Cost-effective energy storage could provide an alternative to conventional gas-fired peaking plants in certain areas within the next five years, according to a new report.

Financial analysis firm Lazard said that, even without subsidies, certain storage technologies are already cost-competitive with certain conventional alternatives, including lithium-ion batteries for certain power grid support applications.

But the report warned that some scenarios envisaged by renewable energy advocates – such as residential energy storage systems paired with solar panels to take consumers “off the grid” – are still very expensive without subsidies.

The findings came as part of Lazard’s first Levelised Cost of Storage Analysis (LCOS), a companion study to its long-running Levelised Cost of Energy Analysis (LCOE), which looks at the cost of producing both conventional and renewable energy.

Falling prices

George Bilicic, Vice Chairman and Global Head of Lazard’s Power, Energy & Infrastructure Group, said: “Although in its formative stages, the energy storage industry appears to be at an inflection point, much like that experienced by the renewable energy industry around the time we created the LCOE study eight years ago.

“Based on our analysis of storage technologies and our experience with LCOE, we expect to see rapid declines in the costs of energy storage.”

Jonathan Mir, Head of Lazard’s North American Power Group, added: “Energy storage system manufacturers and customers told us they expect to achieve significant price decreases over the next five to seven years.

“Falling prices should in turn drive wider deployment, and spur further innovation that could greatly expand the use of energy storage systems, both on and off the power grid, including greater use of renewable energy.”

> Download one of the reports