Are you spotting more electric vehicles on the road? Most of us saw electric charging stations laying empty for months before it suddenly became impossible to get a free spot. Rising diesel costs and changing government legislation is pushing consumers to choose electric cars over their traditional counterparts.
California is leading the way with electric vehicles – and it’s having a knock-on effect on its battery storage capacity. Battery power now makes up 6% of California’s maximum on-peak electricity capacity. California’s intense battery storage growth has come as the result of the skyrocketing demand for electric vehicles.
There’s a clear connection between sales of electric vehicles and the lower costs of components for battery storage systems, leading to an increase in installations of battery storage systems.
At Green Switch Capital, we believe electric vehicles have a vital role to play in achieving net zero. The popularity of electric vehicles is leading to lower battery storage prices, making it more affordable to create a self-sufficient energy market. We’re looking at what lessons we can learn from our friends across the pond.
The Sharp Decline in Battery Prices
One of the major barriers to the transition to green energy has been the cost of various renewable energy sources. While countries are leveraging affordable renewables like wind, fossil fuels remain relatively cheaper.
The overarching cost efficiency of renewables comes into question when surplus power is wasted. We can only get the most out of renewable energy and switch to a low-carbon system when we have affordable energy storage facilities. The falling cost of batteries shows positive signs for expanding battery storage systems.
Renewable technologies, including wind and solar, have become more cost-competitive against fossil fuels as more battery storage facilities have started to go online. Lithium-ion batteries are most commonly used to create low-cost, high-efficiency energy storage systems.
They’ve seen a sharp price reduction since the early 90s. The cost of lithium-ion battery cells has dropped almost 97% since 1991. What’s vital is that this price reduction has come in unison with increasing battery capacity.
Lithium-ion battery cell prices have fallen by an average of 19% for every doubling of capacity. While the cost reduction is to be applauded, there are further positive signs that the cost of lithium-ion batteries will continue to fall in the future.
The Cost of Batteries for Electric Vehicles
Electric vehicles are what has been lowering the cost of lithium-ion batteries. If we compare the costs of batteries in today’s electric cars, we can see how sharp the price decline has been.
The Nissan Leaf is one of the most popular electric cars with an affordable price tag and a 40-kWh battery. While the battery cost roughly $7,300 in 2018, it would have cost $300,000 for the same battery in 1991.
Tesla is the most recognisable electric vehicle brand in the current market. The Tesla Model S 75D boosts a 75-kWh battery that cost $13,600 in 2018. Comparatively, this battery would have cost $564,000 in 1991.
While the cost of these batteries has decreased drastically, their capacity has skyrocketed. You could expect 200 Wh capacity per litre of battery in 1991. There’s been a 3.4-fold increase with batteries now offering 700 Wh per litre.
Electric Vehicles and Battery Storage Systems
California has been spearheading the United States’ transition to green energy. Battery power accounts for 6% of California’s maximum on-peak electricity capacity.
Although 6% may sound tiny, it’s a massive milestone for the industry and is a 60x increase compared to five years ago. It’s also a higher percentage than wind or nuclear power in California.
The Golden State isn’t alone in its battery expansion. Texas has an estimated 23,000 megawatts of battery storage on its grid with a bright future ahead. This figure is expected to double in 2022, and again in 2023.
What’s driving the simultaneous increase in supply and lowering of cost? The fact that every car manufacturer is utilising lithium batteries in its electric vehicles. 90% of lithium batteries currently being produced globally are destined for electric vehicles with the final 10% going for storage facilities.
While electric vehicle demand is rising, the divide is expected to reach a ratio closer to 50:50 by 2030. This fact is exceptional when major automotive brands, including BMW and Volkswagen, have estimated that electric vehicles will make up at least 50% of their global sales by the end of the decade.
We’re still expecting the market to level out due to the versatility of battery storage facilities. They can be established virtually anywhere, whether independent from solar panel infrastructure or near a power planet.
The rising demand for electric vehicles means that more battery facilities are required to help borrow recharging stations. In turn, electrical grids have to be upgraded to handle the increase in demand in pinpointed areas.
The Future of Battery Storage Systems
What does the future look like for battery storage systems? The rise in production and lower costs means that more renewable energy projects can include battery storage systems. Utility-scale solar systems in the United States have seen a 12.3% price decline between 2020 and 2021.
The United States – and the United Kingdom – can only achieve net zero by maximising the potential of renewable energy by leveraging battery storage systems. Batteries will play a vital role in promoting energy security and meeting electricity demands.
Lithium-ion batteries are versatile, being used for everything from mobile phones to large-scale plants for storage technology. The green energy market sees battery storage technology as the backbone of its success. It operates by storing surplus energy until times when electricity demands exceed current production.
At Green Switch Capital, we’re using battery storage facilities to help the UK achieve a sustainable, self-sufficient energy market. The UK is unique in the fact that it has the world’s largest installed offshore wind capacity. Utilising battery storage facilities will allow the UK to increase the value of its green energy, reduce costs, and increase production.
The UK government estimates that battery storage systems, combined with low-carbon power, could save the domestic energy system up to £40 billion by 2050. We can only achieve a green energy revolution together. Contact our team today to find out how you can play your part in promoting battery storage systems.