Battery cost plunge threaten fossil incumbents

A worldwide plunge in the cost of battery power and storage is threatening the global coal and gas industry, according to a new report released by research firm BloombergNEF.

In its latest analysis of the burgeoning lithium-ion battery industry, prices have fallen by 35% to $187 per megawatt-hour since the first half of 2018.

The report also found that the benchmark levelised cost of electricity (LCOE) for offshore wind generation has tumbled by 24%.

Onshore wind and photovoltaic energy’s LCOE have reached $50 and $57 per megawatt-hour, down 10% and 18% over the last calendar year.

“Looking back over this decade, there have been staggering improvements in the cost-competitiveness of these low-carbon options, thanks to technology innovation, economies of scale, stiff price competition and manufacturing experience,” BNEF’s head of economics, Elena Giannakopoulou, said.

“Our analysis shows that the LCOE per megawatt-hour for onshore wind, solar PV and offshore wind have fallen by 49%, 84% and 56% respectively since 2010. That for lithium-ion battery storage has dropped by 76% since 2012, based on recent project costs and historical battery pack prices.”

The report tracked a precipitous fall costs associated with lithium-ion batteries, opening up new opportunities to balance a renewable-heavy generation mix.

Batteries co-located with solar or wind projects are starting to compete, in many markets and without subsidy, with coal- and gas-fired generation for the provision of ‘dispatchable power’ that can be delivered whenever the grid needs it.