Outlook on storage cost for fully

installed systems through 2025

September 2017

CONFIDENTIAL AND PROPRIETARY

Any use of this material without specific permission of McKinsey & Company is strictly prohibited
Executive summary
Technology innovation and global scale in battery storage have driven down battery pack costs faster than all forecasts, accelerating capacity growth
▪ Over 2012-2015, battery storage costs decreased at ~25% p.a. while capacity installation grew at ~30% p.a.
As battery pack costs have declined, balance of system costs (e.g., non-battery hardware, EPC, soft-cost) now represent the majority of fully installed costs
(~60% in 2017)
▪ In 2017, hardware represents the largest BOS cost driver ~$190/kW, followed by soft costs ~$90/kW and EPC costs ~$70/kW

Recent BOS cost reductions have outperformed analyst projections, reaching ~$350/kW for utility-scale in 2017, below prior estimates for 2020 costs

Looking ahead, energy storage capacity is expected to grow at ~35% p.a. through 2024, with battery storage playing a key role
▪ Global energy storage capacity is expected to grow from ~10 TWh in 2017 to ~80 TWh in 2024
▪ Lithium-ion has been the preferred technology to date (used in ~90% of utility-scale projects), and is expected to remain a key technology over the next decade

By 2025, BOS costs for utility-scale applications are projected to decrease by ~55% down to ~$150 USD/kW, driven by continued advances in scale and
improvements in technology and system engineering
▪ Hardware costs are expected to go from ~$190/kW to ~$80/kW, benefiting from design & technology improvements as incumbent players increasingly optimize
their operations through system-engineering levers and from additional price pressure brought by new entrant low-cost hardware manufacturers
▪ Soft costs are projected to experience a sharp decline from ~$90/kW down to ~$35/kW as utilities define the optimal use of storage technologies in their portfolio,
thus streamlining procurement and development
▪ EPC costs are expected to follow a steady trajectory from ~$70/kW down to ~$40/kW as more efficient, storage-specialized EPC players emerge and design
standardization simplify labor-intensive, on-site operations

Utility-scale storage systems are the most economic. We estimate a ~50% cost premium for residential systems and a ~30% premium for commercial systems

By 2050, fully installed system costs could decline by ~80% to below $100/kWh (as low as 65-90 USD/kWh) for utility-scale and residential systems, through
material, chemistry and manufacturing innovation

1 Balance of system (BOS) costs include hardware costs beyond battery pack, soft costs, and EPC related expenses
2 O.Schmidt, “The future cost of electrical energy storage based on experience rates” (2017);
McKinsey & Company 2
Source: McKinsey
Contents

▪ Battery storage introduction

▪ Detailed utility-scale cost baseline and short-term projection

▪ Perspective across utility-scale, commercial & industrial

and residential applications
Strong investment and technology innovation have been driving battery storage costs down
significantly (-24% p.a.), leading to significant growth in installations (30% p.a. in the US)
Utility-scale storage total system cost, Cumulative installed battery storage
$/kWh, E/P = 1hr capacity in the U.S., kW

-24% p.a. +30% p.a.

2,100 550

Balance of system
1,550
costs1
939 250

670

Battery pack2 550

269

2012 2015 2012 2015

1 Balance of system (BOS) costs include Hardware costs, Soft costs and EPC related expenses 2 Battery pack costs including cell, BMS and pack for lithium-ion batteries
SOURCE: GTM Research (2016); McKinsey sanitized client projects McKinsey & Company 4
By 2024, some 81GWh of energy storage will be installed globally – Lithium-ion is expected to remain
the dominant battery storage technology
Energy storage capacity projections by applications, GWh Energy storage capacity projections by geography, GWh

RoW
90 90 Latin America
81 Other 81 Canada
80 Behind-the-meter: 80
US
C&I demand charges
70 70 SSA
65 65
MENA
60 60 Europe: Other
Behind-the-meter:
+34% p.a. 51 PV + storage +34% p.a. 51 Italy
50 50
UK
40 39 40 39 Germany
APAC: Other
30 29 30 29
Distribution level India
21 Transmission level 20 South Korea
20 20
15 Renewable energy integration 15 Australia
11 11
10 8 Peaking capacity 10 8 Japan
6 6
Short duration balancing China
0 0
2015 16 17 18 19 20 21 22 23 2024 2015 16 17 18 19 20 21 22 23 2024

