In less than five years from now solar-plus-storage costs could be competitive against gas peaking plants in Australia, according to new analysis from Wood Mackenzie.
According to the analyst company, unsubsidised utility-scale lowest cost of energy (LCoE) for a 4-hour lithium-ion solar-plus-storage system will command a cost premium between 48% and 123% over solar LCoE in 2019, reducing to between 39% and 121% in 2023.
Research analyst Rishab Shrestha said: “By then, solar-plus-storage costs would already be competitive against gas peakers in all the National Electricity Market states of Australia.
“The country’s utility-scale solar-plus-storage LCoE will hover at about 23% above average wholesale electricity price.”
As grid resiliency and renewables intermittency continue to be a challenge in Asia Pacific’s power markets, solar-plus-storage could address these issues particularly as solar and battery costs continue to decline, states the report.
Only Thailand is expected to have a utility-scale solar-plus-storage LCoE below the average wholesale electricity price by 2023, found the analysis.
While the country does not have a wholesale electricity market, industrial power price taken as a proxy is higher compared to other wholesale markets and hence shows competitive solar-plus-storage economics.
The report predicts the average solar-plus-storage LCoE in Asia Pacific to decrease 23% from $133 megawatt hour (MWh) this year to $101/MWh in 2023.
The research also found that unsubsidised commercial and industrial (C&I) solar-plus-storage is expected to be competitive in Australia, India and the Philippines by 2023.
Business models still need to be refined according to market design and future policy options. Safety and fire hazards also need to be looked at carefully.
Once these challenges are addressed solar-plus-storage will be a “great asset for the power grid,” said the report.