LDES competing better with lithium-ion batteries - BNEF study

Long-duration energy storage (LDES) is getting closer to out-competing lithium-ion batteries in some markets, according to BloombergNEF, which says that while most LDES technologies remain early-stage and costly, some have or are set to achieve lower costs for longer durations.

According to BNEF’s Long-Duration Energy Storage Cost Survey, some technologies are already offering cheaper storage than lithium-ion batteries for durations over eight hours. For instance, thermal energy storage and compressed air storage had an average capital expenditure (capex) of USD 232 (EUR 215) and USD 293 per kWh, respectively, below lithium-ion systems’ average capex in 2023 of USD 304 per kWh for four-hour duration systems. LDES capex is much impacted by storage duration, project size and location. Gravity energy storage systems have the highest average capex of USD 643 per kWh, according to the study.

The rate of cost reduction of LDES technologies will hinge on the expansion of deployment and the development of routes to market in major regions, BNEF says. It is however unlikely that LDES costs will decline as fast as those of lithium-ion batteries this decade because the demand for lithium-ion batteries, resulting from their wide adoption in the transport and power sectors, will drive down their costs.

China is currently the leader in terms of cost-effectiveness for established LDES technologies, with the non-Chinese markets having 68% higher average capax for compressed air storage, 66% for flow batteries and 54% for thermal energy storage.

“The significant cost disparity is largely due to China’s far greater adoption of LDES technologies. While other nations are still in the early stages of commercializing LDES technologies, China is already developing gigawatt-hour scale projects, driven by favorable policies,” said Yiyi Zhou, BNEF’s clean energy specialist and co-author of the report.

However, China also has the world’s cheapest lithium-ion batteries, which could make it harder for LDES technologies to compete.

“While costs for LDES technologies outside of China are higher, the US and Europe have a chance to invest in their own industries and drive innovation and deployment,” said Evelina Stoikou, energy storage senior associate at BNEF and co-author of the report.

BNEF figure (fully installed energy storage system average capex and ranges by technology, 2018-2024)

(USD 1 = EUR 0.925)

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