Cost reduction for energy storage systems: Synergistic interaction of pace of innovation with scale of deployment

August 18, 2017

In Global Green Shift the point is made repeatedly that it is scale of deployment of green energy systems like wind power and solar power that helps drive down their costs, making renewable systems more accessible to countries and industries that are not using them or making insufficient use of them at the moment. Deployment is viewed in GGS as driving down costs more significantly than innovation, which has been the dominant focus of energy cost analysis. Now in the context of energy storage systems (batteries etc) Daniel Kammen from the University of California at Berkeley and colleagues Noah Kittner plus Felix Lill from the Technical University of Munich, have demonstrated how each process is contributing to driving down costs and in combination the two are driving costs down faster than anticipated. They demonstrate this using both production volumes as the substrate for the learning curve as well as cumulative numbers of patents issued under the International Patent Cooperation Treaty. Describing this as a ‘two-factor model’ of cost reduction they show that predictions of cost reduction in the past have over-estimated costs utilizing just production or innovation on their own (as single factors), while in combination these factors have been more accurate. Turning to predictions in the near term, the same combination of innovation with production (i.e. deployment) would indicate that costs of energy storage would reduce to the $125 to $165 per kilowatt-hour range where batteries (used e.g. in electric vehicles) would become competitive with internal combustion engine vehicles. This would indicate that EVs’ cost-competitiveness would arrive sometime between 2017 and 2020 – much earlier than previously anticipated.

The Kammen et al model of cost reduction utilizing both the pace of innovation (proxied by cumulative numbers of patents) and scale of deployment (production volumes of energy storage systems) is demonstrated to have a better grasp of take-up than utilizing just deployment or innovation on its own. This theoretical result complements the reality that incentives to drive both innovation and deployment are needed to hasten the global green shift.

The Kammen et al paper is published 31 July in the journal Nature Energy, and can be found here: https://www.researchgate.net/profile/Daniel_Kammen/publication/318796739_Energy_storage_deployment_and_innovation_for_the_clean_energy_transition/links/59842425a6fdccb3bfcb42a5/Energy-storage-deployment-and-innovation-for-the-clean-energy-transition.pdf

Professor Kammen’s Renewable and Appropriate Energy Laboratory (RAEL) issued this advance notification and summary of the results, here: https://rael.berkeley.edu/publication/energy-storage-deployment-and-innovation-for-the-clean-energy-transition/

Yesterday, Greentech Media published an illuminating explanation of the study and its findings, authored by Julian Spector, here: https://www.greentechmedia.com/articles/read/were-still-underestimating-cost-improvements-for-batteries

This result has immediate implications for the take-up of energy storage systems. It should be generalizable across other green technologies – but can only be applied when there is a sufficient pace of patenting. This is the factor that will no doubt limit the applicability of this ‘two factor’ model of new energy technology adoption.

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