Levelized Cost of Storage 2.0: Storage costs fall more than 10%

Dan Gabaldon is a Founder of CTG’s parent company Enovation Partners.

Lazard has released its second Levelized Cost of Storage Analysis (LCOS 2.0), which was developed through joint analysis of the energy storage market by Lazard and Enovation Partners. The analysis is intended to provide a transparent, rigorous methodology for comparing the cost of energy storage across ten distinct use cases for over a dozen storage technologies. Building on last year’s study, this year’s analysis includes a significantly refined methodology for comparing costs, plus the addition of “Value Snapshots” that report the profitability of behind the meter storage use cases across five US markets.

As with the past edition, results of this year’s analysis exhibit a large variety in energy storage costs across technologies and use cases, with hundreds of individual cost estimates. Storage costs have fallen significantly compared to last year, with midpoint levelized cost estimates showing greater than 10% decreases from last year for select use cases. Industry participants expect this cost decline to continue over the next 5 years, with an outlook for sustained cost decreases of 10% per year or more across many technologies.

The “Value Snapshot” enables insight into how the ability for energy storage to provide multiple applications (“stacked use cases”) can impact the economics. This year’s study indicates that in three of the five markets profiled, energy storage is “in the money,” reflecting the influence of market structures and regional power market fundamentals on levelized costs.

View the Lazard LCOS 2.0 Executive Summary and Full Report.

Interested in learning more? The team that led the Lazard LCOS 2.0 analysis will host a breakfast workshop at our 2017 Cleantech Forum San Francisco on Tuesday, Jan 24th.