The costs of energy storage systems (ESS) have been declining rapidly, creating an opportunity for the widespread adoption of renewable energy in South Korea. According to a report released by Bloomberg New Energy Finance (BNEF), the levelized cost of electricity (LCOE) for standalone battery projects dropped to $78 per megawatt-hour last year, down approximately 27% from $107 the previous year. This decrease in battery costs introduces competitive pricing against gas generation, marking the renewable energy-ESS combination as a primary alternative in the new generation market.

Industry analysts attribute the rapid drop in ESS costs to the economy of scale effect as global battery companies compete fiercely around the renewable energy and electric vehicle sectors. With the push for large-scale ESS projects ranging from 100 to 500 megawatts, the unit production costs are declining quickly. The BNEF report suggests that falling battery cell prices, design improvements, and heightened competition within the industry are key drivers of this cost reduction. Additionally, government policies promoting energy transition are contributing synergistically to reduced battery costs.

The economic viability of energy storage systems now rivals that of gas generation used for emergency power. The International Energy Agency estimates that the LCOE for gas generation in South Korea is around $90 per megawatt-hour but can escalate to $120 with rising international gas prices. In contrast, the maximum cost for a renewable energy-battery combination model, factoring in solar energy and storage costs, is projected to be close to $110, indicating that, from a pricing standpoint, these advanced renewable systems are beginning to compete with traditional fossil fuel energy sources.