Abstract: Energy storage will play a pivotal role in the next generation power grid and is the key enabler for renewable energy. Its potential applications widely spread within the domain of electricity generation, transmission, distribution and power end user. We briefly summarized and analyzed the energy storage market economics in this paper, focusing on the key bottleneck of the energy storage adoption, i.e., cost. The cost target of general energy storage product is identified, and viable cost reduction pathways are thoroughly analyzed, with the historical development of PV product as the reference. We concluded that the energy storage market is expecting high growth with high economical and societal value with large challenges, especially in China. The cost reduction remains the critical cornerstone in this challenge.

Key words: energy storage market, energy storage economics, scale economies effect, energy storage cost analysis, levelized cost of energy, grid parity, power value chain, cost target