‘Socket parity’ just around the corner for solar-plus-storage in many countries: Citi

Solar power could reach “socket parity” in some countries as soon as 2020, and utility-scale grid parity in large parts of the world by 2030, according to a major new report.

Investment bank Citigroup has predicted that the return on investment for solar and battery storage by 2020 will beat the payback on solar-only systems now, leaving fossil fuel generators and utility business models terminally challenged.

The report’s forecasts are based on the assumption that battery storage costs will halve over the next 5, 6 or 7 years to around $230/KWh, making storage financially attractive enough to increase manufacturing and further accelerate the fall in battery storage system costs towards $150/KWh. This, in turn, was expected to eliminate the need for subsidies, delivering paybacks for solar plus storage of around 6-7 years in Australia and some European countries.

And solar plus storage would also become attractive at grid level in large parts of the world by 2030, meaning that network operators would be installing them in significant numbers.

Citigroup estimates a 240GW global market for energy storage worth more than $400 billion by that date. That is excluding car batteries.

It will, of course, have dramatic, and even terminal impacts on incumbent parts of the global energy system.

A system that had been unable to store its commodity so had to build excess capacity, will now be able to calibrate supply and demand. The system is, quite literally, being turned on its head.

The Citigroup report is titled Energy Darwinism II, and is a follow-up to its original Energy Darwinism report released last year – with an Australian version this year – which discussed the potential impact of socket parity – where sourcing energy from rooftop solar in cheaper than the grid – on incumbent utilities.

Citigroup said then that the global energy mix was shifting more rapidly than was widely appreciated, and that this had major implications for generators, utilities, and consumers, and for exporters of fossil fuels, like Australia.

Citigroup’s new report, subtitled Energy Storage: Game Changer for Utilities, Tech & Commodities is an update to take into account new forecasts on the course of battery and other forms of storage, and predicts even more dramatic impacts.

It follows similar reports from other leading investment banks, such as UBS, which in August suggested that the payback for solar plus storage could be as low as 6 years by the end of the decade.

This week, the HSBC analysis said both consumers and grid operators will look to battery and other storage technologies.

Top image via Wikipedia

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Giles Parkinson

Giles Parkinson regularly contributes unique content to Solar Choice News. Giles is the founder and editor of clean energy industry news service RenewEconomy. He is a journalist of 30 years experience, a former Business Editor and Deputy Editor of the Financial Review, a columnist for The Bulletin magazine and The Australian, and the founding editor of Climate Spectator.
Giles Parkinson