▪ Forecasted capacity likely to be provided by a range of storage technologies (e.g., Li-Ion, Lead acid, flow batteries)
▪ However, Li-Ion has been the preferred technology to date (used in ~90% of utility-scale projects today) and is
expected to remain a key technology over this period
▪ Behind-the-meter PV plus storage goes from being a niche application in 2016, to making up 64% of capacity in 2024
SOURCE: Bloomberg New Energy Finance (2016) McKinsey & Company 5
Total system costs ($ per kWh) is driven by the discharge time (hours of energy to power)

Independent variables driving total system costs in $/kWh

Focus of this document Independent variable
Assumption Rationale
▪ BOS costs scale with ▪ Hardware costs, driven by inverter costs, must meet
throughput power (kW) design requirements in terms of power rating
BOS,
$/kW ▪ EPC and soft costs are primarily related to project
complexity, for which power rating can be used a
proxy1
BOS,
$/kWh
▪ The DC power source, i.e. the ▪ Pure design rationale – frequency regulation
Discharge battery pack, costs typically applications typically tend to have discharge time <1
time scale with storage capacity (e.g., 0.5hr) and systems designed for peak
Total system E/P, h (kWh) replacement or distribution substation typically have
costs, discharge time >1hr (e.g., 4hrs)
$/kWh

▪ Application dependent ▪ Battery pack costs are primarily driven by the cell
chemistry and material requirements which
Battery Pack, increase as storage capacity increases
$/kWh

Total system costs for projects with identical BOS and battery pack costs (on a
$/kW and $/kWh respectively) ultimately depend on the discharge time E/P

1 However, individual projects may vary on a project by project basis, e.g., EPC costs may vary depending on site location and complexity for projects of similar power rating
SOURCE: GTM Research (2016) McKinsey & Company 6
Contents

▪ Battery storage introduction

▪ Detailed utility-scale cost baseline and short-term projection

▪ Perspective across utility-scale, commercial & industrial

and residential applications
UTILITY-SCALE

Utility-scale total system costs could reach ~$270/kWh by 2025 for a 1hr system, with battery pack
costs <$115/kWh
Utility-scale total system cost for a 1hr system,
$/kWh for a typical 1.0 MW system with discharge time E/P = 1hr

2,100
2012-17 2017-20 2020-25 Drivers of cost compression by cost category
EPC 278 CAGR CAGR CAGR
Soft costs 393 ▪ EPC: Driven by (i) more efficient, storage-
939 -23% -12% -8% specialized EPC players; (ii) design
standardization simplifying labor-intensive on-
BOS 120 site operations
Hardware 879 -24% -8% -6% ▪ Soft costs: Driven by streamlined
170 interactions between market players as
utilities figure out the best use of storage
586 technologies in their portfolio
70
-54%
-26% -14% -9% ▪ Hardware: Driven by design & technology
380 88 improvements via systematic system-
403
54 engineering approach and additional price
193 56 270 pressure brought by new entrant low-cost
-26% -12% -9%
Battery pack1,2 550 40 manufacturers
131 35
83 ▪ Battery pack: Driven by global economies of
269 236 scale, manufacturing efficiencies, and value
162 113 -16% -12% -7% chain integration

20123 2015 2017 2020E 2025E

1 Including cell, BMS and pack

2 Battery pack costs from McKinsey Battery Model (2017)
3 2012 BOS breakdown assuming same % as split as 2015 (no breakdown available)
SOURCE: McKinsey Battery Model (2017); Expert interviews (2017); GTM Research (2016); McKinsey sanitized client projects McKinsey & Company 8
Utility-scale storage costs for a 1hr system are driven primarily by battery pack costs (40% of cost)
followed by BOS elements: inverters (18%), containerization & climate control (12%) and EPC (12%)
EPC Soft costs Hardware Battery xx% % of total cost stack

2017 utility-scale total system cost for a 1hr system,

$/kWh for a typical 1.0 MW system with discharge time E/P = 1hr
Definition
All physical costs and technical expenses related to project engineering work, 586
Engineering,
Procurement and site preparation, transportation as well as construction and commissioning 12%
70
Construction (EPC)
22 4%
Cost related to grid interconnection requirements such as regulatory 22
Interconnection 4%
expenses or filling expenses to transmission organizations
44 7%
All SG&A costs not part of EPC, Interconnection or Customer 18 3%
Overhead, tax and
duties acquisition costs 70 12%

