Energy storage is often hailed as a game changer for renewable energy reliability. But what will it take to ensure that storage is an economic solution?
In November, financial advisory firm Lazard released its inaugural Levelized Cost of Storage Analysis (LCOS). Well known for its Levelized Cost of Energy Analysis (LCOE) analysis — now out in version 9.0 — Lazard's publishing an analysis of storage is a major sign that it considers battery energy storage a critical technology that’s here to stay.
But a closer look at Lazard’s LCOS shows something RMI’s October Economics of Battery Energy Storage report noted: battery economics are usually evaluated on the basis of single-use cases; stacking multiple uses greatly can enhance battery economics; and evaluating those economics gets difficult quickly.
The use cases and stacked value streams — in addition to per-kWh cell cost declines — offer tremendous opportunity.
RMI’s report primarily looked at the value, not cost, of a basket of multiple, stacked uses for customer-sited storage systems. Lazard focused on the costs of several physical storage technologies (including the lithium-ion studied in RMI’s report) and not "alternative" storage options such as building-as-storage, water heater-based storage and other demand flexibility options.