Energy storage costs are falling at the fastest rate ever, as new battery technology enters the market

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Thanks to recent advancements in battery technology and the more than $1.4 billion invested in the space in the first half of 2019 alone, energy storage costs are falling at the fastest rate ever. 

That’s according to the recent Breakthrough Batteries Report by the Rocky Mountain Institute, which found that the increased demand for battery electric vehicles, as well as grid-tied storage was fuelling the cycle of investment and cost reduction in the sector. 

While $1.4 billion has been invested in the market so far this year, RMI predicts that total manufacturing investment in the space, both previous and planned until 2023, represents around $150 billion. Despite the high prices manufacturers have had to pay in the past, analysts expect capital cost for new planned battery manufacturing capacity to drop by more than half between 2018 and 2023. 

That’s good news for some manufacturers who are bullish in the space, with the likes of Tesla planning to roll-out more Gigafactories around the world where it’ll produce battery cells for everything from battery electric vehicles to energy storage devices. Tesla’s capital costs in producing batteries have been high thus far, but it’s work in the space has helped it achieve some of the greatest cost efficiencies in the market. 

Still, despite Tesla’s success, everyone in the industry is set to benefit. According to the report, the diversification of applications for batteries, whether it’s energy storage or otherwise, is creating opportunities for new battery chemistries to compete with Li-ion. We’re already seeing that in the electrical market, with the likes of solid state batteries, rechargeable zinc alkaline, Li-metal, and Li-sulfur. 

Thanks to the affordability of energy storage and the development of battery technology, RMI believes that fossil fuels will eventually be phased out and replaced. 

“As the battery market continues to grow, battery technology will contribute to the replacement of natural gas plants and gain a foothold in other new market segments, including heavy trucking and short-range aviation,” the reports authors noted.  

“With this transition, legacy infrastructure across the fossil fuel value chain risks becoming stranded, including gas pipelines and internal combustion engine manufacturing plants. Already, battery cost declines are contributing to cancellations of planned natural gas power generation.”

Read the full report here: https://rmi.org/insight/breakthrough-batteries/