Energy Storage: Batteries – 3/28/16

Improved technology, falling costs, and problems associated with intermittent renewable energy are setting the stage for an energy storage renaissance.

Tesla and other companies like it are driving down costs of batteries far faster than analysts had predicted thanks to greater than expected cost reductions via economies of scale and learning-by-doing. According to a paper on,  cost estimates for EV Lithium-ion battery packs declined by ~14% annually between 2007 and 2014, a decline from $1,000 per kWh to about $410 per kWh. The resulting increase in storage capacity has been dramatic: Bloomberg New Energy Finance has projected near exponential growth for capacity over the next five years.


Power grids are strained by intermittent energy sources like wind and solar, as well as normal fluctuations in power demand.

Battery storage offers a attractive solution to both. Battery storage of wind and solar power would smooth out the differences between energy production and consumption that would otherwise require supplementation with more conventional base load power plants. As a result, the difference between the cost of electricity during peak production times of heavy sun or wind and off-peak production time would shrink significantly; it would effectively level-out costs and eliminate expenses associated with the mismatch.

Grids using conventional power sources would benefit from energy storage for largely the same reasons as renewables. Electric grid operators typically rely on fast-start natural gas power plants for the extra electricity needed during peak demand times though they must pay significantly more to do so. Battery systems are therefore best used in grid systems with relatively consistent periods of near-peak demand lasting a few hours a day. Estimated battery costs must come down by about $100 to $300 per kilowatt hour, dependent on the region in question, to be economically viable without subsidies and other incentives.

If the regional power grids of the United States were more connected and modernized, then there would not be such high demand for storage solutions. Batteries offer an increasingly cost-effective solution to many of the problems facing electrical grids, such as years of under-investment and the complexity of a network made up of independently owned and operated power plants and transmission lines, but they are not the only solution. Infrastructural overhauls like the Plains & Eastern Clean Line project approved by the Energy Department, proposed to carry 4,000 megawatts of power from the wind-rich Oklahoma panhandle through Arkansas and into Tennessee, offer a more conventional approach.

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