The costs of utility-scale battery energy storage systems (BESS) vary significantly by storage duration, primarily due to differences in how costs are calculated and allocated between energy and power components.
Cost Components and Duration
- Energy Costs vs. Power Costs:
- Energy Costs are typically expressed in $/kWh and represent the cost per unit of energy stored and delivered. Longer-duration batteries tend to have lower energy costs because they provide more energy relative to their total cost.
- Power Costs are expressed in $/kW and reflect the cost of the power that can be delivered within a given time frame, such as during peak demand periods. Shorter-duration batteries may have lower power costs because they are optimized for rapid power delivery rather than energy storage capacity.
- Battery Cost and Duration:
- The overall battery pack cost is influenced by the duration of the battery system. Longer-duration batteries, while having lower energy costs ($/kWh), result in higher total system costs when measured in $/kW due to the increased number of battery packs required. Conversely, shorter-duration batteries have higher energy costs but lower system costs when measured in $/kW because fewer battery packs are needed for the same power output.
- Balance of System (BOS) Costs:
- BOS costs, which include inverters and other necessary infrastructure, contribute significantly to the total system cost measured in $/kW. These costs tend to be more consistent across different durations but are scaled by the power rating rather than the energy storage capacity.
- Total System Cost Formula:
The total system cost can be approximated using the formula:
Total System Cost ($/kW) = Battery Pack Cost ($/kWh) × Storage Duration (hr) + BOS Cost ($/kW)
This formula highlights how longer-duration batteries increase costs due to the battery pack contribution, while shorter durations benefit from lower battery pack costs relative to power capacity.
Economic Considerations
- Longer-Duration Systems: These tend to offer better economies of scale for energy storage but require more batteries and are thus more expensive in terms of the total battery pack cost. However, their energy costs ($/kWh) are typically lower.
- Shorter-Duration Systems: These are more suited for applications that require rapid power delivery and can be more cost-effective in terms of power cost ($/kW), though they have higher energy costs.
- Cost Projections: Future cost reductions are expected to favor longer-duration batteries more significantly due to quicker declines in battery pack costs.
In summary, while longer-duration batteries offer economies of scale in energy costs, their higher total system costs reflect the increased number of battery packs needed. Conversely, shorter-duration systems are more cost-effective in terms of power delivery capability but have higher energy costs per kilowatt-hour stored.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-the-costs-of-utility-scale-battery-energy-storage-systems-bess-vary-by-duration/
