When it comes to energy storage systems, the cost of the battery itself receives a great deal of attention, but a new report shows that the plummeting price of other storage components could prove just as significant for the proliferation of the resource. 

The 15 to 20 different items in the balance of the system (BOS) represent one-half to three-fourths of the installation’s cost. Those costs are likely to plummet over the next five years – if the growth of storage deployment continues.

“If storage can keep up its momentum there is reason to believe BOS costs will fall from their 2015 level of $670/kW to under $400/kW by 2020, a 41% cost drop,” said Luis Ortiz, lead author of a recent report from GTM Research: "Grid-Scale Energy Storage Balance of Systems 2015-2020: Architectures, Costs and Players."

The researchers assumed $350/kWh for the battery cost, an aggressive number based on the performance of industry leaders Samsung and LG and the Panasonic-Tesla product. For an installation intended to supply energy with a two-hour duration battery, BOS would be about half the total project cost, Ortiz explained.

But for a project intended to supply power with a half-hour duration battery, BOS is almost three-fourths of the installation’s cost, he said.

Continued growth of battery storage to drive this drop in the BOS cost is likely, according to the Q3 2015 U.S. Energy Storage Monitor from the Energy Storage Association and GTM Research. The 60.3 MW deployed in Q3 2015 was a twofold increase from Q3 2014 and a 46% increase from Q2 2015.

2015’s total deployment of 192 MW will more than triple 2014's 62 MW. By 2020, annual deployment is expected to be up to 1,349 MW, which is “21 times the size of the 2014 market, and seven times the size of 2015 market,” the monitor reports.

The BOS study is intended to add dimension to the battery energy storage cost discussion “to make it possible to figure out how financeable a project has become by including everything that figures into consideration of a project when capital is involved,” Ortiz said.

The researchers did two analyses. One was an item by item cost projection through 2020 of the 15 to 20 discreet factors beyond the battery in an energy storage system. The other was a learning curve analysis, based on the solar PV industry’s BOS cost decline from 2009 to 2015, that was applied to BOS for battery energy storage through 2020.

The two analyses produced “very similar numbers” which gives Ortiz "good reason to believe storage BOS will hit the cost declines we expect,” he said.

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