The International Renewable Energy Agency (IRENA) publish ongoing reports on renewable energy and complementary technologies. Their latest report on electricity storage was published in late 2017, and it reveals significant cost reductions for battery systems throughout the world. In addition, batteries are expected to continue decreasing in the foreseeable future.
Affordable batteries are excellent news for commercial solar power, since they will help eliminate one of the key limitations of photovoltaic systems: inability to provide electricity when the sun is not shining. When complemented with batteries, solar photovoltaic systems can deliver electricity day and night, as long as they are sized large enough to produce surplus electricity with the sunshine available during the day.
By the end of 2017, the total stationary battery capacity in the world was around 2 gigawatts. With improved performance and ongoing price reductions, IRENA predict that total capacity will reach 175 GW by 2030. In particular, Germany has experienced a dramatic cost reduction in residential lithium-ion battery systems: between 2014 and 2017, their average installed cost decreased by 60%.
When analysing lithium batteries, IRENA determined a price range of 473 to 1260 USD per kWh of storage capacity for lithium titanate batteries, and 200 to 840 USD/kWh for other types of lithium batteries. High efficiency is a common advantage of all lithium batteries, ranging from 92% to 96% according to IRENA.
Lithium titanate batteries have a higher cost than other types of lithium batteries, and the main cause is the high price of titanium. However, these batteries compensate their added cost with a longer service life, which can exceed 20,000 charge and discharge cycles. Lithium iron phosphate batteries occupy the second place in terms of service life, lasting up to 10,000 cycles. The lifetime of a battery is influenced in great part by the depth of discharge and environmental temperature.
IRENA estimate that lithium-ion batteries will reach installed costs below 100 USD/kWh by the year 2030, complemented with service life increases. These two trends will combine to offer a lower battery operating cost, per kilowatt-hour stored and retrieved.
Lithium batteries have one of the main attributes that has made commercial solar power successful: a modular design that lets them adapt to any project scale. Just like photovoltaic array capacity can range from a few kilowatts to hundreds of megawatts, the storage capacity of lithium batteries can be configured from the scale of kilowatt-hours to megawatt-hours.
As batteries are able to provide a lower operating cost per kilowatt-hour stored and retrieved, they will become competitive in a wider range of applications. Also keep in mind that Australian electricity rates will likely continue increasing, making self-generated electricity more valuable.
Consider that commercial electricity users are billed for both electricity consumed and for the highest demand peak measured in a rolling 12-month period. While the output of commercial solar arrays is used to reduce net consumption, batteries can be configured to trim peaks in demand and mitigate the capacity charge.