Released this week at the World Future Energy Summit in Abu Dhabi, the report forecasts a 70 percent reduction in the associated costs of energy storage technologies by 2030, citing this as the driving factor in increased adoption rates of energy storage worldwide. The report also argues that common valuation methodologies may be hindering accurate economic assessment and growth of the global energy storage industry.
The report was headed by lead author Paul Gardner of DNV GL and reflects the work of 23 industry and academic experts from across the world, all of whom are members of the WEC Storage Knowledge Network.
The publication supports its forecast by referencing the many new energy storage technologies currently in R&D pipelines around the world. “Electrical energy storage costs have already come down, but will have to fall further for broader adoption,” said WEC Secretary General Christoph Frei. “The investment community has good reason to be excited about the innovation and business models that will emerge from new opportunities. With the cost of capturing and storing wind and solar energy coming down, its deployment across the world will increase.”
The report further posits that “a narrow focus on costs alone drives the common misperception that electrical energy storage is more expensive than it really is”. According to this assertion, an inaccurate preoccupation with costs comes at the expense of a broader understanding of the value of energy storage technologies across their economic lifespans. The report calls for the true value of energy storage to be recognized by taking into account revenue benefits, further arguing that the widely-used levelized cost of energy (LCOE) methodology hinders the growth of the energy storage industry due to arbitrary metrics that do not allow for differences in application cases. This dependence on LCOE, says the report, also leads to incomplete reporting because it considers only a limited scope of account revenue.
The report calls for five guidelines that will create a policy environment that more accurately assesses the potential of energy storage, encouraging the industry to:
- Consider overall value, not simply costs
- Examine energy storage through holistic case studies, not simply generic cost estimates
- Work with operators and regulators to accelerate the development of flexible markets
- Enact a regulatory framework to facilitate future commercial deployment of technology storage
- View storage as an essential component of grid expansion