Cheaper battery storage systems are less than 20 years away from becoming a “competitive” alternative to oil and gas-fired peaking plants, according to a new International Energy Agency (IEA) study.
The cost of battery storage is projected to “decline fast” by 2040 and global BESS capacity could reach 220 giagwatts by 2040, the IEA’s World Energy Outlook 2018 said.
This would see batteries “increasingly compete with gas-fired peaking plants to manage short-run fluctuations in supply and demand”— with the scenario’s projected need for global peaking capacity set to increase by three-quarters compared to 2017.
However, the report said conventional power plants would “remain the main source of system flexibility, supported by new interconnections, storage and demand-side response”. According to the IEA, energy investment under the report’s ‘new policies scenario’ would amount to US$2.2 trillion “each year between 2018 and 2025 on average and $2.8tn each year thereafter”. The rise of solar photovoltaic and wind power “gives unprecedented importance to the flexible operation of power systems in order to keep the lights on”, the report added.
“The rise of clean energy technologies is leading to significant growth in demand for a wide range of minerals and metals, such as aluminium, copper, lead, cobalt, lithium, manganese, nickel, silver, iron ore, zinc and rare earth minerals.”
“The projected growth in electric vehicles “represents a level of demand for lithium and cobalt that is considerably higher than today’s supply”, the report said. “This means large investment to open new mining operations and expand production capacity… However, given that it takes several years to bring new mine capacity online, the risk remains that bottlenecks in the supply chain will lead to tight supply and price spikes in the early 2020s. This would have implications along the value chain, as raw material costs make up around 20% of the total battery pack cost, and as the cost of the battery is the main determinant of the price of an electric vehicle.”
The number of electric cars on the world’s roads is projected to exceed 40 million in 2025 and 300 million in 2040, “with broadly equal shares of battery electric and plug-in hybrid vehicles”, the report said. Batteries are projected to reduce in cost to around $100/kWh by 2030— “driven by large-scale manufacturing for electro-mobility”. Cost reductions achieved in batteries for transport “are likely to spill over into power sector applications”.
According to the IEA, stationary battery storage accounted for $1.8 billion of energy sector investment in 2017, a 12% decline compared to the previous year. Around 600 megawatts of grid-scale batteries were commissioned in 2017, similar to the 2016 amount. “A decline in battery costs was the main driver for the fall in overall investment.”