Utility-scale battery storage costs decreased nearly 70% between 2015 and 2018

Battery storage systems store electricity produced by generators or pulled directly from the electric power grid and redistribute the power later as needed. At the end of 2018, the United States had 869 megawatts (MW) of installed battery power capacity (the maximum amount of power a battery can provide at a given moment) and 1,236 megawatthours (MWh) of battery energy capacity (the total amount of energy that can be stored by a battery).

Battery storage costs vary by region and application. Independent system operators (ISOs) and regional transmission organizations (RTOs) manage the operation of the U.S. electric system. To understand how battery storage costs vary based on a battery unit's location, the U.S. Energy Information Administration (EIA) grouped cost data into regions based on RTOs/ISOs or (such as in the case of California) aggregated different entities in the state to avoid disclosing respondents’ confidential information in areas with fewer battery systems. At the regional level, the 2013 to 2018 average utility-scale battery costs ranged from $1,946/kWh in the PJM Interconnection (PJM), which manages the electric power grid in 13 eastern and midwestern states and the District of Columbia, to as low as $947/kWh in Hawaii.

Although battery storage costs are usually published in terms of energy capacity (cost per kilowatthour), they can also be expressed in terms of power capacity (cost per kilowatt). In power capacity cost terms, short-duration batteries cost less than long-duration batteries. In energy capacity cost terms, long-duration batteries are less expensive.

Source: U.S. Energy Information Administration, Annual Electric Generator Report

Note: Size of circle indicates battery storage capacity. Regions are regional transmission organizations (RTOs), independent system operators (ISOs), and states. California includes both CAISO and LDWP. Other defined as states not in RTOs/ISOs. NYISO/SWPP excluded to protect respondents’ confidential information.

Most of the batteries installed in PJM are used for power applications, such as frequency regulation, which helps maintain the grid’s electric frequency on a second-to-second basis. PJM prioritizes power capabilities that use shorter durations over energy use cases that store large amounts of energy over time. For this reason, the power capacity installed cost is a better indicator of price for value in PJM.

California had the most installed battery capacity of any state in 2019. The average battery storage cost in California was $1,522/kWh. About two-thirds of battery storage capacity in California is used for frequency regulation. Batteries in the state also provide energy-oriented services, including ancillary services, black start services, and easing transmission congestion.

According to EIA data, the United States added 152 MW of battery storage capacity in 2019 and added an additional 301 MW in 2020 through July 2020. EIA also collects data on planned future battery capacity additions. Based on planned capacity additions data reported to EIA by developers and power plant owners as of July 2020, EIA expects battery storage to increase by more than 6,900 MW in the next few years. About 2,300 MW of the 6,900 MW of planned battery storage capacity was reported to EIA between April and June 2020. Large battery storage systems are increasingly paired with renewable energy power plants to increase grid reliability and resilience.