The U.S. Department of Energy (DOE) has set a cost reduction target of $0.05/kWh for long-duration energy storage, part of its Long Duration Storage Shot initiative. This goal aims to reduce the cost of 10-hour-plus energy storage assets by 90% from the 2020 baseline for lithium-ion batteries by the end of the decade.
To compare this target with current costs, let’s look at some benchmarks:
- Residential Electricity Costs: Currently, residential electricity rates in the U.S. range from approximately 11.35¢ to 43.41¢ per kWh, depending on the state.
- Wholesale Electricity Prices: In many regions, wholesale electricity prices have been declining, with some areas experiencing negative prices during low-demand periods, though these negative prices are generally within a moderate range and not below -30 USD/MWh.
- Commercial Electricity Rates: Similar to residential rates, commercial rates also vary significantly by state, ranging from about 14¢ to nearly 40¢ per kWh for commercial users in different states.
Given these figures, achieving a cost of $0.05/kWh for long-duration energy storage would be a significant reduction compared to current wholesale and retail electricity prices. It would make long-duration storage solutions more competitive and economical, potentially enabling broader adoption and integration into the grid. This could also drive changes in how energy is produced, stored, and consumed across different sectors.
However, the comparison with current electricity costs should be understood within the context of the specific target for energy storage rather than direct electricity generation or distribution. The goal is to reduce storage costs, which could help balance supply and demand more effectively, especially during periods of low electricity demand or high renewable energy production.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-does-the-cost-reduction-target-of-0-05-kwh-compare-to-current-costs/
