How Batteries are Challenging Coal and Gas on Cost: BNEF

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The refrain that lithium-ion batteries are a good idea, but just too expensive, is beginning to ring hollow in some markets, according to new data from BloombergNEF (BNEF).

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In fact, batteries are experiencing what BNEF describes as a “spectacular” drop in per megawatt-hour costs — 76 percent since 2012.

The research company this week offered new numbers on battery costs, solar photovoltaics (PV) and offshore wind power as part of its BNEF Summit in New York.

BNEF pegged the benchmark levelized cost of electricity, or LCOE, for lithium-ion batteries at $187 per megawatt-hour. This signals a 35 percent drop just since the first half of 2018.

Meanwhile, the cost of onshore wind has fallen 49 percent, solar PV 84 percent, and offshore wind 56 percent since 2010.

“Looking back over this decade, there have been staggering improvements in the cost-competitiveness of these low-carbon options, thanks to technology innovation, economies of scale, stiff price competition and manufacturing experience,” said Elena Giannakopoulou, head of energy economics at BNEF.

Among the clean energy resources, lithium-ion batteries stood out as the “most striking finding” when it came to cost, according to BNEF.

The research group noted new opportunities emerging for batteries to balance renewable energy on the grid. (Batteries are often included in a microgrid for balancing and to extend the microgrid’s ability to supply power during a central grid outage.)

In many markets, projects that pair storage with renewable energy are starting to compete on price with coal and gas-fired generation as dispatchable power — even without subsidies, according to BNEF. Because they include stored energy, the projects are no longer as vulnerable to weather — the loss of wind or sun — so are more likely to be available to dispatch power when the grid needs it.

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Source: BloombergNEF LCOE analysis, based on information on projects starting construction and proprietary pricing information from suppliers. The database covers nearly 7,000 projects across 20 technologies in 46 countries.

“Solar PV and onshore wind have won the race to be the cheapest sources of new ‘bulk generation’ in most countries, but the encroachment of clean technologies is now going well beyond that, threatening the balancing role that gas-fired plant operators, in particular, have been hoping to play,” said Tifenn Brandily, energy economics analyst at BNEF.

On solar, BNEF said last year’s 18 percent drop in cost happened mostly in the third quarter of 2018 because of a module glut related to policies in China.

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Elisa Wood About Elisa Wood

Elisa Wood is the chief editor of MicrogridKnowledge.com. She has been writing about energy for more than two decades for top industry publications. Her work also has been picked up by CNN, the New York Times, Reuters, the Wall Street Journal Online and the Washington Post.

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