• Balance-of-system costs seen sliding below $400 a kilowatt
  • Storage systems currently cost about $670 a kilowatt

The cost of installing energy-storage systems is expected to decline 41 percent over the next five years as key components get cheaper, according to a report by GTM Research.

Balance-of-system costs, including hardware, labor and customer acquisition, will fall below $400 a kilowatt by 2020, from an average of $670 per kilowatt now for grid-scale storage systems, GTM said in a report released Monday.

Energy-storage technologies, notably batteries, are gaining in popularity as costs decline and utilities incorporate more wind and solar farms onto their grids. Storage is seen as a key complement to clean-energy assets that only produce power when the sun is shining or the wind is blowing. Hardware, and especially inverters, will see the biggest price-decline, according to Luis Ortiz, a consultant and author of the report.

“It’s the most complicated piece of equipment outside of the battery,” Ortiz said in an interview Monday. “It’s kind of natural that this piece of highly specialized equipment would be the second most-expensive piece.”

Inverters convert the alternating-current electricity that moves across the grid into direct current. The components used for storage systems are more complicated and more expensive than those used for solar because power moves in both directions as batteries are charged and drained.

Utilities including Edison International’s Southern California Edison are signing contracts for storage systems as the technology becomes more affordable. Costs will decline further as the systems improve and production volume increases, following the same pattern as other industries. 

“We’ve seen it happen with solar,” Ortiz said. “It’s the learning curve.”

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