Storage

The FES Consumer Transformation scenario (2023) put 35GW of storage on the system by 2050, but we think that's not enough.

And our capacity expansion model agrees!

The 2023 CM auctions (a good way of assessing how many projects are at a stage where the developers are confident they'll get built as non-delivery penalties are high) show 12GW of battery storage by 2027.

The Q2 2024 buildout report shows 14 GW by the end of 2027.

Let's consider the global growth of energy storage, as put by Michael Liebreich:

The same thing has been happening for batteries – they have in fact been racing through doublings even faster than solar: five of them in the last eight years. In 2015, some 36GWh of lithium-ion batteries were produced; last year the total was around 1TWh. Over the past decade, cell costs have come down from $1,000 to $72 per kWh, and at the same time energy density has doubled and degradation per cycle has halved. We are also seeing new battery chemistries such as iron-air and sodium-ion that promise to be even cheaper than lithium-ion.

Battery energy storage is the only non-subsidized, commercially proven, scaled technology that can manage renewable intermittency, grid constraints, balancing, etc.

CATL has recently released new numbers for their battery cells, reducing cell costs by $100/kW.

Battery CAPEX has dropped in the last year and will continue to fall

Major battery manufacturers (CATL, for example) announced dramatic drops in the cost of their systems in the first half of 2024. We have updated our assumptions around BESS CAPEX accordingly.

Our capacity expansion model is informed by the learning rate of battery CAPEX and OPEX numbers from NREL, as well as the ratios of CAPEX for different system durations. We model the Capacity Market and wholesale revenues for trading storage to determine their profitability for 1, 2, 4, and 8-hour systems.

We assume no new 1h systems get built.

The duration of storage in the buildout is shown below.

Considering also behind-the-meter battery storage, and other types of storage, the build out is:

Values forv pumped and other storage are taken from the 2023 FES.

Pumped storage capacity will also grow

The FES says that an additional 3GW of pumped storage will come online in the early 2030s. This is largely driven by a significant new project (Coire Glas) in Scotland and the conversion of smaller hydro sites to pumped hydro.

Other storage will come online

Likely to be from liquid and compressed air storage, we also have mid-duration storage coming online.