In Conversation: How cheap can battery storage get?

While lithium iron phosphate (LFP) battery system prices were not expected to fall under the $100/kWh threshold before 2030, the last couple of months have proven the opposite.

“Prices have hit the bottom, nonetheless they will keep on falling until the first half of next year when some market players will withdraw due to cash flow issues,” Robin Song, energy storage analyst at InfoLink, tells ESS News. “Vertically integrated battery energy storage manufacturers will be less vulnerable.”

Fully integrated batteries in China are currently offered at below $90/kWh. The current prices will continue to tumble to $50/kWh on the cell level and $68/kWh on the system level early next year, Song anticipates.

In terms of shipments, the year started with a depressed Q1. A total of 38.82 GWh lithium-ion battery cells were distributed globally in the first quarter of 2024. Utility-scale and commercial and industrial (C&I) projects accounted for 34.75 GWh while the remaining 4.07 GWh share was installed in small-scale projects, according to InfoLink’s database.

Following a 2.2% year-on-year decline in Q1, a rebound is expected in Q2 with the demand in China on the rise.

“The world is expected to ship a total of 270 GWh of lithium-ion battery cells in 2024, up from 196.7 GWh last year,” Song says. However, not all of the capacity will be installed.

“Overall, 2024 is expected to see an oversupply of 80 GWh of battery energy storage cells,” Song says.