While the cost of renewable energies such as wind and solar have come down greatly in recent years, low availability continues to handicap renewable energy in certain energy markets. In this article, I will examine the great growth opportunities in renewable energy for vanadium batteries in the $27 billion off-grid energy market.
Cost of Electricity by Source, according to from Wikipedia: “In November 2015, the investment bank Lazard headquartered in New York, published a study on the current electricity production costs of photovoltaics in the US compared to conventional power generators. The best large-scale photovoltaic power plants can produce electricity at 50 USD per MWh. The upper limit at 60 USD per MWh. In comparison, coal-fired plants are between 65 USD and $150 per MWh, nuclear power at 97 USD per MWh. Small photovoltaic power plants on roofs of houses are still at 184-300 USD per MWh, but which can do without electricity transport costs. Onshore wind turbines are 32-77 USD per MWh. One drawback is the intermittency of solar and wind power. The study suggests a solution in batteries as a storage, but these are still expensive so far.
Below is the complete list of LCOEs by source from the investment bank Lazard.
The levelised cost of electricity (LCOE) is a measure of a power source which attempts to compare different methods of electricity generation on a consistent basis. It is an economic assessment of the average total cost to build and operate a power-generating asset over its lifetime divided by the total energy output of the asset over that lifetime. The LCOE can also be regarded as the minimum cost at which electricity must be sold in order to break-even over the lifetime of the project.”
The LCOE for wind and solar plants have come down so quickly due to innovation and economies of scale, that they are already at or below the LCOE of traditional base load coal, nuclear and gas plants.
The issue with wind and solar energy sources is their availability factor, according to Wikipedia
“Wind capacity factors range from 20–40% and solar capacity factors in Arizona are about 19%.”
The obvious solution is to invent utility scale batteries that can store solar power during sunny days and supply that power at night. Wind power needs are often the opposite (i.e. winds blow more at night). While such battery technology exists, it was not a practical solution until recently, as previously stated, due to its high cost which has come down through innovation and growing adoption (economy of scale).
Levelized Cost of Electricity imposed by Batteries, according to a great 2015 article titleld, "Why Energy Storage is About to Get Big – and Cheap," by Ramez Naam, who spent 13 years at Microsoft. He holds 19 patents related to search engines, information retrieval, web browsing, artificial intelligence, and machine learning and is also the award-winning author of five books.
“Traditional lithium ion-batteries begin to degrade after a few hundred cycles of fully charging and fully discharging, or 1,000 cycles at most. So naively we’d take the capital cost of the battery and divide it by 1,000 to find the cost per kwh round-tripped through it (the LCOE). However, we also have to factor in that some electricity is lost due to less than 100% efficiency (Li-ion is perhaps 90% efficient in round trip). This multiplies our effective cost by 11%.
So we’d estimate that at the following battery prices we’d get the following effective LCOEs:
– $300 / kwh battery : 33 cent / kwh electricity storage
– $200 / kwh battery : 22 cent / kwh electricity storage
– $150 / kwh battery : 17 cent / kwh electricity storage
– $100 / kwh battery : 11 cent / kwh electricity storage
All of those battery costs, by the way, are functions of what the ultimate buyer pays, including installation and maintenance.
For comparison, wholesale grid electricity in the United States at ‘baseload’ hours in the middle of the night averages 6-7 cents / kwh. And retail electricity rates around the US average around 12 cents per kwh. You can see why, at the several hundred dollars / kwh prices of several years ago, battery storage was a non-starter…
Right now, most of the talk about energy storage is about lithium-ion, and specifically about Tesla, who appear close to announcing a new home battery product at what appears to be a price of around $300 / kwh.
Lithium-ion is compact and light. It’s great for mobile applications. But heavier, bulkier storage technologies that last for more cycles will be long-term cheaper.”