Bloomberg New Energy Finance has forecast a veritable boom in energy storage installations in the coming years with investments hitting US$1.2 trillion by 2040.
Falling battery costs will be the driver behind this boom, with BNEF projecting a 52 percent drop in utility-scale lithium-ion systems by 2030. Is this just another super upbeat forecast for the future of energy storage that won’t materialize? Possibly.
It is a fact that the cost of producing batteries for energy storage is falling. Cost reduction, after all, is a top priority for everyone from EV makers to utilities betting on energy storage as a future source of revenues. However, one fact needs to be noted, and it is that the space for cost reduction is not endless.
Indeed, one BNEF analyst told Bloomberg, “Costs have come down faster than we expected,” adding “Batteries are going to permeate our lives,” and he is right. But the fact that battery costs have fallen faster than BNEF expected does not necessarily suggest they will continue falling at the same rate. In fact, it is just as likely that the pace of cost reduction will plateau and eventually slow down, because no industry can keep the pace of cost-reducing innovation at breakneck levels.
BNEF forecasts that by 2040, there will be global energy storage capacity of almost 1 terawatts. That’s if costs of batteries fall as much as projected and if grids can withstand it. The grid problem is more of a potential one now, but as EV adoption rises it is likely to become a real problem in the future. Norway, the most EV-friendly country in the world perhaps has already felt the effect of EVs on the grid.
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