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Batteries, offshore wind impress with significant LCOE drops - BNEF

Vattenfall’s battery@pyc. Source: Vattenfall AB (group.vattenfall.com)

March 28 (Renewables Now) - The benchmark levelised cost of electricity (LCOE) for both lithium-ion batteries and offshore wind has plunged significantly since the first half of 2018, according to statistics prepared by research firm BloombergNEF (BNEF).

The LCOE for lithium-ion batteries has dropped 35% to USD 187 (EUR 166.1) per MWh, which creates new opportunities for this technology to balance a renewables-heavy generation mix. This has led energy economics analyst Tifenn Brandily to believe that clean technologies are now “threatening the balancing role that gas-fired plant operators, in particular, have been hoping to play.”

At the same time, the benchmark LCOE for offshore wind has fallen by 24% to less than USD 100/MWh thanks to auction programs for new capacity coupled with much larger turbines. Just five years ago, BNEF’s global benchmark for this technology exceeded USD 220/MWh.

Compared to a year ago, the LCOE for onshore wind has declined by 10% to USD 50/MWh and that for solar photovoltaic (PV) has decreased by 18% to USD 57/MWh for projects entering the construction phase in early 2019. The great majority of the solar LCOE drop took place in the third quarter of 2018, when the amendments in China’s policy drove a huge global supply glut of modules.

Elena Giannakopoulou, head of energy economics at BNEF, attributes the improvement in the cost-competitiveness of low-carbon options to technology innovation, economies of scale, stiff price competition and manufacturing experience.

“Our analysis shows that the LCOE per megawatt-hour for onshore wind, solar PV and offshore wind have fallen by 49%, 84% and 56% respectively since 2010. That for lithium-ion battery storage has dropped by 76% since 2012, based on recent project costs and historical battery pack prices,” she commented.

(USD 1.0 = EUR 0.889)

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