Grid-scale energy storage balance of systems costs will decline 41% by 2020

Source: GTM Research

Today, grid-scale energy storage balance of system (BOS) costs average $670 per kilowatt. These costs include hardware like inverters and containers, soft costs like customer acquisition and interconnection, and engineering, procurement and construction (EPC) expenses. According to the latest report from GTM Research, Grid-Scale Energy Storage Balance of Systems 2015-2020: Architectures, Costs and Players, costs will fall 41 percent over the next five years.

Today, grid-scale energy storage balance of system (BOS) costs average $670 per kilowatt.

Source: Grid-Scale Energy Storage Balance of Systems 2015-2020: Architectures, Costs and Players

“While batteries remain the most expensive component of an energy storage system and have the most room for price declines, savings will be found across projects’ entire value chain,” said Luis Ortiz, lead author of the report.

GTM Research expects the largest BOS decline to come from hardware costs, particularly inverters. Storage inverters are significantly more expensive than solar PV inverters, but the next five years should see that gap shrink. However, due to their bidirectional nature, storage inverters will likely always be more expensive than their solar counterparts.

The next most attractive area for BOS cost reductions is in soft costs.

 “Soft costs have been an area targeted by U.S. solar developers as a ripe territory for significant improvements in the near future, and similar gains are expected to kick in for storage projects closer to 2020,” said Ortiz. The report cites customer acquisition (project origination for utility-scale projects) as the area of soft costs with the greatest opportunity for reductions as best practices and momentum build up in a successful industry.

Finally, EPC costs like site preparation, rigging, shipping, engineering and installation, make up the smallest share of BOS costs and aren’t expected to drastically shrink. GTM Research forecasts these costs to fall six percent per year through 2020.

The report provides a component-level breakdown of storage BOS costs, and identifies factors for large variances in BOS costs observed across storage projects. “As the (non-pumped hydro) energy storage industry is very nascent with limited history of deployments, we reinforced our projections by comparing against trends in solar PV industry in its early years of deployment,” said GTM Research Senior Storage Analyst Ravi Manghani.  

GTM Research forecasts average grid-scale energy storage BOS costs to dip below $400 per kilowatt by 2020.

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