The size of a battery system significantly affects its overall cost due to several factors:
Economies of Scale
- Larger Systems: Generally, larger battery systems offer better value per kilowatt-hour (kWh) due to economies of scale. This means that utility-scale projects can benefit from bulk purchasing and reduced per-unit costs compared to residential installations.
- Cost Savings: Larger systems tend to have a lower cost per kWh because the increased scale allows for more efficient use of balance of system (BOS) components, such as inverters and transformers.
Balance of System (BOS) Costs
- BOS Components: While the battery pack itself is a major cost component, BOS elements (e.g., inverters, cooling systems, wiring) can account for a significant portion of the total cost, sometimes as high as 30-40%. For larger systems, BOS costs can be optimized through better design and economies of scale.
Installation Complexity
- Installation Costs: Installation costs, which can range from 10-20% of the total expense, vary based on system size and location. Larger systems often require more complex installations, which can increase these costs.
Cost per kWh
- Duration and Cost: The cost of battery systems is often expressed in terms of both $/kWh and $/kW. For utility-scale systems, costs decrease with longer durations when measured in $/kWh, though system costs in $/kW increase.
Technological Advancements
- Cost Reductions: As technology advances, both battery packs and BOS components are expected to become cheaper, leading to overall cost reductions. This is particularly significant for lithium-ion batteries, which have seen an 85% cost drop over the past decade.
In summary, larger battery systems typically benefit from economies of scale, reducing the cost per kWh, while also offering opportunities for more efficient use of BOS components. However, installation complexity and costs may increase with system size.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-does-the-size-of-the-battery-system-affect-its-overall-cost/
