The energy sector is transforming rapidly to reduce carbon emissions and limit global climate change. Electricity storage can provide the required flexibility to balance intermittent and relatively inflexible power generation with demand in low-carbon power systems. However, falling investment cost, the wide range of technologies with different performance characteristics and the wide range of use cases with different performance requirements lead to uncertainty on its commercial viability. To assess electricity storage against alternatives and enable further investment in low-carbon technologies, policy-makers and industry need certainty on cost reduction potentials and its value in enabling low-carbon power systems.
This thesis creates an experience curve dataset for 11 electricity storage technologies, identifying investment cost reductions to US$325±125/kWh (systems) and US$155±45/kWh (packs) once 1 TWh capacity is installed for each technology. This could be achieved by 2027–2040 based on market growth projections. Expert interviews highlight the importance of production scale-up as cost reduction driver and provide a detailed list of technical and value chain innovations for two prominent storage technologies. The quantification of future application-specific lifetime cost with a novel, comprehensive formula, that accounts for all relevant cost and performance parameters, indicates that lithium ion will be the most cost competitive for most applications by 2030. Lower financing cost, in general, and performance improvements for alternative technologies specifically could challenge this dominance. Matching future lifetime cost to revenue potentials across applications reveals profitable business cases in three distinct application categories with specific requirements. An analysis of modelled flexibility capacity in power system studies reveals two approaches to assess electricity storage capacity requirements in low-carbon power systems. In both approaches, the flexibility capacity requirement relative to peak demand increases linearly with increasing wind, solar and nuclear penetration, albeit at different rates, requiring up to 65% or 115% in a fully decarbonised power system.
These insights combined with the online availability of experience curve dataset and lifetime cost tool increase transparency on the future cost of electricity storage and its value in low-carbon power systems, supporting policy and industry in transforming the energy sector.