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A brief analysis of energy storage full life cycle cost of electricity

According to statistics, the cost of lithium battery energy storage systems has dropped by nearly 80% in the past ten years. As of the beginning of 2024, the cost per kilowatt hour of lithium battery energy storage has dropped to approximately 0.3-0.4 yuan per kilowatt hour. The cost per kilowatt hour of some lithium battery energy storage projects has Close to 0.2 yuan per degree. In the current environment of high involution in the energy storage industry, more and more practitioners have judged based on the development trend of the energy storage industry that reducing energy storage costs is the key to the healthy development of the industry. There are voices calling for a reduction in the cost of electricity throughout the entire life cycle of energy storage. increasingly in the market. In May 2023, industry experts proposed that the full life cycle cost of electricity of a certain all-vanadium redox flow energy storage system has been less than 0.2 yuan per kilowatt hour, showing its economy. In mid-2023, some companies in the market also predicted that by the end of 2025, the cost of electricity per kilowatt hour of lithium battery energy storage is expected to be reduced by 50%, reaching 0.2 yuan per kilowatt hour.

As the installation volume of photovoltaics and wind power continues to expand significantly, reducing the LCOE of electrochemical energy storage systems is an urgent problem that needs to be solved in the current industry. In the context of the current involution of the energy storage market, companies need to continue to reduce storage costs through technological innovation. Full life cycle cost of electricity.

In the wave of global energy structure transformation, energy storage technology is a key link in balancing the volatility of renewable energy and improving grid stability, and its economic evaluation is particularly important. Levelized Cost of Storage (LCOS), as a core indicator to measure the economics of energy storage projects, is of great significance in guiding investment decisions and policy formulation of energy storage projects. Against this background, InfoLink will briefly analyze the current life cycle cost of electricity of major energy storage technologies and discuss its future development trends.

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Calculation principles and formulas of energy storage full life cycle cost of electricity
The calculation of the cost of electricity is based on the full life cycle cost analysis of the energy storage system, that is, all the costs incurred in the entire process from construction to decommissioning of the energy storage system are converted to the present value according to a certain discount rate, and then divided by the lifetime of the system. The number of cycle cycles. This method takes into account the time value of money and can more accurately reflect the economic benefits of the project. The calculation formula of the cost of electricity is as follows. The disassembly analysis is that the cost of energy storage per unit of electricity = (power loss + operation and maintenance cost + installation cost) ÷ number of cycles;
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Life cycle cost of electricity for different energy storage technologies
According to this model, combined with the influencing parameters of the electricity cost of different current energy storage technologies (regardless of charging prices), taking pumped hydro energy storage, lithium battery energy storage, and all-vanadium liquid flow energy storage as examples, the full life cycle of the three types of energy storage The electricity costs are: 0.213 yuan per kilowatt hour for pumped hydro energy storage, 0.316 yuan per kilowatt hour for lithium battery energy storage, and 0.428 yuan per kilowatt hour for all-vanadium flow energy storage. Considering that each energy storage project is affected by its actual region, policy, price and cost, the actual energy storage cost per kilowatt-hour is different, this data is for reference only.
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Future trends in energy storage full life cycle cost of electricity

By comparing the LCOE of different energy storage technologies, pumped hydro storage currently has the lowest LCOE, lithium battery energy storage LCOE is close to pumped storage LCOE, and all-vanadium liquid flow is still relatively high in cost. With the advancement of energy storage technology and large-scale production, it is expected that the LCOE of different energy storage technologies will continue to decline in the future. Especially for lithium battery energy storage, with the reduction of material costs and the improvement of production efficiency, its LCOE is expected to be further reduced. In addition, it will benefit from the continuous reduction of battery cells and overall system costs, as well as the continuous advancement of technology, such as extended cycle life, reduce energy attenuation and improve energy conversion efficiency, the scope of cost reduction extends to the entire life cycle of the energy storage power station.

According to statistics from the InfoLink global lithium battery supply chain database, lithium carbonate and energy storage cell production capacity will remain in excess for a certain period of time. The price of battery-grade lithium carbonate in China has dropped from a high of about 600,000 yuan per ton in 2022 to the current level of about 600,000 yuan per ton. 100,000 yuan, with prices falling as much as 83%; as of the end of March, the average price of 280Ah lithium iron phosphate energy storage cells was approximately 0.36 yuan per watt-hour, a month-on-month decrease of 8.3%. In the future, with the further decline in the cost of lithium carbonate and energy storage cells, it is expected that the full life cycle cost of electricity for lithium battery energy storage will be less than 0.2 yuan per kilowatt hour by 2030. The full life cycle cost of electricity for lithium battery energy storage will be close to or even lower than pumped hydro storage, making it the lowest-cost energy storage technology.

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Post time: May-15-2024