All expenses related to engaging commercial customers and preparing,

BOS Customer acquisition evaluating and submitting customer bids 18%
105

SCADA/controller and Costs related to the development and manufacturing of additional hardware
controls used to control and coordinate system operations

Containerization and Costs related to the development and manufacturing of the housing and
climate control cooling structure for the storage system 236 40%
Costs related to the development and manufacturing of the bidirectional
Inverter inverter

All costs related to the development and manufacturing of the battery pack,
Battery pack1 McK estimation
BMS and cells
(2017)2

1 Including cell, BMS and pack 2 Battery pack costs from McKinsey Battery Model (2017)
SOURCE: GTM Research (2015); McKinsey Battery Model (2017); Expert interviews (2017); “Lazard’s Levelized Cost of Storage – Version 2.0” (2016) McKinsey & Company 9
UTILITY-SCALE
EPC Soft costs

Labor and material each account for a roughly equal share of the costs of storage Hardware Battery pack

2017 utility-scale total system cost for a 1hr system,

$/kWh for a typical 1.0 MW system with discharge time E/P = 1hr

Cost categories by component type Cost categories by cost type

Engineering Overhead, tax and duties
~590 ~590
Transportation and shipping Marketing and advertising
EPC 1% 1% Fixed costs 4%
1%
3% Construction, installation and commissioning - material 1% Battery pack - fixed costs
2%
~12% 4% Construction, installation and commissioning - labor ~13% 9% Containerization and climate control - manufacturing (non-labor)

Soft costs 4% Site preparation and logistics - material 2% Inverter - manufacturing (non-labor)
Manufacturing–
4% 3%
1% Site preparation and logistics - labor non labor Battery pack - manufacturing (non-labor)
1% 5%
~15% ~10% 1%
5% Interconnection 2% Construction, installation and commissioning - material
Material
3% Overhead, tax and duties Site preparation and logistics - material
Hardware 8%
2%
Bid closing Containerization and climate control - material
8% 5%
Marketing and advertising Inverter - material
1%
3% Bid preparation and customer engagement Battery pack - material
5%
SCADA/controller and controls Engineering
~33% 22%
Containerization and climate control - manufacturing (non-labor) Transportation and shipping
10%
Containerization and climate control - material ~38% Construction, installation and commissioning - labor
Battery pack1,2 Containerization and climate control - labor 1% 1% Site preparation and logistics - labor
9% Labor 3%
Inverter - manufacturing (non-labor) 4% Interconnection
5%
Inverter - material 4% Bid closing
1%
Inverter - labor 5% Bid preparation and customer engagement
Battery pack - fixed costs 3% SCADA/controller and controls
22% 1%
Battery pack - manufacturing (non-labor) Containerization and climate control - labor
10%
Battery pack - material Inverter - labor

~40% 5% Battery pack - labor ~38% 5% Battery pack - labor

1 Including cell, BMS and pack 2 Battery pack costs from McKinsey Battery Model (2017)
SOURCE: McKinsey Battery Model (2017); Expert interviews (2017) McKinsey & Company 10
UTILITY-SCALE – BOS DEEP-DIVE

BOS deep-dive: Battery storage experts believe BOS costs reduction will be driven by scale and
learning effects as the industry matures
What we have heard from expert interviews at market leading storage companies

“There is currently very limited
overlap between storage and solar
inverter manufacturers. We should
witness an increasing overlap over
the coming years as storage
becomes an attractive growth
opportunity, thus driving economies
Scale effects of scale.
– Former Executive Vice President &
CTO
“Utilities are still being “educated” on energy storage “Similar to the wind industry, we
technologies. It is a complex technology for them to understand may also see the emergence of
as it can provide multiple applications. This “education” 3-4 specialized storage EPC
primarily happens during the tendering process, resulting in players. This will allow EPC
long and costly tendering phases.” players to benefit from
economies of scale but also
– Vice President, Business Development, US and Canada develop and implement best
practices more efficiently.”
“Many utilities are still performing their “first” storage project – I
– Former Vice President of
have carried out multiple projects with the same utility and
Technology
we were able to carry out EPC work twice faster during the
2nd project.”

