Calculating Energy Storage Cost can be intimidating, but it’s really not all that complicated. Comparing apples to apples (kWhs to kWhs) is the most important thing to look out for. It’s easy to mix up important data as not everyone is defining terms or procedures the same way.

Being able to differentiate between cost and price point is very crucial to progressing the discussion on solar and storage as regards performance and actual value over the project‘s life. Whether assessing lithium ion, lead acid, flow or others, the different combinations of battery chemistries, form factors and architecture can influence the actual cost of energy delivered over the battery’s useful life. Although basing your buying decisions on published forthright per watt hour price points is very common, it is more accurate and reliable to determine the LCOE (Levelised Cost of Energy) over the useable lifetime of the battery to understand the true cost of the battery and Return On Interest (ROI) for customers.

Use the specific energy storage formula below to compute the LCOE in Wh for any type of battery:

Gathering the needed data to fill in the blanks may prove difficult however, you can find these data points on the manufacturer’s specification sheets, except for available capacity.

## Step one: Fill in the basic energy storage cost factors

Price refers to the battery’s published price point irrespective of depth of discharge, stated capacity or other parameters for measuring performance.

Cycles refers to the sum of full cycles (charge and discharge) expected from a battery’s life span at the same time retaining about 80% of its original published capacity, which is the industry‘s standard definition of End Of Life (EOL). Be conscious of the fact that a number of battery manufacturers fail to disclose their battery’s EOL, which makes it difficult to accurately calculate LCOE. Many do not maintain 80% EOL industry standard and permit degradation of about 60% – 70% battery life, which negatively impacts the LCOE.

Depth of discharge, or DOD, is the sum total of the energy that can be pulled from the battery in a single cycle. Generally, 80% DoD is common but sometimes it could be up to 50% low for batteries like lithium cobalt oxide based batteries or lead acid to prevent fire, overheating or voiding the warranty.

Capacity, expressed in WH refers to the total amount of energy that can be stored in the battery at full charge. For instance, a battery discharged at a lower depth lasts longer however, the implication is that the available and useable watt or Amp hours (Ah) of the battery life may reduce. Consequently, the nameplate capacity and the available capacity (number of Wh) may differ depending on the depth of discharge. Just in case the DoD is not given on the spec sheet of the product, you can either contact the manufacturer directly or perform the calculation below:

Available capacity in kWh= kWh x DoD

For example, a 3.4-kWh (67 Ah) battery with 100% depth of discharge has the capacity to deliver 3.4 kWh or 67 Ah of power. A 3.4 kWh (67 Ah) lead acid battery could be destroyed if discharged to 100%, and so should be limited to just about 50% (3.4 x 0.5 = 1.7 kWh). What this example demonstrates is that the available energy in any installation has significant impact on DOD, outside the nameplate or publicized capacity.

To cushion the effect of Wh that was lost due to shallow depth discharge, we need more batteries and, larger installations add up to the difference. Providing the same amount of power and energy than batteries that do not require shallow discharging, more space and weight per pound are required.

Efficiency rate shows the amount of energy that is lost or maintained in the charge and discharge cycle, or the amount of energy that can be stored in the battery effectively and pulled back out for use. The greater the efficiency, the lower the watt wasted; the smaller and lighter the batteries, the smaller the installations and the more space and weight is used effectively.

Techniques used by some battery manufacturers to safeguard against overheating and thermal runaway include reduced rates of efficiency, lower discharge depths and longer charge and discharge times (more than two hours). How efficient the system is as a whole can reduce significantly, leaving a little usable energy to counterbalance electrical loads in an installation.

Below is an example illustrating how these performance metrics impact the LCOE of a battery with a:

Price point = $2,550

Nameplate and usable capacity = 3.4 kWh

Roundtrip efficiency rate = 98%

DoD = 80%

Cycles = Over 10,000

Therefore, the LCOE equals $0.095 cents per kWh which is less than the nation‘s standard electricity rate of $0.12/kWh for residents. Also, about 34MWh can be got from this type of battery, more than its useful warranted life by the time it arrives its 80% EOL, and most likely with many more years at a reduced capacity beyond the 80% EOL.

## Step two: Ancillary energy storage costs should be factored in

Besides the above analysis of LCOE, which is dependent on the battery‘s performance profile, there’s need for contractors to also include other ancillary costs of the installation that erode a lower up-front price point, as well as the LCOE. The usual ancillary costs may comprise:

The valuable project space the batteries are going to occupy

In terms of weight, what will be the cost of shipping?

If you‘ll need to pay for a forklift or other equipment for battery installation

The kind of on-going maintenance that will be required such as:

Replacement cost due to inefficiencies and shorter cycle life

Construction to support larger systems

Containment and extra space for ventilation and setback requirements

External HVAC equipment to maintain optimal ambient temperature

These are important facts you must consider even though these costs may be difficult to calculate. To calculate the true energy storage costs (as against up-front price point) and benefits of any battery system, calculate the obtainable lifetime hours in watt and include the other costs connected with setting up operation and replacement eventually. Carefully evaluate your options and calculate LCOE to get the actual costs and benefits of any storage system. It will help you and your customers save costs on projects.