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The decreases in battery cost in this report are pretty spectacular, but it's missing comparisons to costs for traditional generation. As best as I can tell fro

by matt2000 8y ago

The decreases in battery cost in this report are pretty spectacular, but it's missing comparisons to costs for traditional generation. As best as I can tell from https://www.eia.gov/outlooks/aeo/pdf/electricity_generation.pdf https://www.eia.gov/outlooks/aeo/pdf/electricity_generation.... - the LCOE for gas generation is around $40/MWh. So this article's cost of $187/MWh for batteries is still a lot higher, but the battery cost has dropped 35% in one year so it could get there soon. What I'm still not sure about is if you need to include the LCOE of the original generation method in the cost of the battery system? In that case the total LCOE for say wind+battery would be ~$210.

tlb 8y ago
LCOE includes all the costs, including the power to charge the batteries (assumed to be 60% of wholesale power price, since you can charge whenever it's cheapest in the daily cycle.)
beefield 8y ago
Batteries have cycle life of thousands of cycles so you can't really compare the costs of production and storage directly.
- jsight 8y ago
  I'm sure his numbers take that into account. The cost per MWh for batteries would be at least an order of mangnitude higher if he did not.
  - acidburnNSA 8y ago
    You are correct. Capital cost of battery systems is closer to $800/MWh Page 11: https://www.lazard.com/media/450774/lazards-levelized-cost-of-storage-version-40-vfinal.pdf https://www.lazard.com/media/450774/lazards-levelized-cost-o...
    - jsight 8y ago
      I'm curious how they come up with that, actually. Aren't batteries at ~100/KWh at the moment? I would have expected a MWh to be closer to $100k. If I'm not mistaken, 1000 cycles at that rate would get you close to $100/MWh. Obviously I am misunderstanding something in these calculations.
      - ben_w 8y ago
        I assume that one difference is that a facility for LiIon batteries costs more than just LiIon battery cells; and the land, the transformers, the site security, and general maintenance of all the above are non-trivial compared to cell costs?
        acidburnNSA 8y ago
        Yup. Capital cost, operation and maintenance, and charging costs are all added up, financed over the operating period, and turned into a cost to meet an investment IRR of 12%. The table in page 11 of the pdf I linked above breaks it all down.
        zaroth 8y ago
        12% seems massively high for the risk level. This should be extremely low risk, right?
        lukeschlather 8y ago
        I think you're reading it as Annual Recurring Revenue rather than Internal Rate of Return. For IRR I think 12% is pretty normal, and depending on how good your project management is it could easily turn into 0%. But I'm not an accountant so I might be misunderstanding.
        xyzzyz 8y ago
        Investing in a single facility with unproven technology, without other existing facilities with well known financials is a very risky investment.
  - beefield 8y ago
    Sure. I don't know what I was thinking.
shaki-dora 8y ago
I may be wrong in the interpretation, but LCOE would seem to apply only to the actual capacity, and not the grid‘s entire throughput. Yet batteries would only be needed for a fraction of the installed power, to adjust for fluctuations in supply and demand. Most power would never see the battery in such a grid. And, of course, batteries are only one of multiple strategies to get supply and demand to equalize. Smart consumers is probably the most underdeveloped now, from cars that would charging (and possibly even discharge into the grid if your schedule allows), washing machines picking the best times when possible, or cooling and heating working with their respective reservoirs.
philipkglass 8y ago
$40/MWh is for combined cycle gas turbines that operate at high capacity factors. According to this BNEF report, gas peaking capacity is now threatened by battery replacement: Electricity demand is subject to pronounced peaks and lows inter-day. Meeting the peaks has previously been the preserve of technologies such as open-cycle gas turbines and gas reciprocating engines, but these are now facing competition from batteries with anything from one to four hours of energy storage, according to the report. The report itself doesn't give a $/MWh figure for these peakers. Lazard's 2017 report puts the lower end of CCGT generation at $42/MWh, close to the EIA number, but gas peaking starts at $156/MWh and goes as high as $210/MWh: https://www.lazard.com/media/450337/lazard-levelized-cost-of-energy-version-110.pdf https://www.lazard.com/media/450337/lazard-levelized-cost-of... Note that they put gas reciprocating engines no higher than $106, so I don't think that batteries at this price threaten gas reciprocating engines yet. Mostly they threaten open cycle gas turbines. Diesel reciprocating engines show a cost of at least $197/MWh and are also threatened by battery-backed renewables. Diesel generators have been heavily used to supply electricity for small remote villages, islands, and off-grid mining sites. For a few years now there has been a trend to reduce consumption of diesel at such sites by partially substituting generator output with renewable electricity. It's possible to make deeper cuts in diesel use with added battery storage, and the payback period is shorter than you might guess from looking at the local gas station's diesel price. Getting the fuel to certain locations can cost nearly as much as buying it in the first place.
- Gibbon1 8y ago
  This is the thing that gets missed is renuables are competing with peaking power which is more expensive than base load power. The way to think of baseload power is it's the lowest quality power source. If you contract for it you have to use it. And it's generated when other consumers don't need it. Which is why it's cheap. Batteries are competing with very expensive grid stabilization technologies. Solar is selling into the peek daily power cycle.
  - 0815test 8y ago
    > This is the thing that gets missed is renuables are competing with peaking power The other thing that gets missed is that they aren't competing at all, because renewables are unreliable and non-dispatchable. So, more renewables means more peaking power other things being equal. What can directly compete with peaking power is battery storage (though pumped hydro is king there) and demand-response.
BurningFrog 8y ago
Batteries don't generate power so comparing them to power generators is like comparing apples to apple trees.

