ELECTRICITY STORAGE AND RENEWABLES

1 ELECTRICITY STORAGE AND RENEWABLES : COSTS AND MARKETS TO 2030 ELECTRICITY STORAGEAND RENEWABLES : COSTS AND MARKETS TO 2030 October STORAGE AND RENEWABLES : COSTS AND MARKETS TO 2030 IRENA 2017 Unless otherwise stated, material in this publication may be freely used, shared, copied, reproduced, printed and/or stored, provided that appropriate acknowledgement is given of IRENA as the source and copyright holder. Material in this publication that is attributed to third parties may be subject to separate terms of use and restrictions, and appropriate permissions from these third parties may need to be secured before any use of such 978-92-9260-038-9 (PDF) Citation: IRENA (2017), ELECTRICITY STORAGE and RENEWABLES .

2 Costs and Markets to 2030, International Renewable Energy Agency, Abu IRENAThe International Renewable Energy Agency (IRENA) is an intergovernmental organisation that supports countries in their transition to a sustainable energy future, and it serves as the principal platform for international co-operation, a centre of excellence, and a repository of policy, technology, resource and financial k nowledge o n r enewable e nergy. I RENA p romotes t he w idespread a doption a nd s ustainable u se of all forms of renewable energy, including bioenergy, geothermal, hydropower, ocean, solar and wind energy, in the pursuit of sustainable development, energy access, energy security and low-carbon economic growth and prosperity.

3 Is grateful for the the reviews and comments of numerous experts, including Mark Higgins (Strategen Consulting), Akari Nagoshi (NEDO), Jens Noack (Fraunhofer Institute for Chemical Technology ICT), Kai-Philipp Kairies (Institute for Power Electronics and Electrical Drives, RWTH Aachen University), Samuel Portebos (Clean Horizon), Keith Pullen (City, University of London), Oliver Schmidt (Imperial College London, Grantham Institute - Climate Change and the Environment), Sayaka Shishido (METI) and Maria Skyllas-Kazacos (University of New South Wales).Contributing authors: Pablo Ralon, Michael Taylor and Andrei Ilas (IRENA), with Harald Diaz-Bone (Green Budget Germany) and Kai-Philipp Kairies (Institute for Power Electronics and Electrical Drives, RWTH Aachen University)For further information or to provide feedback: report is available for download: publication and the material herein are provided as is.

4 All reasonable precautions have been taken by IRENA to verify the reliability of the material in this publication. However, neither IRENA nor any of its officials, ag ents, data or other third-party content providers provides a warranty of any kind, either expressed or implied, and they accept no responsibility or liability for any consequence of use of the publication or material STORAGE AND RENEWABLES : COSTS AND MARKETS TO 20304 ELECTRICITY STORAGE AND RENEWABLES : COSTS AND MARKETS TO 2030It is truly remarkable what a difference five years can make in the ongoing transformation of the energy sector. As recently as 2012, questions about high generation costs still overshadowed the rise of solar and wind power.

5 But what was already clear, to those watching closely, was that economies of scale, technological improvements, greater competition in supply chains and the right policy conditions had started a continuous process, driving down the cost of ELECTRICITY from these , the competitiveness of renewable power generation options is increasingly evident to all. Yet the hard work continues, as governments, industry and investors plan the next stage of the energy transformation. This involves pro-active discussions to create new policies, regulations, market structures and industry strategies, particularly to support the stable integration of the highest possible shares of power generation from variable RENEWABLES ( solar and wind).

6 Strategies are also needed to decarbonise end uses, from transport and industry to the buildings in which we live and work. This brings the role of ELECTRICITY STORAGE , and in particular battery systems, to centre stage. STORAGE from the batteries in solar home systems to those in electric vehicles will be crucial to accelerating renewable energy deployment. It can also provide some of the flexibility that future ELECTRICITY systems will need to accommodate the fluctuating availability to solar and wind energy. Longer-term, as countries strive to significantly reduce emissions from power generation, the importance of STORAGE will only grow.

7 Although pumped hydro STORAGE dominates total ELECTRICITY STORAGE capacity today, battery ELECTRICITY STORAGE systems are developing rapidly with falling costs and improving performance. By 2030, the installed costs of battery STORAGE systems could fall by 50-66%. As a result, the costs of STORAGE to support ancillary services, including frequency response or capacity reserve, will be dramatically lower. This, in turn, is sure to open up new economic opportunities. Battery STORAGE technology is multifaceted. While lithium-ion batteries have garnered the most attention so far, other types are becoming more and more cost-effective. As the present report indicates, battery STORAGE in stationary applications is poised to grow at least 17-fold by have the technologies, and we have a template for success.

8 Industry growth, access to new markets, and continued support policies where needed can make stored power highly competitive, like solar and wind power before it. As governments set market forces to work, ELECTRICITY STORAGE is poised to play a decisive role in the transition to a sustainable energy future. Foreword Adnan Z. AminDirector-GeneralInternational Renewable Energy Agency5 ELECTRICITY STORAGE AND RENEWABLES : COSTS AND MARKETS TO 2030 Contents FOREWORD ..4 EXECUTIVE SUMMARY ..10 INTRODUCTION: THE ROLE OF ELECTRICITY STORAGE IN THE ENERGY TRANSITION .. 23 Purpose and objectives .. 24 The energy transition in IRENAs REmap analysis and STORAGE needs.

9 25 Current ELECTRICITY STORAGE deployment in the energy sector .. 28 Current use of energy STORAGE systems in various applications .. 33 ELECTRICITY STORAGE SYSTEM CHARACTERISTICS AND APPLICATIONS .. 36 stationary STORAGE systems and technologies ..36 ELECTRICITY STORAGE technology characteristics and suitability for different applications .. 40 ELECTRICITY STORAGE applications analysed in the cost-of-service tool .. 45 ELECTRICITY STORAGE SYSTEM COSTS AND PERFORMANCE TO 2030 .. 50 Pumped hydro STORAGE ..50 Compressed air energy STORAGE ..54 Flywheel energy STORAGE ..58 Lithium-ion batteries ..63 Lead-acid Flow batteries ..86 High-temperature batteries.

10 95 Cost and performance overview of battery ELECTRICITY STORAGE ..99 GLOBAL ELECTRICITY STORAGE MARKET OUTLOOK TO 2030 .. 103 REFERENCES .. 110 Annex 1: Characteristics of stationary ELECTRICITY STORAGE systems from 2016 to 2030 ..124 Annex 2: Cost-of-service tool methodology .. 1266 ELECTRICITY STORAGE AND RENEWABLES : COSTS AND MARKETS TO 2030 Figure 1: ELECTRICITY sector capacity and total ELECTRICITY generation by technology in the REmap Reference and Doubling cases, 2015-2050 ..26 Figure 2: ELECTRICITY STORAGE needs in the energy transition ..28 Figure 3: Global operational energy STORAGE power capacity by technology group, mid-2017 ..29 Figure 4: Global operational pumped hydro STORAGE power capacity by country, mid-2017.