$US100/kWh: It’s the magical number that has been painted as something of a Holy Grail for the battery storage industry, and the solar and electric vehicle technologies that will be whisked along in its footsteps.
It’s the goal, too, of Tesla founder and boss Elon Musk, who says he would be disappointed if battery storage costs did not break that barrier by 2020, from the $US350/kWh implied by the upcoming Tesla PowerWall battery storage system for homes and businesses. But can it be done?
Not everyone is so sure. As UBS analysts said in a recent report: “Many investors assume that reaching this target is a given; however, we are highly sceptical that this can be achieved.”
It pointed to its recent meetings with electric vehicle expert Jon Bereisa, the head of Auto Lectrification, and a former chief architect of the Chevy Volt. Bereisa notes that just the raw material cost in battery technology today is in the range of $US115-$US130/kWh.
This means that at a very minimum, getting costs down to below $US100/kWh will require significant improvements in chemistry.
“Even assuming density can double, which is theoretically possible but not available with today’s technology, raw material costs would be $US70-$US80/kWh range, leaving little room for all manufacturing costs and the pack cost.
This could be crucial for companies like Tesla, looking to the mass market both for the upcoming Tesla 3 family model, and for mass-market take-up of its PowerWall battery storage system. According to UBS, he suggests a best case scenario of $US133-$US155/kWh by 2025.
In countries like Australia, however, given the high cost of electricity, the structure of tariffs and the excellent solar resource, battery storage could become compelling for the mass market at around $US250/kWh. Some analysts suggest it is already break-even.
(To be clear, we are talking about the price of the battery storage technology, not the all-in installed costs which includes inverters and other installations costs).
It’s the goal, too, of Tesla founder and boss Elon Musk, who says he would be disappointed if battery storage costs did not break that barrier by 2020, from the $US350/kWh implied by the upcoming Tesla PowerWall battery storage system for homes and businesses. But can it be done?
Not everyone is so sure. As UBS analysts said in a recent report: “Many investors assume that reaching this target is a given; however, we are highly sceptical that this can be achieved.”
It pointed to its recent meetings with electric vehicle expert Jon Bereisa, the head of Auto Lectrification, and a former chief architect of the Chevy Volt. Bereisa notes that just the raw material cost in battery technology today is in the range of $US115-$US130/kWh.
This means that at a very minimum, getting costs down to below $US100/kWh will require significant improvements in chemistry.
“Even assuming density can double, which is theoretically possible but not available with today’s technology, raw material costs would be $US70-$US80/kWh range, leaving little room for all manufacturing costs and the pack cost.
This could be crucial for companies like Tesla, looking to the mass market both for the upcoming Tesla 3 family model, and for mass-market take-up of its PowerWall battery storage system. According to UBS, he suggests a best case scenario of $US133-$US155/kWh by 2025.
In countries like Australia, however, given the high cost of electricity, the structure of tariffs and the excellent solar resource, battery storage could become compelling for the mass market at around $US250/kWh. Some analysts suggest it is already break-even.
(To be clear, we are talking about the price of the battery storage technology, not the all-in installed costs which includes inverters and other installations costs).
Giles Parkinson is founder and editor of One Step Off The Grid, and also edits and founded Renew Economy and The Driven. He has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.
