Utility scale battery costs down about 70%, according to the EIA

by Peter Maloney
APPA News
October 27, 2020

The costs of utility scale battery storage in the United States fell about 70% between 2015 and 2018, according to data compiled by the Energy Information Administration (EIA), a part of the Department of Energy.

The average energy capacity cost of utility-scale battery storage went from $2,152 per kilowatt hour (kWh) in 2015 to $625/kWh in 2018, according to the EIA. The agency noted, however, that costs vary widely by region and by application.

Regionally, average utility scale battery costs between 2013 and 2018 ranged from $1,946/kWh in the PJM Interconnection to as low as $947/kWh in Hawaii. And in California, which had the most battery capacity of any state in 2019, average battery storage cost was $1,522/kWh.

In its analysis, the EIA grouped cost data into regions based on regional transmission organizations and independent system operators and aggregated entities to avoid disclosing confidential information.

Battery storage costs are usually published in terms of energy capacity, that is, cost per kilowatt hour or the total amount of energy that can be stored by a battery. But costs can also be expressed in terms of power capacity, or cost per kilowatt. Power capacity is the maximum amount of power a battery can provide at a given point in time. In power capacity cost terms, short-duration batteries cost less than long-duration batteries. In energy capacity cost terms, long-duration batteries are less expensive.

In PJM where most batteries are used for frequency regulation, there is an emphasis on shorter duration batteries rather than batteries capable of discharging over longer periods of time. That makes power capacity installed costs a better indicator of price for value in PJM, EIA said.

About two-thirds of battery storage capacity in California is used for frequency regulation. Batteries in the state also provide ancillary services, black start service and are used to help ease transmission congestion, EIA added.

At the end of 2018, the United States had 869 megawatts (MW) of installed battery power capacity and 1,236 megawatt hours (MWh) of battery energy capacity. In 2019, there was 152 MW of battery storage capacity installed in the United States and another 301 MW added through July 2020, according to EIA data.

The EIA expects battery storage to increase by more than 6,900 MW in the next few years with about 2,300 MW of that total being reported April and June. Large battery storage systems are increasingly being paired with renewable energy plants to increase grid reliability and resilience, EIA noted.

Just before the EIA published its data on Oct. 23, investment bank Lazard released its annual report on energy storage costs.

Lazard’s latest annual Levelized Cost of Storage Analysis (LCOS 6.0) shows that storage costs have declined across most use cases and technologies, particularly for shorter-duration applications, in part driven by evolving preferences in the industry regarding battery chemistry.