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Navigant: ‘Risk of slower than expected price declines’ for lithium batteries but prices will fall

A 10MW / 40MWh lithium-ion ESS could be priced at under US$10 million by 2030, Navigant analyst Alex Eller said. Image: AltaGas.

Lithium-ion battery cell costs could fall to as little as US$76 per kWh by 2030, from around US$139 per kWh this year, according to new analysis by Navigant Research.

The Colorado-headquartered firm issued its latest market data on 'Advanced battery and energy storage pricing trends' this week. Author Alex Eller, a senior research analyst, told Energy-Storage.news that while the report, available to subscribers, looks at a range of energy storage technologies, "the real focus is on li-ion batteries for utility-scale grid storage".

"In 2019 we have seen pricing continue to decline after much slower than expected price declines in 2018 due to supply shortages," Eller said.

"Overall our long-range forecasts for li-ion price declines are a bit more conservative than other groups. However, we believe there is still the risk of slower than expected price declines due to either shortages of finished battery cells, or shortages of key input materials as battery demand increases rapidly."

Indeed, in March, BloombergNEF's head of energy storage analysis, Logan Goldie-Scott said an 'average' lithium-ion battery pack could cost as low as US$62 per kWh by 2030, noting however that some companies will "undershoot" and price their packs even cheaper than that while others will come in with higher prices.

"Different cell and pack designs, a range of cathode chemistries on offer, economies of scale and regional differences will ensure there is a range in the market," Goldie-Scott wrote in a BloombergNEF blog, adding that if installed volumes are much higher than predicted, this will exert further downward pressure on average pricing.

Renewables integration to require 'massive amounts' of energy storage

Meanwhile Navigant's Alex Eller said that overall, despite those caveats, his team does expect to also see prices continue to decline and said that through his team's modelling, "we project li-ion cell prices to fall from an average of US$139 per kWh in 2019 to US$76 per kWh in 2028," which in itself will be a "major driver of decreases in grid storage project pricing".

Navigant modelled prices for grid-scale systems at progressively large output sizes and larger capacities of storage, from 10MW / 5MWh, then 10MW / 10MWh to 10MW / 40MWh, the principle being that the overall analysis will demonstrate "the differences in system pricing by component as you move to different duration ranges", Eller said.

"For a 10 MW / 40 MWh li-ion system, we see average prices around US$15.8 million in 2019, projected to fall to US$9.8 million by 2028."

Also this week, UK-based market research firm IDTechX has published “Batteries for Stationary Energy Storage 2019–2029", exploring which regions lead the global market today, and which are predicted to come up in the next 10 years.

IDTechX said it found 6GWh of stationary storage to have been installed in 2018, calling it a "remarkable year" for the technology, and highlighting that going forward, even the likes of Tesla's 129MWh battery in South Australia, delivered in just 100 days, will soon be dwarfed by much larger projects from providers including Elon Musk's Silicon Valley electrification missionaries themselves.

Last year, IDTechX said, the US began as leader due to policy-driven developments in key markets such as California, while South Korea and China each deployed more than 1GWh in the year.

The firm did note that the rapid rise of the technology has not been without its problems, referring to fires at ESS project sites in South Korea during the year as one example.

"Despite hiccups, the ambitious levels of renewables integration in many of these countries will nevertheless require massive amounts of energy storage to manage moving forward," a release from the company said.

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