Lux Research, analyses emerging technologies and forecasts their progress in the market. Analyst Brian Warshay developed models of three predominant batteries with potential for grid storage – Lithium-ion, molten salt and venadium pentoxide flow batteries. He then looked at forecasts for the prices of their raw materials and how economies of scale could impact their costs.
The results were mixed. The good news was that prices for Lithium-ion and molten salt batteries will drop dramatically. The bad news is that they’ll still cost double previous market predictions. “They aren’t going to hit the $250 mark,” Warshay said.
There has been chatter in the grid storage markets that wider penetration and economies of scale could bring energy storage down to $250 per kilowatt hour, which would make renewable energy like solar more reliable, less intermittent and more cost-competitive with traditional fossil fuel power.
Warshay found that lithium-ion batteries could drop in price about 45 percent by 2022 to about $507 per kilowatt hour. Molten salt batteries could fall 50 to 60 percent by 2022 to $473 per kilowatt hour. The vanadium pentoxide flow batteries rely on expensive and rare materials that are expected to increase in cost, Warshay said. The total system cost for that technology will likely rise to $1,205 per kilowatt hour.
While costs aren’t going to drop as low as they need to for grid parity, the two technologies that are dropping in price hold a lot of potential in the renewable energy realm. “Even though they aren’t going to hit $250,” Warshay said, “that’s not to say there aren’t still opportunities.”
He said the technology will still be key to renewable energy integration in island nations, in emerging economies that don’t have expansive grids and in areas where power is especially expensive. As much as the prices are going to drop, the energy storage technologies will be cost-competitive in those markets. Other than that, there is still opportunity for adoption in other areas as well. “It will just still be pretty dependent on subsidies."