Cost models for battery energy storage systems

Abstract: The aim of this study is to identify existing models for estimating costs of battery energy storage systems(BESS) for both behind the meter and in-front of the meter applications. The study will, from available literature, analyse and project future BESS cost development. The study presents mean values on the levelized cost of storage (LCOS) metric based on several existing cost estimations and market data on energy storage regarding three different battery technologies: lithium ion, lead-acid and vanadium flow. These values are intended to serve as benchmarks for BESS costs of today. The results show that for in-front of the meter applications, the LCOS for a lithium ion battery is 30 USDc/kWh and 34 USDc/kWh for a vanadium flow battery. For behind the meter applications, the LCOS for a lithium ion battery is 43 USD/kWh and 41 USD/kWh for a lead-acid battery. A sensitivity analysis is conducted on the LCOS in order to identify key factors to cost development of battery storage. The mean values and the results from the sensitivity analysis, combined with data on future cost development of battery storage, are then used to project a LCOS for year 2030. The results from the sensitivity analysis show that capex, cycles and discount rate have the biggest impact on the LCOS formula. The projection conducted in this study indicates that LCOS will decrease significantly by 2030. The results show that for in-front of the meter applications, the LCOS for a lithium ion battery will drop 60 % and 68 % for a vanadium flow battery. For behind the meter applications, the LCOS for a lithium ion battery will drop 60 % and 49 % for a lead-acid battery.