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Energy storage costs must drop for renewables to supply grid power: study

Jordan Smith
By Jordan Smith October 25th, 2019
4 min read
For business

Energy storage costs must decrease for renewable energy sources to power the grid.

If renewable sources of energy such as solar and wind power are going to provide our electricity grids with 100 percent of the power they need, energy storage costs will have to drop 90 percent from current levels. That’s the conclusion contained in a recent study published by the Michigan Institute of Technology.

In monetary terms, Professor Jessika Trancik and her team of researchers calculated that energy storage needs to drop to $20 per kilowatt hour if it is to help a mix of wind and solar power support 100 percent of U.S. energy demand.

Putting a price tag on an energy storage future

To take account of long-term variations in solar and wind production, Trancik and her team examined the output of renewables over a 20-year period. The figures were based on energy generation in four U.S. states: Arizona, Iowa, Massachusetts, and Texas.

“One of the core sources of uncertainty in the debate about how much renewable energy can contribute to the deep decarbonization of electricity is the question of how much energy storage can be improved,” said Trancik.

She explains that understanding what price range energy storage must hit requires comparing fluctuations in renewable energy supply to overall energy demand.

“Large but infrequent solar and wind shortage events are critical in determining how much storage is needed for renewables to reliably meet demand, and it’s important to understand the characteristics of these events,” she said.

The researchers also made direct comparisons with nuclear and natural gas power plants. For a combination of renewables and energy storage to beat nuclear power in terms of cost, the overall cost would need to drop to between $10 and $20 per kilowatt hour, and $5 per kilowatt hour for natural gas.

Can the cost target be met?

Cutting energy storage costs by 90 percent will require major technological improvements, although Trancik points out that similarly spectacular cost declines for solar and wind power have been seen over recent years.

According to the National Renewable Energy Laboratories, the average cost to install a stand-alone battery storage system with four-hour batteries was $380 per kilowatt hour in 2018. That may seem like a long way from the $20 target set by the research.

But the MIT study makes a second important point: storage costs do not need to come down as far as $20 per kilowatt hour if supplementary technologies can be deployed.

The researchers calculated that if renewables and storage were asked to provide 95 percent of energy needs over a 20-year period, storage options costing as much as $150 per kilowatt hour would be viable. The remaining 5 percent of hours could be covered by initiatives such as demand-side management or improved energy transmission systems.

Another potential factor that may help is a continued drop in the price for renewables, which would encourage more solar and wind facilities to be built, thus reducing the overall requirement for energy storage facilities.

Trancik’s team plans to address the question of supplementary approaches in future research.

But Yet-Ming Chiang, a material science and energy professor at MIT, believes that even the $20 target may be a realistic possibility very soon. “I believe this kind of storage can be demonstrated at a pilot scale within the next five years,” said Chiang.

Which storage technologies could support the transition to renewables?

Based on the projections contained in the MIT study, some analysts argue that various types of storage technologies could be viable for grid-scale use by 2030.

The installation costs for lithium ion batteries are projected to drop to between $145 and $480 per kilowatt hour by 2030, according to the International Renewable Energy Agency. Meanwhile, flow batteries will cost between $108 per kilowatt hour and $560 per kilowatt hour, although there are companies already claiming that they can install them more cheaply. Chiang has backed the founding of a start-up focusing on sulphur flow batteries, which could reach costs as low as $10 per kilowatt hour.

Compressed air energy storage systems cost as little as $50 per kilowatt hour, although costs can vary considerably depending on site specifics. Other technologies, including storing energy as heat, also come in well below the $150 target cost that would be required to make renewables plus storage competitive.

Writing on Vox, David Roberts’ conclusion is upbeat. “Storage is rapidly evolving, diversifying, and falling in cost, to the point that wind and solar power plants coupled with storage are beginning to compete directly with fossil fuel power plants on cost,” he wrote.

“That’s only going to accelerate as both renewables and storage get cheaper,” he continued. “Providing all of US power, all day every day, will require oversizing renewables and installing an enormous amount of storage, but if they get cheap enough, that’s what we’ll do.”

Jordan Smith is a freelance journalist and translator covering issues related to energy, the environment, and politics. His work has appeared on the independent news site Opposing Views, and at the Canadian Labour Institute.