Summary: Based on life cycle cost theory, the costs and cost-per-kilowatt-hour of various energy storage devices were calculated. The study shows that pumped hydropower stations have the lowest cost-per-kilowatt-hour, followed by compressed air energy storage. Battery-based energy storage has the highest cost-per-kilowatt-hour. The order of cost-per-kilowatt-hour for battery-based energy storage is, from lowest to highest, lithium-ion batteries, flow batteries, sodium-sulfur batteries, and lead-acid batteries. Lithium-ion battery costs have declined rapidly in recent years. If lithium-ion battery costs continue to decline, preliminary estimates suggest that annual energy storage utilization hours could reach over 1,500 hours, with a cost-per-kilowatt-hour (COE) below 0.50 yuan/kW-h.

The analysis is as follows:

The COE of several typical energy storage power stations was calculated, and the economic feasibility of various energy storage devices was compared. The energy storage devices considered included pumped hydropower stations, compressed air energy storage, lead-acid batteries, sodium-sulfur batteries, flow batteries, and lithium-ion batteries. Their basic parameters are shown in Table 1.



Based on the currently more mature pumped storage power station, the energy storage installed capacity is 1200MW, the energy storage duration is 6h, and the battery life is temporarily calculated based on the energy storage discharge depth of 80%, 300 cycles per year, and the number of cycles of liquid flow batteries is more than 12,000 times, which is calculated based on 20 years.

The investment of energy storage power stations is shown in Table 2, and the results of the energy storage power station cost per kilowatt-hour are shown in Table 3 and Figure 1. It can be seen that:

(1) According to the above parameters, the cost per kilowatt-hour of pumped storage power stations is the lowest, followed by compressed air, and the cost per kilowatt-hour of battery energy storage is the highest. Among them, the cost per kilowatt-hour of battery energy storage is lithium-ion battery, liquid flow battery, sodium sulfur battery and lead-acid battery from low to high. (2) If the energy storage utilization hours of the energy storage power station reaches 1000h, the energy storage cost per kWh of the pumped storage power station is less than 1 yuan/(kW·h), about 0.93 yuan/(kW·h), the energy storage cost per kWh of the compressed air energy storage is about 1.85 yuan/(kW·h), and the energy storage cost per kWh of the lithium-ion battery is about 2.04 yuan/(kW·h); if the energy storage utilization hours of the energy storage power station reaches 2000h, the energy storage cost per kWh of the pumped storage power station is less than 0.5 yuan/(kW·h), about 0.46 yuan/(kW·h), the energy storage cost per kWh of the compressed air energy storage is less than 1 yuan/(kW·h), about 0.92 yuan/(kW·h), and the energy storage cost per kWh of the lithium-ion battery is reduced to about 1.02 yuan/(kW·h). 



A sensitivity analysis of the relevant parameters of other energy storage types except pumped storage power stations was conducted. If the unit investment of compressed air is reduced to the same level as that of pumped storage power stations in the future, the power conversion efficiency is increased to 65%; the unit investment of battery energy storage is reduced by 50%, and the cycle life of lithium-ion batteries reaches 5,000 times, the cost per kilowatt-hour of energy storage power stations is calculated as shown in Table 4 and Figure 2. It can be seen that:

(1) According to the above parameters, the cost per kilowatt-hour of pumped storage power stations and compressed air is basically the same. The main reason is that the shorter construction period of compressed air leads to lower annual costs. The cost per kilowatt-hour of battery energy storage is the highest. Among them, the cost per kilowatt-hour of battery energy storage is lithium-ion battery, flow battery, sodium sulfur battery and lead-acid battery from low to high. (2) If the energy storage utilization hours of the energy storage power station reaches 1000h, the cost of compressed air energy storage per kWh is less than 1 yuan/(kW·h), about 0.88 yuan/(kW·h), and the cost of lithium-ion battery energy storage per kWh is about 0.79 yuan/(kW·h); if the energy storage utilization hours of the energy storage power station reaches 2000h, the cost of compressed air energy storage per kWh is less than 0.5 yuan/(kW·h), about 0.44 yuan/(kW·h), and the cost of lithium-ion battery energy storage per kWh is less than 0.5 yuan/(kW·h), about 0.39 yuan/(kW·h). It should be noted that energy storage is applied in different scenarios and in different ways. For the user-side energy storage that is currently widely used, since the load curve is basically fixed and the energy storage operation mode is clear, it can be operated according to basically the same strategy every day, and the utilization efficiency is relatively high. The annual utilization hours of energy storage in some eastern regions are around 2,000 hours, and the cost per kilowatt-hour of energy storage is relatively low. In addition, the peak-valley electricity price difference is relatively high, so there is room for profit in energy storage; but for the application of energy storage on the power generation side and the reduction of new energy power curtailment, since power curtailment does not occur every day and the amount of power curtailment is also different, the interest rate of energy storage applied in this scenario is significantly lower. Preliminary calculations show that the annual utilization hours of energy storage applications in the northwest region are around 1,000 hours, so the cost per kilowatt-hour of energy storage is significantly higher, and the energy storage profit model needs further research.