While the physical hardware of batteries, flywheels and compressed air systems is often the single largest cost when it comes to deploying energy storage, battery costs are coming down rapidly with increased deployment.
Balance of systems (BOS) costs also make up a significant portion of the overall price tag of U.S. energy storage systems, according to a new report by GTM Research. The company estimates that these expenses currently average US$670 per kilowatt for various kinds of grid-scale energy storage systems.
The share of the overall system costs that this represents can vary a lot according to the project. Report co-author Luis Ortiz says that soft costs can make up as much as 75% of system costs for short-duration storage systems, or under 25% for long-term storage.
The report looks not only at batteries but at compressed air, flywheel storage and flow cells, however Ortiz estimates that these costs will vary no more than 25% depending on the technology deployed.
The good news is that energy storage BOS costs are coming down quickly. In the report GTM Research predicts that these costs will fall 41% to 2020, driven by both better technology and improved operational effectiveness.
A large portion of storage BOS costs are in the inverters. GTM Research notes that inverters for energy storage systems are more expensive than those for PV, as they must be bi-directional. And while these costs are expected to decline with greater deployment, the company says that they will always be higher than uni-directional inverters.
However, Ortiz notes that non-hardware soft cots are also important, and more often overlooked by energy storage companies. This includes not only the costs of permitting, interconnection and installation, but the costs of customer origination and overhead.
The report finds that the soft costs with the greatest opportunity for reductions are customer acquisition costs, but Ortiz says that some of this may be simply that energy storage is a newer industry than solar PV.
In the PV industry now, they do a pretty reasonable job of being able to keep track of their soft costs, but in the storage industry, there’s not as much volume, Ortiz told pv magazine. It’s a number they don’t even want to think about, because they haven’t turned the crank on leveraging their overhead efficiently.