Reduction in grid storage battery costs will fall short of expectations

Lithium-ion (Li-ion) and molten-salt battery costs will around $500/kWh by 2022, reducing the high capital cost of emerging grid storage technologies. However, expectations of half that level will remain unrealistic for at least a decade, says Lux Research.

Technology developers make bold claims about performance enhancements and economies of scale that will lead to dramatic cost reductions, says Lux Research, but prices of Li-ion and molten-salt batteries will still be double the target of $250/kWh in 2022.

Lux Research’s baseline scenarios for grid-tied systems indicate that by 2022, Li-ion batteries will reach $506/kWh; sodium nickel chloride (ZEBRA) batteries $473/kWh; and vanadium redox flow batteries (VRFBs) $783/kWh.

“Molten-salt batteries hold the most potential to be the cheapest large-scale systems, with manufacturing improvements playing the largest role, accounting for 95 per cent of the cost reduction,” said Brian Warshay, Lux Research associate and the lead author of the Grid Storage Battery Cost Breakdown: Exploring Paths to Accelerate Adoption report.

The report's key conclusions include:

  • Cost of Li-Ion batteries will dip 45 per cent by 2022. Li-ion batteries may lose market share to cheaper molten-salt batteries for large projects but will remain the system of choice for space-constrained projects because of their high energy density.
  • ZEBRA battery manufacturing accounts for 50 -60 per cent of the total system costs, primarily because of the cost of processing its key raw materials. Improved manufacturing productivity and better capacity utilization will account for the 95 per cent of the expected reduction in costs by 2022.
  • Vertical integration and exclusive supply agreements will be essnetial to managing the cost of vanadium pentoxide, a metal with a widely variable historical market price and uncertain future. Future cost estimates for vanadium pentoxide range from $15/kg to $30/kg, from the current $13.20/kg. At the upper end of the range, VRFB cost will actually increase to $1205/kWh.

To find out more information on this topic, please register for Lux Research's free webinar, The Future of the Vanadium Redox Flow Battery: Cost Reduction, Market Adoption, and Demand Growth, which takes place on Tuesday, 7 August, 11:00 EDT.

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