Boston, July 3, 2012 — Lithium-ion and molten-salt battery costs will approach $500/kWh by 2022, reducing the high capital cost of emerging grid energy storage technologies. However, expectations of half that level will remain unrealistic for at least a decade, according to Lux Research.
Technology developers make bold claims about performance enhancements and economies of scale that will lead to dramatic cost reductions. Lux Research’s baseline scenarios for grid-tied systems indicate that by 2022 Li-ion batteries will reach $506/kWh; sodium nickel chloride, or ZEBRA, batteries will approach $473/kWh; and vanadium redox flow batteries will hit $783/kWh.
To gain an understanding of the key cost components for each technology, Lux Research analysts built production cost models of Li-ion, ZEBRA, and VRFB systems for small- to large-scale grid storage systems, and assessed drivers that will facilitate cost reduction and constraints to innovative material and manufacturing approaches. Among their findings:
Cost of Li-Ion batteries will dip 45 percent by 2022. Li-ion batteries may lose market share to cheaper molten-salt batteries for large projects but will remain the system of choice for space-constrained projects because of their high energy density.
ZEBRAs need productivity gains. ZEBRA battery manufacturing accounts for between 50 percent and 60 percent of the total system costs, primarily because of the cost of processing its key raw materials. Improved manufacturing productivity and better capacity use will account for 95 percent of the expected reduction in costs by 2022 to $473/kWh.
Vertical integration is key to VRFB costs. Vertical integration and exclusive supply agreements will be key to managing the cost of vanadium pentoxide, a metal with a widely variable historical market price and uncertain future. Future cost estimates for vanadium pentoxide range from $15/kg to $30/kg, from the current $13.20/kg. At the upper end of the range, VRFB cost will actually increase to $1,205/kWh.