How Batteries are Challenging Coal and Gas on Cost: BNEF

March 27, 2019
The refrain that lithium-ion batteries are a good idea, but just too expensive, is beginning to ring hollow in some markets, according to new data from BloombergNEF (BNEF).

The refrain that lithium-ion batteries are a good idea, but just too expensive, is beginning to ring hollow in some markets, according to new data from BloombergNEF (BNEF).

In fact, batteries are experiencing what BNEF describes as a “spectacular” drop in per megawatt-hour costs — 76 percent since 2012.

The research company this week offered new numbers on battery costs, solar photovoltaics (PV) and offshore wind power as part of its BNEF Summit in New York.

BNEF pegged the benchmark levelized cost of electricity, or LCOE, for lithium-ion batteries at $187 per megawatt-hour. This signals a 35 percent drop just since the first half of 2018.

Meanwhile, the cost of onshore wind has fallen 49 percent, solar PV 84 percent, and offshore wind 56 percent since 2010.

“Looking back over this decade, there have been staggering improvements in the cost-competitiveness of these low-carbon options, thanks to technology innovation, economies of scale, stiff price competition and manufacturing experience,” said Elena Giannakopoulou, head of energy economics at BNEF.

Among the clean energy resources, lithium-ion batteries stood out as the “most striking finding” when it came to cost, according to BNEF.

The research group noted new opportunities emerging for batteries to balance renewable energy on the grid. (Batteries are often included in a microgrid for balancing and to extend the microgrid’s ability to supply power during a central grid outage.)

In many markets, projects that pair storage with renewable energy are starting to compete on price with coal and gas-fired generation as dispatchable power — even without subsidies, according to BNEF. Because they include stored energy, the projects are no longer as vulnerable to weather — the loss of wind or sun — so are more likely to be available to dispatch power when the grid needs it.

Source: BloombergNEF LCOE analysis, based on information on projects starting construction and proprietary pricing information from suppliers. The database covers nearly 7,000 projects across 20 technologies in 46 countries.

“Solar PV and onshore wind have won the race to be the cheapest sources of new ‘bulk generation’ in most countries, but the encroachment of clean technologies is now going well beyond that, threatening the balancing role that gas-fired plant operators, in particular, have been hoping to play,” said Tifenn Brandily, energy economics analyst at BNEF.

On solar, BNEF said last year’s 18 percent drop in cost happened mostly in the third quarter of 2018 because of a module glut related to policies in China.

Learn more about the role of lithium-ion batteries in microgrids. Subscribe to the free Microgrid Knowledge newsletter

About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is an award-winning writer and editor who specializes in the energy industry. She is chief editor and co-founder of Microgrid Knowledge and serves as co-host of the publication’s popular conference series. She also co-founded, where she continues to lead a team of energy writers who produce content for energy companies and advocacy organizations.

She has been writing about energy for more than two decades and is published widely. Her work can be found in prominent energy business journals as well as mainstream publications. She has been quoted by NPR, the Wall Street Journal and other notable media outlets.

“For an especially readable voice in the industry, the most consistent interpreter across these years has been the energy journalist Elisa Wood, whose Microgrid Knowledge (and conference) has aggregated more stories better than any other feed of its time,” wrote Malcolm McCullough, in the book, Downtime on the Microgrid, published by MIT Press in 2020.

Twitter: @ElisaWood

LinkedIn: Elisa Wood

Facebook:  Microgrids


Designing Microgrids: Evaluating Parameters for Reliable, Cost-Effective and Optimized Power Solutions

Dec. 7, 2023
Shawn Dalke electrical engineer at Mesa Solutions discusses load profiles and power sources for microgrids.


Using AI to Shrink Crypto’s Carbon Footprint

Learn how artificial intelligence and a renewable energy powered microgrid can reduce the carbon footprint of one of the dirtiest industries – cryptocurrency.