The costs of storing energy in batteries

The cost of storing energy in batteries is getting less as this report shows, quoting a figure of about \$135/kWh for the cost of storage in 2020. That’s about £100/kWh.

Nissan Leaf replacement battery
In the US, a 30 kWh replacement battery costs about \$4000, about £3000. That’s £100/kWh – about the same as the Bloomberg figure.

The real cost of storage – 1 the battery cost of storing energy
What you are buying for £100/kWh is the ability to store energy. But that ability to store decreases with time. Even with the most careful charging and discharging, a battery can be expected to lose 20% of its capacity after 1000 cycles and 40% after 2000 cycles. For a rough cost of storing each kWh, let’s assume we get a total of 2000 cycles and the average capacity is 70% of the original capacity.

For a £100 battery storing 1 kWh new, it stores an average of 0.7 kWh for 2000 cycles, which is 1400 kWh. Therefore cost per kWh stored is £100/1400 = 7.1p.
Your £100 battery, if it is very carefully charged and discharged, will cost you 7p for each kWh that you store.

2 – the inefficiency cost of storing energy
You don’t get 1 kWh out of a battery for every kWh that you put in. That’s because the process of charging and discharging involve current flowing through resistance, hence energy loss. And the chemical changes caused by charging and discharging waste energy.
If you charge a battery slowly, then its efficiency can be over 90%. If you charge or discharge quickly (say in one of those motorway fast chargers) the efficiency can be as low as 70%. A reasonable figure for the overall charge/discharge efficiency is around 85%. This means that there is a loss of 15% of the energy you put into a battery.
Even if you charge at a low night-time rate of around 13 p/kWh (see below), you lose 15% of that. That is about 2 p/kWh. It’s 3 p/kWh if you charge at a daytime rate.
The total cost of storing energy in a battery is the battery cost plus the inefficiency cost, ie 7p + 2p = 9 p/kWh.

Domestic electricity costs
The current Octopus tariff which, with an Economy 7, tariff quotes a night rate of 13.24p and a day rate of 20.25p. That’s a difference of 7p per kWh.

But remember, every time you store a kWh in a battery, that process costs you 9p. You may think that you are paying only 13p a kWh to charge your car battery, but the battery storage costs bump that up to 22p/kWh. And if you charge you car during the day, or at a place that does not have cheap night rate electricity, it is costing you 30p per kWh.

Tesla Powerwall
For reference, a Tesla Powerwall costs £9,810 including VAT for a UK domestic installation. It has a capacity of 13.5 kWh – over £700/kWh, albeit in a nice box with battery management equipment. That’s 7 times as much as our batteries above. So the storage costs of a Tesla Powerwall are 7 times as much, which is 50p/kWh. But it’s obvious that Tesla make loads on the Powerwall and the Powerwall could be sold for significantly less than the current prices.