Storage Costs Continue to Fall Despite Lithium Bull Market

As demonstrated by recently announced projects, prices for energy storage continue to fall. Specifically, the Kauai Island Utility Cooperative has recently announced they will buy power from a combined solar-storage plant located on Kauai at a price of 11 cents per kilowatt-hour, down over 25 percent from a previous Kauai-based solar+storage plant announced in 2015 and significantly cheaper than the current cost of an oil-fired peaker plant. The new project combines 28 MW of solar PV capacity with 20 MW of 5-hour duration batteries and will generate 11 percent of the island’s electricity.

These continued cost decreases seemingly fly in the face of the current lithium market, a primary material in lithium-ion batteries. Chinese spot prices for lithium have risen from $7,000 in September 2015 to near $20,000 today. How can storage costs continue to decrease? As Navigant Research notes, the balance of system costs for storage, including everything but the batteries themselves, have been falling rapidly and more than cancel out any cost increases due to lithium prices. Ravi Manghani, director of energy storage at GTM Research believes that even if lithium costs double, all else being equal, it would not result in more than a 5 to 10 percent increase in costs. In short, storage costs continue to fall, and even a growing lithium market can do little to halt that decline.

Read more about the new Kauai Plant here and the Lithium bull market’s effect on storage here.