government policies are driving a demand boom for batteries in both the transportation and utility power sectors. But just how big is this boom expected to be?
That’s to say nothing of battery-powered electric vehicles (EVs), where the global fleet has been expanding at a compounded annual growth rate (CAGR) of 52% over the past 5 years. That rate is expected to level off to about 25% between now and 2025. There are currently 3 million EVs on the road today, and an estimated 1.2 million of them were sold in 2017. That’s around 1.5% of all car sales last year.
The Market Driver.
Fall in costs of lithium-ion (LI) batteries are a key driver of increasing demands for battery storage. Lithium-ion is the leading battery storage technology to date, though alternatives are beginning to crop up. The price of LI batteries fell 80% between 2010 and 2017 ($/kWh) with costs projected to fall another 52% between 2018 and 2030. Head of Energy Storage at BNEF expects to see ‘energy storage growing to a point where it is equivalent to 7% of the total installed power capacity globally in 2040.' Nothing to sneeze at considering all (non-hydro) renewable power accounted for 8% of worldwide electricity production in 2017.
Challenges
Lack of standardization and outdated regulatory policy – two issues you can expect to see with any emerging technology – are also prominent.
But as batteries continue their penetration into the energy sector, we can anticipate markets and regulations to adapt. Scaling will continue to bring prices down, and lower prices will attract further investment. Cost declines projected by industry participants vary widely, but lithium-ion capital costs are expected to decline as much as 36% over the next five years. And over the next twenty?
The future is bright for energy storage, and right now it's powered by lithium-ion.
That’s to say nothing of battery-powered electric vehicles (EVs), where the global fleet has been expanding at a compounded annual growth rate (CAGR) of 52% over the past 5 years. That rate is expected to level off to about 25% between now and 2025. There are currently 3 million EVs on the road today, and an estimated 1.2 million of them were sold in 2017. That’s around 1.5% of all car sales last year.
The Market Driver.
Fall in costs of lithium-ion (LI) batteries are a key driver of increasing demands for battery storage. Lithium-ion is the leading battery storage technology to date, though alternatives are beginning to crop up. The price of LI batteries fell 80% between 2010 and 2017 ($/kWh) with costs projected to fall another 52% between 2018 and 2030. Head of Energy Storage at BNEF expects to see ‘energy storage growing to a point where it is equivalent to 7% of the total installed power capacity globally in 2040.' Nothing to sneeze at considering all (non-hydro) renewable power accounted for 8% of worldwide electricity production in 2017.
Challenges
Lack of standardization and outdated regulatory policy – two issues you can expect to see with any emerging technology – are also prominent.
But as batteries continue their penetration into the energy sector, we can anticipate markets and regulations to adapt. Scaling will continue to bring prices down, and lower prices will attract further investment. Cost declines projected by industry participants vary widely, but lithium-ion capital costs are expected to decline as much as 36% over the next five years. And over the next twenty?
The future is bright for energy storage, and right now it's powered by lithium-ion.
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