tlb 8y ago

LCOE includes all the costs, including the power to charge the batteries (assumed to be 60% of wholesale power price, since you can charge whenever it's cheapest in the daily cycle.)

beefield 8y ago

Batteries have cycle life of thousands of cycles so you can't really compare the costs of production and storage directly.

jsight 8y ago
I'm sure his numbers take that into account. The cost per MWh for batteries would be at least an order of mangnitude higher if he did not.
- acidburnNSA 8y ago
  You are correct. Capital cost of battery systems is closer to $800/MWh Page 11: https://www.lazard.com/media/450774/lazards-levelized-cost-of-storage-version-40-vfinal.pdf https://www.lazard.com/media/450774/lazards-levelized-cost-o...
  - jsight 8y ago
    I'm curious how they come up with that, actually. Aren't batteries at ~100/KWh at the moment? I would have expected a MWh to be closer to $100k. If I'm not mistaken, 1000 cycles at that rate would get you close to $100/MWh. Obviously I am misunderstanding something in these calculations.
    - ben_w 8y ago
      I assume that one difference is that a facility for LiIon batteries costs more than just LiIon battery cells; and the land, the transformers, the site security, and general maintenance of all the above are non-trivial compared to cell costs?
      - acidburnNSA 8y ago
        Yup. Capital cost, operation and maintenance, and charging costs are all added up, financed over the operating period, and turned into a cost to meet an investment IRR of 12%. The table in page 11 of the pdf I linked above breaks it all down.
        zaroth 8y ago
        12% seems massively high for the risk level. This should be extremely low risk, right?
        lukeschlather 8y ago
        I think you're reading it as Annual Recurring Revenue rather than Internal Rate of Return. For IRR I think 12% is pretty normal, and depending on how good your project management is it could easily turn into 0%. But I'm not an accountant so I might be misunderstanding.
        xyzzyz 8y ago
        Investing in a single facility with unproven technology, without other existing facilities with well known financials is a very risky investment.
- beefield 8y ago
  Sure. I don't know what I was thinking.

shaki-dora 8y ago

I may be wrong in the interpretation, but LCOE would seem to apply only to the actual capacity, and not the grid‘s entire throughput. Yet batteries would only be needed for a fraction of the installed power, to adjust for fluctuations in supply and demand. Most power would never see the battery in such a grid. And, of course, batteries are only one of multiple strategies to get supply and demand to equalize. Smart consumers is probably the most underdeveloped now, from cars that would charging (and possibly even discharge into the grid if your schedule allows), washing machines picking the best times when possible, or cooling and heating working with their respective reservoirs.

philipkglass 8y ago

$40/MWh is for combined cycle gas turbines that operate at high capacity factors. According to this BNEF report, gas peaking capacity is now threatened by battery replacement: Electricity demand is subject to pronounced peaks and lows inter-day. Meeting the peaks has previously been the preserve of technologies such as open-cycle gas turbines and gas reciprocating engines, but these are now facing competition from batteries with anything from one to four hours of energy storage, according to the report. The report itself doesn't give a $/MWh figure for these peakers. Lazard's 2017 report puts the lower end of CCGT generation at $42/MWh, close to the EIA number, but gas peaking starts at $156/MWh and goes as high as $210/MWh: https://www.lazard.com/media/450337/lazard-levelized-cost-of-energy-version-110.pdf https://www.lazard.com/media/450337/lazard-levelized-cost-of... Note that they put gas reciprocating engines no higher than $106, so I don't think that batteries at this price threaten gas reciprocating engines yet. Mostly they threaten open cycle gas turbines. Diesel reciprocating engines show a cost of at least $197/MWh and are also threatened by battery-backed renewables. Diesel generators have been heavily used to supply electricity for small remote villages, islands, and off-grid mining sites. For a few years now there has been a trend to reduce consumption of diesel at such sites by partially substituting generator output with renewable electricity. It's possible to make deeper cuts in diesel use with added battery storage, and the payback period is shorter than you might guess from looking at the local gas station's diesel price. Getting the fuel to certain locations can cost nearly as much as buying it in the first place.

Gibbon1 8y ago
This is the thing that gets missed is renuables are competing with peaking power which is more expensive than base load power. The way to think of baseload power is it's the lowest quality power source. If you contract for it you have to use it. And it's generated when other consumers don't need it. Which is why it's cheap. Batteries are competing with very expensive grid stabilization technologies. Solar is selling into the peek daily power cycle.
- 0815test 8y ago
  > This is the thing that gets missed is renuables are competing with peaking power The other thing that gets missed is that they aren't competing at all, because renewables are unreliable and non-dispatchable. So, more renewables means more peaking power other things being equal. What can directly compete with peaking power is battery storage (though pumped hydro is king there) and demand-response.

BurningFrog 8y ago

Batteries don't generate power so comparing them to power generators is like comparing apples to apple trees.