World Energy Council Forecasts 70 Percent Drop in Energy Storage Costs by 2030, Warns of Cost/Value Misperceptions
- Electrical energy storage experts caution against narrow focus on cost alone in assessing technology’s value
- Lead author DNV GL and 23 global World Energy Council storage experts cite drawbacks in widely used levelised cost methodologies
- Report sees strong growth in adoption of storage technology, outlines five policy recommendations for more accurate cost/value analysis
A new report from the World Energy Council with lead authors from DNV GL, the world’s largest resource of independent energy experts and certification, forecasts strong growth in global adoption of electrical energy storage, citing dramatic reductions in the cost of electrical energy storage, yet finds that flaws in a common valuation methodology may be hindering growth. The report, E-Storage: Shifting from Cost to Value, by lead author Paul Gardner of DNV GL, reflects the work of 23 industry and academic experts from across the world who are in the World Energy Council Storage Knowledge Network, with significant contributions to cost analysis by PwC. It was released at the World Future Energy Summit in Abu Dhabi this week.
Costs to Continue to Drop
The report estimates that with the many new technologies in the pipeline, storage costs of energy are projected to fall as much as 70 percent over the next 15 years. World Energy Council Secretary General Christoph Frei said: “Electrical energy storage costs have already come down but will have to fall further for broader adoption. The investment community has good reason to be excited about the innovation and business models that will emerge from new opportunities. With the cost of capturing and storing wind and solar energy coming down, its deployment across the world will increase.”
Valuation Methods Flawed
“We found clear indications that a narrow focus on costs alone drives the common misperception that electrical energy storage is more expensive than it really is,” said Gardner. The report calls for the true value of electrical energy storage to be recognised by taking into account revenue benefits. It compares storage costings across different storage technologies, concluding that the widely used levelised cost of energy methodology is hindering the progress of electrical energy storage. The analysis identifies flaws in this methodology, including arbitrariness that does not allow for differences in application cases, and incompleteness as only limited account of revenue is taken.
Policy Changes Called For
The report recommends five guidelines to help create a policy environment to accurately assess the potential of electrical energy storage and capitalise on its true cost and value benefits.
- Think more than just cost. Cheapest is not always best.
- Look at storage through holistic case studies. It is not sufficient to only look at generic cost estimates.
- Work with both operators and regulators to accelerate the development of flexible markets.
- Make supporting policies and a regulatory framework to facilitate future commercial deployment of technology storage.
- View storage as an essential component for grid expansion or extension.