Cost projections for battery storage systems
Cost projections for battery storage systems vary significantly by duration, primarily due to the distinction between energy and power costs. Here’s a breakdown of how these costs are structured and how they differ for different durations:
Basic Cost Structure
- Energy Cost ($/kWh): This component represents the cost per unit of energy stored and is directly proportional to the energy capacity of the system.
- Power Cost ($/kW): This represents the cost per unit of power output and is proportional to the power capacity of the system.
The total cost of a battery storage system can be calculated using the formula:
Total Cost ($/kWh) = Energy Cost ($/kWh) + (Power Cost ($/kW) / Duration (hours))
Variation by Duration
- Shorter Duration Systems (2 hours): These systems have a higher power cost component due to the need for rapid charging and discharging. The per-kWh cost is higher compared to longer duration systems because the power cost is spread over fewer hours.
- Longer Duration Systems (10 hours): These systems have a lower per-kWh cost since the same power cost is distributed over more hours, reducing the impact of the power cost component on the total cost.
NREL Projections
NREL’s reports indicate that costs for longer-duration batteries decrease more quickly over time compared to shorter-duration systems. This is largely because the cost reduction in battery packs (a significant component of energy costs) accelerates faster than reductions in balance-of-system (BOS) and installation costs, which affect power costs.
Scenario Examples
| Duration | Example Costs ($/kWh) Year 2030 & 2050 | Notes |
|---|---|---|
| 4 hours | $245-$403 (2030), $159-$348 (2050) | Mid-range projections from NREL. |
| 10 hours | Longer duration systems typically show lower costs due to reduced power cost impact. |
In summary, while energy costs decrease more significantly over time, the proportional impact of power costs diminishes for longer duration systems, leading to lower per-kWh costs for these systems compared to shorter duration ones.
Future Outlook
The cost of battery energy storage systems is projected to continue decreasing, driven by improvements in manufacturing efficiency and economies of scale. By 2030, costs could decrease by 50% to 60%, and by 2050, costs may drop even further as technology continues to evolve.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-the-cost-projections-for-battery-storage-systems-vary-by-duration-such-as-2-hour-versus-10-hour-batteries/
