In the report “Global Power and Renewable Energy - Energy storage: Are we at the tipping point?” financial services firm UBS states that energy storage will be the next critical catalyst for a global shift towards renewables.
A critical factor impacting the viability of renewables is energy storage. Current energy storage capacity represents just 17% of total installed solar and wind capacity. Energy storage cost has almost halved in the past five years but generally remain too pricey for scale-up applications.
UBS thinks that renewable energy will most likely need to fill much of the power generation gap.
The banks scenarios suggest that annual renewable energy capacity additions would likely treble to 500-600GW globally. But without concurrent growth and development of energy storage, the targets for renewable growth are unlikely to be met.
UBS believes energy storage would significantly bolster the potential renewable energy installations, mainly by:
"1. Removing the constraints on solar and wind power’s capacity on the power grid: 100% of the power on the grid could be supplied by renewables if energy storage was widely available.
2. Reducing renewable energy's curtailment rate: Solar and wind power projects could be fully utilised with the energy storage system.
Although the cost of energy storage has nearly halved in the past five years, UBS thinks it is still too expensive for scale-up application. To make energy storage cheap enough for widespread application, driven by the more aggressive R&D investments of those battery makers and energy storage developers, we expect the energy storage battery's average cost to be reduced by up to 80% in 2020-30.
If assuming solar/wind power generation costs to fall up to 60%/40% in the next 5-7 years, we expect Level 1 energy storage grid parity (energy storage cost is lower than the power price difference for end-user’s peak and trough loads) to be achieved in 2023-24. On top of this, we foresee Level 2 energy storage grid parity in 2025-27 (energy storage cost plus renewable energy power generation cost is lower than the other major power sources' generation costs)."