Plummeting battery storage costs threatening coal and gas – BNEF

Battery storage technology has shown “spectacular gains“ in cost-competiveness with coal and gas over the last year, analysis by BloombergNEF (BNEF) has revealed.

The findings show that the levelised cost of electricity (LCOE) for lithium-ion batteries has fallen by 35% to $187 (£141) per megawatt-hour since the first half of 2018.

This is the net price that would be paid for each unit of energy over a battery's lifetime, and has declined by a massive 76% since 2012, according to recent project costs.

And the LCOE of offshore wind, which has often been seen as relatively expensive, has plummeted by 24% since last year thanks to auction programmes for new capacity and much larger turbines.

BNEF said batteries and wind projects are now starting to compete with coal- and gas-fired generation of 'dispatchable power' that can be delivered whenever the grid needs it, without subsidies.

This is significant development considering it has only been technologies like open-cycle turbines and gas reciprocating engines that have traditionally been able to meet peak electricity demand.

“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,“ BNEF head of energy economics, Elena Giannakopoulou, said.

The analysis shows that the costs of onshore wind and photovoltaic (PV) solar have also gotten cheaper, with their respective LCOE dropping from 10% and 18% over the last year.

BNEF highlighted how solar PV and onshore wind have won the race to be the cheapest sources of new bulk generation in most countries.

The data shows that the LCOE per megawatt-hour for onshore wind, solar PV and offshore wind have fallen by 49%, 84% and 56% respectively over the last nine years.

“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,“ BNEF energy economics analyst, Tifenn Brandily, said.

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