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Benefiting from favorable policies for the energy storage industry and the rapid development of the application market for new energy storage technology, listed companies and investors are optimistic about the market prospects for a long time, and enterprises are accelerating their diversification. In the Chinese market, the mandatory storage policy for wind and solar drives the exponential growth of energy storage demand.
Driven by the explosion of market demand and policy encouragement, mature pumped hydro storage and lithium battery energy storage have shown explosive growth, and other new energy storage technologies have also entered the fast lane of development. The explosion of energy storage market demand will affect energy storage cost. This article will take you through various types of energy storage cost.
1. Energy storage cost calculation
Levelized cost of energy (LCOE) is the cost of power generation calculated after leveling the cost and power generation in the project life cycle. That is, the present value of cost in the life cycle/the present value of power generation in the life cycle. Similarly, the full life cycle energy storage cost is the LCOS. LCOS quantifies the discounted cost per unit of discharge under specific energy storage technologies and application scenarios, and considers all technical and economic parameters that affect the cost of discharge life.
It can be compared with LCOE and is a suitable tool for energy storage cost comparison. Specifically, the levelized cost of energy is the investment cost, operation and maintenance cost, and charging cost, and the sum of the three is divided by the total discharge capacity during the investment period. In view of the availability of data, the calculation of energy storage cost in this article does not consider the depth of discharge, capacity decline, and recovery costs.
2. What aspects are included in energy storage cost calculation
① Investment costs
The investment cost in the energy storage cost includes capacity cost and power cost. Capacity cost refers to the equipment and construction costs related to energy storage capacity in the energy storage system. Such as battery, battery container and other equipment costs and construction costs in battery energy storage, the cost of reservoirs in pumped storage power stations, the cost of gas storage chambers and heat storage systems in compressed air energy storage, etc.
Power cost refers to the equipment and construction costs related to power in the energy storage system. Such as converters, transformers and other equipment in battery energy storage systems, turbines in pumped storage power stations, compressors and expanders in compressed air energy storage, etc.
② Charging cost
Charging cost is an important factor in calculating energy storage cost, but because charging cost needs to consider the electricity price itself, there are large differences between regions, making it difficult to compare. In addition, different types of electric energy have different on-grid electricity prices. Wind power, gas power, and thermal power are more expensive, and wind power can be evaluated on-grid. Therefore, if we only start from the perspective of comparing the cost of electricity of various energy storage technologies, we can ignore the charging cost and only consider the cost of the storage and release process.
③ Operation and maintenance cost
The operation and maintenance cost in the energy storage cost mainly includes labor, fuel power, and component replacement.
④ Cumulative electricity delivered
To calculate the cost per unit of electricity of energy storage, it is necessary to determine how many kWh or cycles the energy storage system can release in its entire life cycle. This involves the system life T (in years) of the energy storage system, the number of annual cycles n(t), and cycle efficiency.
3. Energy storage cost trend comparison
In order to compare the changing trends of energy storage cost, we first make assumptions about the energy storage capacity, energy unit cost, service life, and charge-discharge efficiency of various technologies by 2030. The discount rate refers to the ratio that converts the future finite-term expected income into the present value. A higher discount rate means a higher preference for the present. This concept can also be used in energy storage cost calculations. Assuming that the discount rate of energy storage cost is 7%, the annual operation and maintenance cost is generally about 3% of the initial investment cost. It can roughly calculate the cost per unit of electricity of various energy storage technologies.
From the perspective of 2020, the ranking of various types energy storage cost from low to high is: pumped storage, lithium-ion batteries, vanadium redox flow batteries, lead-carbon batteries, compressed air energy storage, sodium-ion batteries, sodium-sulfur batteries, hydrogen energy storage. Pumped energy storage is still the solution with the lowest energy storage cost at present, which is significantly lower than other types energy storage cost. Lithium-ion and vanadium redox flow batteries have similar energy storage cost, which are second only to pumped storage with lower costs per unit of electricity.
The cost of compressed air energy storage and sodium-ion battery energy storage is also below 1 RMB/kWh, and sodium-sulfur battery and hydrogen energy storage do not yet have cost advantages. By 2030, the various types energy storage cost will be ranked from low to high or in order: lithium-ion batteries, pumped storage, vanadium redox flow batteries, lead-carbon batteries, sodium-ion batteries, compressed air energy storage, sodium-sulfur batteries, hydrogen energy storage. In other words, if the capacity cost and power cost of lithium-ion batteries energy storage cost can be reduced by 20% between 2020 and 2030, the LCOE by 2030 is expected to be lower than the most economical pumped hydro storage at this stage .
Overall, vanadium redox flow batteries energy storage cost and lithium-ion batteries energy storage cost are expected to achieve substantial cost reductions. By 2030, they will still be the two technologies with the lowest cost of electricity in electrochemical energy storage. Lead-carbon batteries, sodium-ion batteries, and compressed air energy storage cost second, and the cost of hydrogen energy storage is still at a relatively high level.
4. Several issues needing attention in various types energy storage cost comparison
● Comparability of various types energy storage cost
Since mechanical energy storage such as pumped hydro storage, compressed air energy storage, and gravity energy storage has a longer physical energy storage life of about 30 years, the energy storage cost will naturally be lower at the current stage. In contrast, the system life of electrochemical energy storage is short, and there is no obvious advantage over mechanical energy storage in terms of energy storage cost. Therefore, the LCOE is more suitable for comparing various types of electrochemical energy storage and various types of mechanical energy storage.
● How much energy storage cost reduction makes sense?
For intermittent energy sources such as wind power and photovoltaics, when the sum of the current power generation cost and energy storage cost is lower than thermal power, it has an energy storage cost advantage over thermal power. And if it is equipped with an energy storage system, with the rapid increase in its cycle times, assuming that the cost per unit of electricity of the energy storage system itself can be reduced to 0.2 RMB, the cost of transmitting electricity through the energy storage system will be 0.3-0.35 RMB/kwh.
Therefore, if the current energy storage cost can be reduced to 0.2 RMB/kwh or below, the combination of solar power and storage may be more economical than thermal power, and the power provided by the combination of the two will be more stable and controllable. However, power generation costs and on-grid electricity prices are different in different regions, and there may be certain differences in energy storage cost.
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