Significant Price Decline
The average prices of lithium-ion batteries witnessed a notable decline, plummeting by 14% in 2023 alone. Over the past decade, since 2013, prices have plunged by a staggering 82%, marking a substantial shift in the energy storage landscape. Globally, the average lithium-ion battery pack prices dropped to $139 per kWh in 2023 from $161 per kWh in the previous year, indicating a significant decrease of 13.6% within a single year.
Driving Factors
According to ICRA, this remarkable decline in battery prices can be attributed to a moderation in raw material costs coupled with increased production efficiency across the value chain. Cheaper battery prices play a pivotal role in driving the adoption of battery energy storage systems (BESS) projects, particularly as the share of renewable energy generation is expected to surge to nearly 40% of all-India electricity generation by FY30.
Impact on Energy Storage Projects
The reduction in battery costs over the past decade has substantially lowered the overall cost of energy storage, fostering the widespread adoption of BESS projects globally. This cost reduction is evident in the significant decline in discovered tariffs under BESS tenders. For instance, the tariff under the Solar Energy Corporation of India (SECI) tender dropped from Rs. 10.84 lakh/MW/month in August 2022 to Rs. 4.49 lakh/MW/month in Gujarat’s latest tender in March 2024.
Future Outlook
Girishkumar Kadam, Senior Vice President & Group Head – Corporate Ratings at ICRA, emphasizes the importance of battery cost in determining the viability of BESS projects. With an average battery cost of $140/kWh in 2023, coupled with associated taxes/duties and balance of plant costs, the capital cost is projected to range from $220-230/kWh. This outlook underscores the growing competitiveness and economic viability of energy storage solutions, driving the transition towards a more sustainable energy future.
Source：deccanchronicle.com
