Lazard Launches Levelized Cost Of Storage Analysis Along With Latest Renewables Study


New York-based financial consulting and asset management firm Lazard Ltd. has launched its Levelized Cost of Storage Analysis (LCOS 1.0) study comparing the costs of various energy storage technologies for particular uses.

LCOS 1.0, conducted with support from Enovation Partners, is being released in tandem with Lazard's latest annual Levelized Cost of Energy Analysis (LCOE 9.0), which analyzes the costs of generating electricity from conventional and alternative technologies.

According to Lazard, LCOS 1.0 is an analytical study of the major energy storage technologies in the context of their various uses, from large-scale, power grid-oriented applications to small-scale, residential applications. Its purpose is to compare the cost effectiveness of each technology on an"apples to apples," basis within applications and compare each application with conventional alternatives.

Highlights of the LCOS 1.0 study include the following:

  • Even without subsidies, certain storage technologies are already cost competitive with certain conventional alternatives, such as lithium-ion batteries for certain power grid support applications;
  • The transformational scenarios envisioned by some renewable energy advocates – such as residential energy storage systems paired with solar panels to take consumers off the grid – are still very expensive without subsidies; and
  • If industry projections materialize over the next five years, cost-effective energy storage technologies will have increasingly broad applications across the power grid, such as providing an alternative to conventional gas-fired peaking plants in certain areas.

‘Although in its formative stages, the energy storage industry appears to be at an inflection point much like that experienced by the renewable energy industry around the time we created the LCOE study eight years ago,’ says George Bilicic, vice chairman and global head of Lazard's Power, Energy & Infrastructure Group. ‘Based on our analysis of storage technologies and our experience with LCOE, we expect to see rapid declines in the costs of energy storage.’

Highlights of the LCOE 9.0 study include the following:

  • The costs of generating electricity from all forms of renewable energy continue to decline – especially in utility-scale solar photovoltaic technology, wherein the median levelized cost has declined about 25% from one year ago;
  • Despite recent sharp declines in the market price of natural gas, utility-scale solar and wind power remain cost-competitive complements to traditional generation technologies even without subsidies;
  • Rooftop solar PV technology is still not cost competitive without significant subsidies primarily due to higher installation costs;
  • The levelized cost of rooftop solar PV is expected to decline in coming years primarily as a result of more efficient installation techniques, lower costs of capital and improved supply chains; and
  • Even though alternative energy is increasingly cost competitive and storage technology holds great promise, alternative energy systems alone will not be capable of meeting the baseload generation needs of a developed economy in the foreseeable future.

The two studies are available here.

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