The Cost of Battery Energy Storage Systems (BESS)

It's not cheap

There’s a lot of discussion that the solution to the intermittency of wind and solar is a BESS (Battery Energy Storage System). Wind is regularly down for 2 days, no problem get a BESS that can store the power wind generates over 2 days. Fill it up at night when it’s windy, use it during peak load when we hit the doldrums.

Addresses the giant weakness of Wind (solar is not as big a problem) that is only blowing 35% of the time. So, let’s explore the costs, space requirements, and future prospects of large-scale BESS, focusing on systems with a capacity of 1 GWh.

Understanding the Scale

To put things into perspective, a 1 GWh battery system is massive. Such a system could power about 100,000 average American homes for one hour. But in terms of power needs, this is small. For example, Colorado wants to be 95% renewables and so will need 4¹ of these - per hour. For 2 days, 48 of these.

Cost Analysis

The cost of BESS has been declining rapidly over the past decade. As of 2024, the average price for a utility-scale BESS is approximately $148/kWh 1. For a 1 GWh system, this translates to $148 million.

It's important to note that this cost includes not just the batteries themselves, but also the inverters, control systems, and other balance of system components.

Operational Costs

Beyond the initial capital cost, there are ongoing operational costs associated with BESS. These include:

• Maintenance: Regular maintenance is required to ensure optimal performance and longevity.

• Replacement: Battery cells degrade over time, necessitating periodic replacement.

• Cooling: BESS often require cooling and/or heating systems to maintain optimal operating temperatures.

Space Requirements

The space required for a 1 GWh BESS depends on the specific battery technology used. However, for a rough estimate, we can use the energy density of modern lithium-ion batteries, which is around 200-300 Wh/L 2. Using the lower end of this range for a conservative estimate: 5,000 m³²

This volume is equivalent to about two Olympic-sized swimming pools. However, when accounting for spacing between battery racks, cooling systems, and maintenance access, the actual footprint could be 2-3 times larger.

So space is not an issue.

Largest BESS Systems

To get a sense of the scale of existing BESS, let's look at some of the largest systems currently in operation:

• Moss Landing Energy Storage Facility: Located in California, this is one of the world's largest BESS, with a capacity of 400 MW / 1,600 MWh³.

• Victorian Big Battery: This Australian BESS has a capacity of 300 MW / 450 MWh.

The costs of these projects are not always publicly disclosed, but for reference, the 300 MW / 1,200 MWh Vistra Moss Landing project had an estimated cost of $400 million when it was completed in 2020 4.

Battery Price and Energy Density Improvements

The past decade has seen remarkable improvements in both the cost and energy density of lithium-ion batteries. According to BloombergNEF, the volume-weighted average price of lithium-ion battery packs across all sectors has fallen by 89% from 2010 to 2023, reaching $151/kWh 4.

In terms of energy density, top-tier cells have seen a fivefold increase over the past 30 years. In 1991, you could only get 200 watt-hours (Wh) of capacity per liter of battery. Now, you can get over 700 Wh 5.

Looking ahead to the next five years, the trend of decreasing costs and increasing energy density is expected to continue, albeit at a slower rate. BloombergNEF projects that by 2030, battery pack prices could fall to $74/kWh 6. Energy density is also expected to improve, with some researchers projecting densities of up to 500 Wh/kg by 2025 7.

This is likely why Will Toor said Colorado is no longer considering a significant investment in batteries.

Challenges and Considerations

While the prospects for BESS are promising, there are several challenges to consider:

1. Lifespan: BESS systems typically have a lifespan of 10-15 years, after which they need to be replaced or refurbished.

2. Recycling: As more batteries are deployed, developing efficient recycling processes becomes crucial.

3. Raw Material Supply: The increasing demand for batteries puts pressure on the supply chains for key materials like lithium, cobalt, and nickel.

4. Safety: While rare, thermal runaway events (i.e. fire) in large-scale lithium-ion batteries can pose significant safety risks.

Conclusion

Large-scale BESSs are presently useful component of our modern grid, primarily to ease the minute by minute balancing of the grid. This makes keeping the grid in balance a lot easier.

With costs continuing to decrease and energy densities improving, the use cases for BESS will grow. It may decrease to the point that it can address the intermittency of wind and solar. However, we’re not close to there yet as it will require an order of magnitude improvement at the least.

For example, if it drops in 5 years to the above estimated $74/kWh. Colorado at 95% intermittent energy generation is looking at $14b. And 5 years from now Colorado’s energy usage could well be 30% higher than now as we’re a growing state.

There are also emerging technologies like solid-state batteries and alternative chemistries may further revolutionize grid-scale energy storage, potentially offering even greater energy densities and lower costs. We’ll have to wait and see as most new ideas don’t ever make it to significant use.

1. Colorado mean power needs is 6.25GW. Covering the 2/3 of the 95% - that’s ~ 4GW.

2. 1 GWh / 200 Wh/L = 5,000,000 L = 5,000 m³

3. And they have a tendency to catch on fire