Even with the predicted cost of US$500/kWh, expectations of another 50 percent of that level remain unrealistic, at least for a decade according to Lux Research.
Lux Research developed the following scenarios and concluded with these findings for grid-tied systems:
- Li-ion batteries: Costs will fall by 45 percent by 2022 to US$506/kWh. They may lose market share to cheaper molten-salt batteries for larger projects but will remain the choice for projects with space constraint thanks to their high density.
- Sodium nickel chloride (ZEBRA) batteries: Costs will fall to US$473/kWh by 2022 as a result of improved manufacturing productivity and better capacity utilization that will account for 95 percent of the reduction. The processing of the key raw materials bear a large portion of the manufacturing costs.
- Vanadium redox flow batteries (VRFBs): Costs will fall to US$783/kWh. Vertical integration and exclusive supply agreements will be key to managing the cost of vanadium pentoxide, a metal with a widely variable historical market price and uncertain future. Future cost estimates for vanadium pentoxide range from US$15/kg to US$30/kg, from the current US$13.20/kg. At the upper end of the range, VRFB cost will actually increase to $1,205/kWh.
Brian Warshay from Lux Research who is the lead author of the report ‘Grid storage battery cost breakdown: exploring paths to accelerate adoption‘ said that molten-salt batteries hold the highest potential as the cheapest source for large-scale systems. He added that manufacturing improvements will play the biggest role in cost reductions, to as much as 95 percent."Li-ion batteries are dependent on cost reductions from mass production while molten-salt batteries and VRFBs rely on long discharge durations to reduce costs," he said.