– Former Senior Vice President of Operations

“The solar industry has managed to strip out all non-
necessary functionalities from the inverter – the
Design &
storage industry is not there yet and this represents
technology
significant potential for cost reduction.”
improvements
– Former Executive Vice President & CTO
“Utilities are now fighting to find efficient design, including on the
container side. Some just put in huge AC systems which are the most
expensive thermal management systems, largely over-designed. A more
systematic system engineering design approach should drive these costs
down dramatically, up to 50%.”
– Chief Technology Officer

“In contrast to the solar industry, low-cost manufacturers have not yet turned their (full) attention to the storage market. In fact,
Low-cost
developing storage is not the current priority of their local utilities compared to investing in grid infrastructure. Once they do however,
player
potentially 5-10y from now, they will put additional cost pressure in the global storage market.”
competition
– Former Director of Engineering Services
SOURCE: Expert interviews (2017) McKinsey & Company 11
UTILITY-SCALE – BOS DEEP-DIVE

BOS deep-dive: Scale effects, design & technology improvements as well as low-cost player
Cost reduction driver not applicable
competition will drive BOS cost reductions across cost segments and categories in cost segment x category

Key trends impacting future BOS cost trajectory over 2017-25

Cost segments Cost reduction drivers Hardware Soft costs EPC

▪ Covered in labor & manufacturing segments ▪ Scale effect via increased number of projects ▪ Covered in labor segment
Fixed costs Scale effects

▪ Best practice implementation driven by player

Scale effects consolidation and increasing overlap btw
storage and solar manufacturers

Manu- Design & technology

▪ New technology introduction (e.g. 3 phase
inverters)
facturing improvements
▪ “Stripping” of unnecessary functionalities
▪ Increased global presence of low cost
Low-cost player hardware manufacturers once local storage
competition market achieves critical scale
▪ Scale effects increasing purchasing power of ▪ Scale effect increasing
Scale effects component manufacturers purchasing power of EPC
contractors
Material ▪ System approach and design “rightsizing” ▪ On-site material consumption
Design & technology (e.g., scale-down of cooling system) reduction (e.g., concrete,
improvements ▪ Introduction of new, efficient material (e.g., electrical wiring)
silicon carbide for inverters)
▪ Economies of scale driven by player ▪ Utility pull for faster, more efficient tendering ▪ Emergence of selected number of
Scale effects consolidation phase storage specialized EPC players
▪ Pairing with partners in integrated projects

Design & technology

▪ Reduced need for labor/engineering time to ▪ Streamlining of interconnection impact study ▪ Reduced complexity of labor
Labor adjust “blueprint” design requirements intensive on-site operations
improvements
▪ Simplified tendering preparation

Low-cost player
▪ Increased global presence of low cost ▪ Marginal impact ▪ Marginal impact
hardware manufacturers once local storage
competition
market achieves critical scale

SOURCE: Expert interviews (2017) McKinsey & Company 12

UTILITY-SCALE

BOS deep-dive: Fixed costs, manufacturing, material and labor costs are all expected to decline by at
least ~50% by 2025 Cost reduction driver not applicable in cost segment x category

Cost reduction potential across segments, cost reduction drivers and cost categories by 2025

Cost segment
Cost segments Cost reduction drivers Hardware Soft costs EPC Rationale reduction over 2017-251
Covered in ▪ ~60% ▪ The rapid uptake of storage projects would allow players to significantly spread their fixed
Fixed costs Scale effects manufacutr- costs over multiple projects, thus decreasing the cost/project ~60%
ing

▪ ~25% ▪ Sale effects would drive most of manufacturing efficiency via best practice implementation,
Scale effects boosted by consolidation/specialization of hardware manufacturers

Manu- Design and technology ▪ ~20% ▪ New technology introduction and higher efficiency machines would also decrease
maintenance and energy consumption ~50%
facturing improvements

Low-cost player ▪ ~10% ▪ Increased competition from players with access to low-cost manufacturing capabilities would
competition drive additional cost pressure but its effect would be lower than the first two levers

Scale effects
▪ 10-12% ▪ ~10% ▪ Scale effects would provide additional purchasing power to Hardware and EPC players but
this lever would be of lower importance compared to design and technology improvements
Material ~55%
Design and technology
▪ 40-50% ▪ ~35% ▪ Most of hardware components are still specialized products but industry standardization
would allow design optimization to crystalize around these newly established standards
improvements ▪ There is more potential in Hardware as material costs in EPC are limited to basic material

▪ ~25% ▪ ~40% ▪ ~30% ▪ Economies of scale and industry consolidation are the main drivers within Labor across cost
categories relative to the other levers
Scale effects
▪ Soft costs are primarily driven by Labor costs and its reduction potential within this segment is
therefore greater

