Globa Lithium-Ion Battery Prices Plummet, Driving Energy Storage Adoption
Chennai: Average prices of lithium-ion batteries have come down 14 per cent in 2023. The prices are down 82 per cent in the past 10 years since 2013.
Globally average lithium-ion battery pack prices fell to $139 kwh in 2023 from $161 kwh in 2022, a decline of 13.6 per cent in a year. Battery pack prices largely have been on a downward slide for the past 10 years. In 2013, the average price stood at $780 kwh. By 2016, it came down to $345 kwh and further to $150 kwh by 2021. In 2022, prices went up to $161 kwh and have once again declined to $139 kwh in 2023.
“Battery prices reached an all-time low in 2023 led by the moderation in raw material prices amid the increase in production across the value chain,” finds ICRA. Cheaper battery prices are the key to increased adoption of the battery energy storage systems (BESS) projects. As the share of generation from the renewable energy (RE) capacity to increase to close to 40 per cent of the all-India electricity generation by FY30 from less than 25 per cent currently, requires development of energy storage systems (ESS) to manage the intermittency associated with wind and solar power.
The decline in battery costs over the past decade leading up to 2021 helped reduce the cost of energy storage and adoption of BESS projects globally.
“The discovered tariff under the BESS tenders more than halved from Rs. 10.84 lakh/MW/month in the first Solar Energy Corporation of India (SECI) tender in August 2022 to Rs. 4.49 lakh/MW/month in the latest tender by Gujarat in March 2024, reflecting the decline in battery prices and improving competitiveness of such projects. The viability of these projects remains pegged to the capital cost of the BESS. Based on the average battery cost of $140/kwh seen in 2023 along with associated taxes/duties and cost of the balance of plant, the capital cost is expected to be in the range of $220-230/kwh,” Girishkumar Kadam, Senior Vice President & Group Head - Corporate Ratings, ICRA, said.
