Li-Ion Batteries To Face Competition From Long-Duration Storage: Report

Li-Ion Batteries To Face Competition From Long-Duration Storage: Report

Global energy research body BloombergNEF Research recently released a report analyzing the Long-Duration Energy Storage (LDES) growth and compared its efficacy with the popular Lithium-ion batteries. The study found that the LDES has witnessed rapid growth which garnered interest worldwide. The report anticipates that LDES will out-compete with lithium-ion batteries in some markets as decarbonization plans become more ambitious.

LDES systems are modular large-scale energy storage solutions that can discharge over long periods, generally more than eight hours.  The BNEF’s study on LDES found that most of the long-duration energy storage technologies are still early-stage and costly compared to lithium-ion batteries. 

Based on the BNEF report, which surveyed, seven LDES technology groups and 20 technology types, found that the least expensive technologies are providing cheaper storage than lithium-ion batteries for over eight hours. It explained, “Thermal energy storage and compressed air storage, for example, had an average capital expenditure, or capex, of $232 per kilowatt-hour and $293/kWh, respectively. On the contrary, lithium-ion systems had an average capex of $304/kWh for four-hour duration systems in 2023, so generally shorter-term storage.

The study took the case of flow batteries and compressed air technologies and found that they have had the most commercial success so far. It’s further expected to help in bringing cost reductions in the future. The report showed that the cost reduction rate of LDES technologies will largely depend on the expansion of deployment and the development of routes to market in major regions.

BNEF expects the typical time it takes for energy storage assets to discharge or charge will increase in the future as the technology displaces fossil fuel generators and is used to address the intermittent sources of renewable power. It added LDES technologies can add more energy storage without adding more power conversion capacity, so they are seen as a contender to lithium-ion batteries. However, LDES costs are unlikely to fall as fast as those of lithium-ion batteries this decade, as lithium-ion batteries are extensively used in both the transport and power sectors, and this demand will drive down the cost of the technology.

It gave the example, of China which leads the way in cost-effectiveness for established technologies like compressed air energy storage, flow batteries, and thermal energy storage. On the contrary, the report found that the average capex in non-Chinese markets is 68% higher for compressed air storage, 66% higher for flow batteries, and 54% higher for thermal energy storage.

Yiyi Zhou, BloombergNEF’s Clean Energy Specialist and co-author of the report said: “The significant cost disparity is largely due to China’s far greater adoption of LDES technologies. While other nations are still in the early stages of commercializing LDES technologies, China is already developing gigawatt-hour scale projects, driven by favorable policies. This is particularly true for compressed-air energy storage and flow batteries, where China has set new project size records in the past two years. The rate of LDES installations in China is astounding.”

Challenges

Despite China’s lower costs, LDES technologies struggle to compete with lithium-ion batteries produced in the country, which are the cheapest in the world. Only a few LDES technologies, like natural cavern-based compressed air storage, can outcompete lithium-ion batteries in terms of per-unit capital costs today. Thus, the study concluded that LDES technologies have a better chance of competing with lithium-ion batteries in non-Chinese markets, where lithium-ion batteries are more expensive.

Evelina Stoikou, Energy Storage Senior Associate at BloombergNEF and co-author of the report said: “While costs for LDES technologies outside of China are higher, the US and Europe have a chance to invest in their own industries and drive innovation and deployment. Markets outside of China are developing a wider range of technologies compared to China, including more technology types within flow batteries, compressed air, compressed gas, thermal, gravity, and novel pumped hydro. We’ve seen interest in those regions driven by ambitious clean energy targets, higher lithium-ion battery costs, and an effort to develop alternative technologies that do not rely on lithium.”

Storage duration, project size, and location all greatly affect LDES capex. Gravity energy storage systems, which elevate weights when charging and controllably drop them when discharging, have the highest average capex, at $643/kWh.

Ongoing advances in technology, and deployment experience, are expected to further improve the feasibility and performance of these storage options for long-duration applications. Favorable policies and supportive mechanisms are essential to drive early adoption and accelerate their commercialization.