They Thought Battery Storage Would Be Cost Competitive With Natural Gas By 2014: 6 Years Later It’s Still Not True

In 2013, Steve Hellman, president of the battery storage company, Eos Energy, made a startling prediction about the cost of the company’s then-new zinc-air battery system.

The following is from Green Tech Media more than six years ago:

The cost of battery storage is falling more rapidly than most analysts forecasted and could be competitive with gas-fired generation — even in the U.S., where gas prices are low — within the next eighteen months.

That’s the prediction of Steve Hellman, the president of battery storage startup Eos Energy Storage, which intends to launch its zinc-air battery next year with a price of $200 to $250 per kilowatt-hour.

[Emphasis Added]

Before we compare the cost of battery storage stated above to the cost of natural gas, it’s important to note that the quote, “$200 to $250 per kilowatt-hour,” is not an equivalent to the Levelized Cost of Energy (LCOE), which is often used to describe the cost of electricity of different energy sources over the course of their useful lives.

Rather, it represents a capital cost of the battery facility.

Since battery storage facilities have two capacity ratings – an energy capacity (the amount of electricity it can hold or store while being charged) in kilowatt-hours (kWh) and a power capacity (the amount of electricity it can send back to the grid off of a full charge) in kilowatts (kW) – capital costs can be (rather confusingly) stated in both kW and kWh terms, instead of the standard cost per kW used for traditional power plants.

Based on data from a recent Integrated Resource Plan (IRP) filed by Pacificorp, a utility company located in California, which includes detailed numbers for the cost of Eos-specific zinc-air battery storage facilities, and information provided by Eos Energy itself, equipment costs of $200-$250 per kWh (which is only one aspect of the cost needed to incorporate battery storage facilities onto a grid) would translate to a Levelized Cost of Storage (LCOS) somewhere between $146 to $162 per MWh using best-case-scenario values, making battery storage by far the most expensive source of electricity available (except possibly offshore wind farms).

Worst-case values would exceed $200 per MWh.

With the cost of these facilities put more into context, it’s hard to contemplate how the prediction was made that in a mere 18 months these battery storage facilities would become cost-competitive with one of the cheapest energy sources we can get our hands on – natural gas.

Combined cycle natural gas facilities in Minnesota produce electricity at no more than $40 per MWh.

I assume the article above was talking about natural gas peaker plants – which are not utilized as much as combined cycle plants and thus have a higher cost per MWh at anywhere from $75 to $110. However, the reporting gives readers no indication of that, leaving them to assume that battery storage will one day (soon) be ready to replace natural gas as an electricity provider entirely.

Nothing can be further from the truth.

Regardless, peaker plants were still more affordable than battery storage facilities at this time. Furthermore, when peaker plants are utilized more often (even with rather poor efficiency ratings), our previous research shows the cost of operation decreases exponentially.

And because electrical grids can depend on natural gas peaker plants to produce more electricity, more often, and at any given time – without needing to recharge, cool down, discharge, etc. – these facilities offer far more value as an electricity provider than battery storage systems ever will. For instance, although annual capacity factors at peaker gas plants usually fall between 5 and 20 percent, there may come a day when we need to ramp it up to 80-90 percent in the case that no wind or solar energy is being produced, or due to planned power plant closures for facilities undergoing routine maintenance or repairs.

Battery storage technology is far from being able to provide this backup support, which is required to ensure reliability on an electrical grid.

Now fast-forward not merely eighteen months but four years later to 2017, and these same battery storage facilities were still not close to falling to the price of natural gas, despite the author’s attempt to make them sound incredibly inexpensive.

As reported by Energy Storage News in 2017:

Eos has also been gathering interest for its systems with an interesting pricing strategy – the company’s batteries are available to order at below US$100 per kilowatt-hour, the price benchmark considered something of an inflection point across the industry.

However, the catch is that the batteries will be US$95 per kWh if shipped in the year 2022. The price for shipping during 2017 is at US$160 per kWh – which Eos argues is still as much as 30-40% lower than lithium-ion alternatives.

Using a capital cost of $160 per kWh in 2017, the Levelized Cost of Storage (LCOS) of these facilities are still as high as $133 to $169 per MWh. Using $100 per kWh for 2022, the cost slightly decreases to anywhere from $114 to $150 per MWh.

In other words, Eos itself predicts that by 2022 – nine years after it made the initial prediction – zinc-air battery storage systems will still not be competitive with natural gas in terms of cost or value.

Chalk this up to another failed prophecy for the environmental left.

Articles such as this have become nothing short of self-serving advertisements, brought to you directly by the company’s themselves that are trying to sell you and everyone else their unrealistic vision of the future using their product.

We have already assessed what it would cost Minnesota for one days’ worth of battery storage in the case that the state transitioned to a grid reliant solely on renewable energy sources and no wind or sun was available.

How’s an extra $820 per year per household in electricity costs sound? (Which doesn’t include the cost to build the amount of wind turbines and solar panels needed to replace our existing energy sources and “transition” to renewable energy).