Energy Storage Projects Up 8% in First Half of 2012

The market for energy storage is dynamic, but still immature.  To date it has been dogged by three criticisms: the market is overstated (projects have been announced but are not online); energy storage is too expensive; and advanced storage technologies are dependent on government support.  Nevertheless, according to a new tracker report from Pike Research, the number of projects deployed on a global basis continues to rise as technologies move at a variety of speeds toward commercialization.  The total number of energy storage projects deployed and announced (including inactive projects) rose 8%, from 600 to 649 during the first half of 2012, the tracker report finds.  The number of deployed projects increased over those 6 months from 482 to 514.

“Considerable momentum is building behind newer energy storage technologies, such as advanced batteries, particularly as the renewable energy community embraces storage as a means of mitigating risks associated with variable power generation resources,” says research analyst Brittany Gibson. “High costs remain a significant hurdle for newer technologies, but market interest is growing rapidly as government-funded programs encourage the deployment of a wide variety of technologies.”

The region with the largest base of energy storage is Asia Pacific, which has just over 60 gigawatts of cumulative installed capacity.  Reflecting the large domestic base of R&D and manufacturing for battery technologies, the technical diversity of energy storage projects in Asia Pacific is quite wide.  While advanced batteries are staged to play a large role in the development of power systems across Asia Pacific, bulk energy storage technologies such as pumped hydro will play an increasingly important role in emerging markets like China.

An Executive Summary of the report is available for free download on the firm’s website.

Grid Storage Battery Cost to Fall to $500/kWh, Short of Expectations

Lithium-ion and molten-salt battery costs will approach $500/kWh by 2022, reducing the high capital cost of emerging grid storage technologies. However, expectations of half that level will remain unrealistic for at least a decade, according to Lux Research.

Technology developers make bold claims about performance enhancements and economies of scale that will lead to dramatic cost reductions. Lux Research’s baseline scenarios for grid-tied systems indicate that by 2022 Li-ion batteries will reach $506/kWh; sodium nickel chloride, or ZEBRA, batteries will approach $473/kWh; and vanadium redox flow batteries (VRFBs) will hit $783/kWh.

“Molten-salt batteries hold the most potential to be the cheapest large-scale systems, with manufacturing improvements playing the largest role, accounting for 95% of the cost reduction,” said  Brian Warshay, Lux Research Associate and the lead author of the report titled, “Grid Storage Battery Cost Breakdown: Exploring Paths to Accelerate Adoption.” “Li-ion batteries are dependent on cost reductions from mass production,” he added, “while molten-salt batteries and VRFBs rely on long discharge durations to reduce costs.”

To gain an understanding of the key cost components for each technology, Lux Research analysts built production cost models of Li-ion, ZEBRA, and VRFB systems for small- to large-scale grid storage systems, and assessed drivers that will facilitate cost reduction and constraints to innovative material and manufacturing approaches. Among their findings:

·         Cost of Li-Ion batteries will dip 45% by 2022. Li-ion batteries may lose market share to cheaper molten-salt batteries for large projects but will remain the system of choice for space-constrained projects because of their high energy density.

·         ZEBRAs need productivity gains.  ZEBRA battery manufacturing accounts for between 50% and 60% of the total system costs, primarily because of the cost of processing its key raw materials. Improved manufacturing productivity and better capacity utilization will account for 95% of the expected reduction in costs by 2022 to $473/kWh.

·         Vertical integration is key to VRFB costs. Vertical integration and exclusive supply agreements will be key to managing the cost of vanadium pentoxide, a metal with a widely variable historical market price and uncertain future. Future cost estimates for vanadium pentoxide range from $15/kg to $30/kg, from the current $13.20/kg. At the upper end of the range, VRFB cost will actually increase to $1,205/kWh.

The report, titled “Grid Storage Battery Cost Breakdown: Exploring Paths to Accelerate Adoption,” is part of the Lux Research Grid Storage Intelligence service.