Providing stationary energy storage is vital to the stability of the power grid as renewables grow and demand rises, but cost has been a challenge. A new analysis from Lux Research says that lithium-ion batteries will dominate the stationary energy storage market, though current generation flow battery technology has an economic case for certain very large and long-duration applications.

“Li-ion has a lower levelized cost of storage (LCOS) at most durations and system sizes, but the amount of space required starts to drive up costs at larger scales,” says Tim Grejtak, Lux Research analyst and lead author of the report. “As a result, there’s an opportunity for emerging flow battery technology, which can change this landscape by driving down costs.”

Lux Research says analysts developed new battery cost models based on size, duration, architecture and chemistry, as well as compared Li-ion and flow battery costs across a large parameter space to determine thresholds where given energy storage technologies are less expensive. Some key findings include the following:

Li-ion retains cost edge. Li-ion beats the most popular vanadium-based flow battery technology on LCOS due to higher round-trip efficiency (83% vs. 65%). Li-ion also dominates the application space from 75 kW to 100 MW, and from 15 minutes of storage to eight hours, with costs above $0.37/kWh.

New technology will change economics. New chemistries like Lockheed Martin’s metal complex chemistry, planned to debut in 2018, could make flow batteries competitive versus Li-ion batteries in the highly competitive four-hour duration market, driving down costs of energy storage and opening up new markets. Current technology won’t get lower than $0.35/kWh.

Diversification is key as price falls. Application stacking and multiple value streams will gain importance as energy storage costs fall to about $0.30/kWh by 2036. The lower cost will mean no single application market can bring enough revenue to make energy storage economically compelling.

The report, titled “Future Costs of Stationary Energy Storage: Evaluating Li-ion and Flow Battery Cost Reductions and Application Fit,” is part of the Lux Research Energy Storage Intelligence service.

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