We are in the midst of a year-long acceleration in the decline of battery cell prices, a trend that is reminiscent of recent solar cell price reductions.
Since last summer, lithium battery cell pricing has plummeted by approximately 50%, according to Contemporary Amperex Technology Co. Limited (CATL), the world’s largest battery manufacturer. In early summer 2023, publicly available prices ranged from 0.8 to 0.9 RMB/Wh ($0.11 to $0.13 USD/Wh), or about $110 to 130/kWh.
Pricing initially fell by about a third by the end of summer 2023. Now, as reported by CnEVPost, large EV battery buyers are acquiring cells at 0.4 RMB/Wh, representing a price decline of 50%to 56%. Leapmotor’s CEO, Cao Li, expects further reductions, with prices potentially dropping to 0.32 RMB/Wh this summer, marking a decrease of 60% to 64% in a single year.
EnergyTrend observed that energy storage battery cells are priced similarly to electric vehicle battery cells.
Additionally, CnEVPost reports that the battery cells being sold come equipped with advanced technologies, including faster charge rates, higher cycle life, improved temperature management characteristics, and higher energy density packaging.
A February report from Goldman Sachs attributes the accelerated price declines partly to a slight slowdown in electric vehicle adoption, leading to lower commodity prices. The finance group revised its global battery demand growth projection to 29% for 2024, down from the previous estimate of 35%, with a 31% growth expected in 2023.
Goldman also forecasts a 40% reduction in battery pack prices over 2023 and 2024, followed by a continued decline to reach a total 50% reduction by 2025-2026. Goldman predicts that these price reductions will make electric vehicles as affordable as gasoline-powered vehicles, leading to increased demand.
One of the most notable commodity price declines related to EVs is that of lithium hydroxide. Its price surged from late 2021 through 2022, then began to tumble in early 2023, and continues to decrease today.
The price decreases are attributed to several factors, including a perception of stabilizing demand as manufacturers struggle to make EVs profitable, which has led to a softening of speculative investment in vehicle metal futures markets. Other contributing factors include supply chain improvements, decreasing inflation, and new lithium supplies coming online.
Other metals, such as copper, have fallen from pandemic-era highs but have not returned to pre-2020 prices.
Interestingly, both batteries and solar panels have seen their prices drop by about 90% since 2010, with both products currently experiencing accelerated price declines. The Rocky Mountain Institute’s December report, “X-Change: Batteries – The Battery Domino Effect,” presents a chart mirroring the trends seen in solar panels over the last fourteen years.
Looking back thirty or forty years, the costs of both batteries and solar panels have decreased by 99% or more for their base units.
Driven by these price declines, grid-tied energy storage deployment has seen robust growth over the past decade, a trend that is expected to continue into 2024. The U.S. is projected to nearly double its deployed battery capacity by adding more than 14 GW of hardware this year alone. China is anticipated to become the grid storage leader, with deployments of just over 24 GW of capacity expected. EnergyTrend forecasts a global deployment of 71 GW of capacity, representing a 46% expansion over the 177% growth seen in 2022.
There is abundant anecdotal evidence from public and private sources corroborating these price declines in the marketplace. A significant example is the drop in electric vehicle prices over the past year, so substantial that Hertz had to publicly adjust the value of its Tesla fleet due to falling resale values. pv magazine USA has spoken with multiple energy storage vendors who have reported significant reductions in pricing, though one noted that while cell pricing has fallen significantly, the broader balance of system surrounding the battery cells has not fallen as quickly.
One vendor mentioned that advancements in battery cell technology, leading to increased energy densities, have contributed to lower deployed system costs per kWh.
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A new study by the Mercator Research Institute on Global Commons and Climate Change (MCC) indicates that affordable and eco-friendly energy options have gotten much cheaper to install in the last 10 years — so much so that they might just be all we need by 2050, Interesting Engineering reports.
It’s an optimistic prediction but not unfounded. The Berlin-based climate research institute just released its study results, which showed that thanks to a growing industry and improving technology, there’s been an 87% drop in the cost of solar panels and an 85% drop in the price of battery storage.
Batteries and energy-storage sites are essential in a system that relies on clean sources like solar and wind for power since they only produce energy when there’s enough light or wind.
With the falling price of the solar panels themselves and the improved performance of both, this means that the largest costs associated with solar energy have become almost 90% less costly, making it much easier for individuals, businesses, and governments to adopt the technology.
“Some calculations even suggest that the world’s entire energy consumption in 2050 could be completely and cost-effectively covered by solar technology and other renewables,” Felix Creutzig, lead author of the study, said in a press release. Creutzig heads the MCC working group Land Use, Infrastructure, and Transport.
That’s the shortest time possible, and a full transition will probably take longer. Still, any steps in that direction will be helpful. Solar panels and other clean energy sources save users money — in fact, some people even make money selling energy back to the grid via net metering.
Meanwhile, solar, wind, water, and similar energy sources don’t produce heat-trapping air pollution like oil, gas, and coal do. Switching to these clean options is crucial if we’re going to stop the Earth’s rising temperature and the unstable weather that goes along with it.
“This is an extremely optimistic scenario — but it illustrates that the future is open,” said Creutzig. “Climate science, which provides policymakers with guidance in its scenario models, must reflect technical progress as closely as possible. Our study is intended to provide input for this.”
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