Labor Design and technology ▪ ~20% ▪ ~20% ▪ ~10% ▪ Design standardization will also improve Labor costs primarily by reducing the number of man ~50%
improvements hours required to develop, adapt and implement “blueprint” designs

Low-cost player ▪ ~10% ▪ Marginal ▪ Marginal ▪ Low-cost player competition would only represent a minor proportion of the overall hardware
impact impact improvement over 2018-2025
competition

1 Weighted average across cost categories

SOURCE: Expert interviews (2017) McKinsey & Company 13
UTILITY-SCALE – BOS DEEP-DIVE

BOS deep-dive: By 2025, BOS costs are expected to decrease by ~55% down to ~$150/kW, driven by
both scale effects and design & technology improvements
Utility-scale BOS storage cost evolution projection,
$/kW for a typical 1.0 MW system

EPC Soft costs Hardware

350 350 96
19 xx% Cost reduction driver relative contribution
Fixed costs 28
Manufacturing 30 70 40

37 84 -55% 2018-25 CAGR

Material 97 11
88 13
Total -10% Total -10%
61
12 -11% -7%
157 157 Fixed costs EPC
12
11
40 13
Manufacturing -10% Soft costs -11%
44
Labor 195 193 35
Material -9% Hardware -10%

83 89 -9%
Labor

Design & Low-cost

2017 Baseline Scale technology player 2025E
effects improve- compete-
ments tion

~50% ~45% ~5%

SOURCE: Expert interviews (2017) McKinsey & Company 14

UTILITY-SCALE – BATTERY PACK

Scale effects combined with technology improvements are expected to bring stationary battery pack
costs down nearly 60% to ~$110/kWh by 2025
$/kWh, stationary1 battery pack cost, McKinsey Li-ion Battery Cost Model results

255-260

76

-57%
20 160
20

29
110

Main drivers of scale effect

Main drivers of technology effect2
▪ Spread of SG&A and R&D costs
▪ Lower capex costs ▪ Energy density increase (impact on direct
material and fixed costs)
▪ Greater purchasing power
▪ Manufacturing improvements (automation
▪ Manufacturing efficiency not yet captured through scale)
▪ Value chain integration ▪ Mining efficiency
▪ Design efficiency

2016 Scale effect Technology 2020 Scale effect Technology 2025

effect effect

1 Assuming top competitors in ESS will also have sales in EV to capture scale effect
2 Not double counted in scale effect
SOURCE : Expert interviews, McKinsey Battery Cost Model (2017) McKinsey & Company 15
UTILITY-SCALE

Total storage costs will decline faster than battery pack costs to 2025, given the steeper cost decline
in BOS
McKinsey battery cost model (ESS, 2017) Utility-scale total system costs incl. BOS for 1hr system (Expert interviews, 2017) 2010 outlook 2015/2016 outlook

Li-ion battery pack and total utility-scale system cost trajectories

Source of insight for pack cost, $/kWh

Capex, 2020 estimates 2025 estimates 2030 estimates

$/kWh
190 110-115 50-901
800
170 133-140 N/A
700 150 N/A N/A
586 120 100 N/A
600
100-120 78-85 N/A
500
402
400
Utility-scale total system costs
300 256 270 incl. BOS for 1hr system
236

200 190
-52%
162 135
100 110 113 90 Battery
70
50 pack only
0
2010 15 20 25 2030
1 BNEF-McKinsey model
SOURCE: BNEF; SNE research; Navigant; Avicenne Energy; Berstein; McKinsey Battery Model (2017); Expert interviews (2017) McKinsey & Company 16
Contents

▪ Battery storage introduction

▪ Detailed utility-scale cost baseline and short-term projection

▪ Perspective across utility-scale, commercial & industrial

and residential applications
UTILITY-SCALE, COMMERCIAL & INDUSTRIAL AND RESIDENTIAL

BOS costs for commercial & industrial and residential segments tend to be higher than utility-scale
costs on a $/kW basis, whereas battery pack costs on a $/kWh are similar
Segment characteristics

