By - Jim Vess

Prices for lithium-ion batteries and offshore wind are dropping sharply, Bloomberg says

Energize Weekly, April 3, 2019

The cost of two of the most expensive clean electricity technologies—lithium-ion batteries and offshore wind turbines—are dropping in price more quickly than had been forecast, according to a Bloomberg New Energy Finance (BNEF) analysis.

Since the first half of 2018, the levelized cost of lithium-ion batteries is down 35 percent to $187 per megawatt-hour (MWh) while the levelized cost of offshore wind turbines has dropped 24 percent to below $100 a MWh.

Other forms of renewable generation are also down in the last year with onshore wind reaching $50 a MWh, a 10 percent decline, and photovoltaic solar seeing an 18 percent reduction to $57 a MWh in early 2019.

A levelized cost of energy (LCOE) calculation takes the cost of building or manufacturing and operating an energy source, including the cost of fuel, and dividing that by the total MWh it generates over its lifetime.

For batteries, BNEF modeled a utility-scale installation charging and discharging in daily cycles with the cost of electricity at 60 percent of the wholesale base power price for each country.

“Looking back over this decade, there have been staggering improvements in the cost-competitiveness of these low-carbon options, thanks to technology innovation, economies of scale, stiff price competition and manufacturing experience,” Elena Giannakopoulou, head of energy economics at BNEF, said in a statement.

“Our analysis shows that the LCOE per megawatt-hour for onshore wind, solar PV and offshore wind have fallen by 49 percent, 84 percent and 56 percent respectively since 2010,” Giannakopoulou said. “For lithium-ion battery storage it has dropped by 76 percent since 2012, based on recent project costs and historical battery pack prices.”

Offshore wind, which has been considered one of the more expensive generation technologies when compared to onshore wind, has benefited from new capacity auction programs and larger, more efficient turbines, as the cost per MWh has dropped under $100 from $220 five years ago.

The BNEF analysis is based on data from nearly 7,000 projects covering 20 technologies (including coal, natural gas and nuclear generation) in 46 countries.

BNEF said the “most striking finding” was that the reduced cost of lithium-ion batteries is opening new opportunities for wind and solar installations with co-located storage that in many markets are beginning to compete with coal- and gas-fired generation in providing “dispatchable power.”

 “Solar PV and onshore wind have won the race to be the cheapest sources of new ‘bulk generation’ in most countries, but the encroachment of clean technologies is now going well beyond that, threatening the balancing role that gas-fired plant operators, in particular, have been hoping to play,” BNEF said.

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