The diagram below summarises the findings. Other highlights from the new analysis:
- Among commercially deployed technologies, lithium-ion continues to provide the most economical solution across use cases analysed in the LCOS, although competing flow battery technologies claim to offer lower costs for certain applications.
- Although energy storage technology has created a platform for discussions related to certain transformational scenarios, such as consumers and businesses “going off the grid”, it is not currently cost competitive in most applications. However, under some scenarios, certain applications of energy storage technologies are attractive; these uses relate primarily to strengthening the power grid and accessing cost savings and other sources of value for commercial and industrial energy users through reducing utility bills and/or participating in demand response programmes.
- Industry participants expect costs to decrease significantly over the next five years, driven by scale and related cost savings, improved standardisation and technological improvements, supported in turn by increased demand as a result of regulatory/pricing innovation, increased renewables penetration and the needs of an aging and changing power grid in the context of a modern society. The majority of future cost declines are expected to occur as a result of manufacturing and engineering improvements in batteries. Cost declines projected by industry participants vary widely among energy storage technologies, but lithium-ion capital costs are expected to decline as much as 36% over the next five years.
- As the energy storage market continues to evolve, several potential sources of revenue streams available to energy storage systems have emerged. However, the ultimate mix of available revenue streams for a particular energy storage system varies significantly across geographies.