Typical power Typical storage

rating, capacity, Key cost differences across segments
Segment Typical application MW MWh
▪ Wholesale-energy arbitrage 1-100 1-800 ▪ BOS costs primarily scale with power but tend to be
higher for behind-the-meter (BTM) applications on a
▪ Frequency regulation $/kW basis
▪ Renewable energy firming
▪ Black start/voltage support – Hardware: inverters are typically made of “power
blocks” between 0.1-1.0 MW – the scaling of hardware
Utility-scale
▪ Load following costs with power for systems below 0.1 MW is
▪ Reserve capacity weakened, resulting in hardware costs being typically
▪ Local capacity higher on a $/kW basis
▪ Transmission and distribution grid investment – Soft costs: economies of scale achieved on large-
deferral scale system are typically more difficult to capture for
BTM applications, thus increasing costs a $/kW basis
– EPC: BTM applications do not share electrical
expenses required to integrate the system with the grid
Commercial
▪ Commercial and industrial demand charge 0.1-0.5 0.2-2
but instead have expenses related to stepping up the
reduction
& Industrial project’s AC voltage for interconnection
(C&I) ▪ Self-consumption
▪ Power reliability ▪ Battery pack costs are similar on a $/kWh basis –
battery packs for most common storage applications are
▪ Power quality approaching global commoditization, and are often
0.005 0.01 deployed on modular basis across a range of system sizes
Residential

SOURCE: GTM Research (2016) McKinsey & Company 18

UTILITY-SCALE, COMMERCIAL & INDUSTRIAL AND RESIDENTIAL

By 2050, storage costs could decrease by ~80% compared to the 2017 baseline
DETAILED ASSUMPTIONS IN APPENDIX

Battery component cost projection over 2017-2050 across segments

Utility-scale Commercial & Industrial Residential Same across three segments Assumptions used to derive full 2017-50
projections across segments
2017-50 2018-25 2026-50 Utility-scale 2025-50
525 Reduction CAGR CAGR
▪ 2050 CAGRs set to -2.5% for the battery pack
and hardware costs, -1.0% for EPC and soft
-79% -9.5% -2.9%
350 363 354 costs
BOS,
$/kW 240 249 -79% -9.6% -3.0% ▪ CAGRs follow an exponential-like decrease
162 224 over 2026-50 starting from their average 2021-
157 -83% -10.1% -3.6% 25 value
117
91 93 75 76 90
Residential and commercial & industrial (C&I)
▪ The BOS component of both segments is
scaled up from utility-scale based on segment
236 sample power rating1 (battery pack identical
across segments)

Battery
162 ▪ In 2017, residential BOS costs (on a $/kW
pack, -81% -8.8% -3.6% basis) are 1.5x greater than utility-scale, C&I
113
$/kWh cost are 1.04x greater
60 ▪ By 2050, these values are damped to 1.2x and
46
1.02x for residential and C&I respectively

2017 2020 2025 2040 2050

1 Utility-scale: 1000 kW, Commercial & Industrial: 100kW, Residential: 10kW
SOURCE: McKinsey Battery Model (2017); Expert interviews (2017) McKinsey & Company 19
UTILITY-SCALE, COMMERCIAL & INDUSTRIAL AND RESIDENTIAL

Using discharge time E/P of 4hrs for utility-scale systems and 2hrs for C&I and residential systems,
total system costs could reach ~$150-225/kWh by 2025 and ~$60-90/kWh by 2050
Total system cost projection over 2017-2050

$/kWh Utility-scale (4hrs) Commercial & Industrial (2hrs) Residential (2hrs) Utility-scale (1hr)
586
2017-50 2018-25 2026-50
4982 Reduction CAGR CAGR

-80% -9.0% -3.4%

417
403
Discharge time E/P
assumptions1 -80% -9.1% -3.3%
339
323 -82% -9.4% -3.6%
▪ Utility-scale: 4hr 287
systems 270

▪ Commercial & 222 225

industrial (C&I) and 194
residential: 2hr 152 151
systems 119 121
107
83 84 91
64
Recent external research by O.Schmidt
(2017):
Ratio vs. utility- ▪ Average raw material cost floor across
scale (4hrs) 1.3 1.5 1.3 1.5 1.3 1.5 1.3 1.4 1.3 1.4 all ESS technologies ~$100/kWh
▪ Lowest price projection for stationary
2017 2020 2025 2040 2050 applications of $75/kWh by 2040
involves a shift from Li-ion
1 Similar to GEP Power Model assumptions technology (e.g., to redox-flow
2 Tesla Powerwall ~$450/kWh; quote for a total Powerwall equipment (incl. supporting hardware) of USD 6,200 for a 14 kWh battery technology)
SOURCE: McKinsey Battery Model (2017); Expert interviews (2017); Tesla website; “The future cost of electrical energy storage based on experience rates” (2017) McKinsey & Company 20