A report prepared by AECOM for the Australian Renewable Energy Agency predicts battery prices will fall 40-60% over the next five years, setting off a storage boom that could look similar to the growth in rooftop solar.
While all types of batteries are expected to see price reductions, the report found the largest reductions are likely to occur with li-ion and flow-battery technologies, with prices reducing from $550/kWh in 2014 to $200/kWh by 2020 for li-ion, and from $680/kWh to $350/kWh for flow batteries.
The report recommended the government agency work with industry participants such as technology suppliers and service providers to prepare for the boom and help create sustainable market structures.
“The rapid uptake of solar PV provides a useful analogy to what could occur in the energy storage market, as technology prices have potential to reduce as technology development simultaneously improves,” the report concludes. “The behind-the-meter market segment of energy storage is widely expected to undergo a similar boom to the solar PV industry, with a tipping point expected within the next ten years.”
But the report also cautioned that there are more risks involved with storage, in part due to the greater safety risks but also because of a wider range of applications and value streams, which could include frequency regulation for grid stability. As such, the report called for an active role for ARENA in facilitating storage market.
“By supporting the development of an efficient market for energy storage, ARENA will facilitate additional supply of renewable energy by addressing intermittency and power quality challenges that could otherwise stall growth in the market,” the report found.
The report examines four key storage markets in the United States – Hawaii, California, Texas and New York – as well as Germany, Japan, South Korea and Italy.