Energy storage, particularly with batteries, is becoming a key pillar for a more sustainable and independent energy future. Whether storing the energy produced by solar panels or taking advantage of hourly electricity rates, batteries give us more control over our energy.

But what is the “real cost” of this stored energy? It is not enough just to look at the purchase price of the battery. We have to consider how much energy it will provide over its entire operational life. This is where the Levelised Cost of Accumulation (LCOS).

What is LCOS (Levelised Cost of Storage)?

Imagine LCOS as the average cost per kilowatt-hour (kWh) of energy that the battery is capable of delivering over its lifetime. It is a bit like calculating the cost per litre of fuel a car will consume over its lifetime, taking into account not only the initial price of the car but also how much petrol it will need.

The LCOS allows us to compare different accumulation solutions on a fair basis and truly understand the long-term investment.

The Data We Have for Your Battery

For our calculation, we have the following crucial information about your specific battery:

1. Purchase cost: €4.900
2. Nominal Capacity: 10 kWh (This is the amount of energy the battery can store when new and fully charged)
3. Declared Life Cycles: 6,500 cycles (A “cycle” occurs each time the battery is charged and then fully discharged. Partial use counts as a fraction of a cycle).
4. Residual Capacity at End of Life: 60% (This means that after 6,500 cycles, the battery will still be able to store and deliver approximately 60% of its initial 10 kWh capacity. This point is often considered the “end of life” for many applications, although the battery may continue to operate with reduced performance).

Scientific and Technical Concepts Explained Simply

Before calculating, let us better understand the terms:

• Kilowatt-hours (kWh): It is the unit of measurement for electrical energy. Think of the kWh as the “petrol” for electrical devices. A 100 watt light bulb switched on for 10 hours consumes 1 kWh. The 10 kWh capacity of your battery means that, when new, it can power, say, a 1kW oven for 10 hours (or a 1kW device for 10 hours).
• Charge/discharge cycle: A lithium battery does not last indefinitely. Each time it is used (charged and discharged), it undergoes a slight degradation. One complete cycle is the equivalent of fully discharging the battery and then fully recharging it. The lifetime of a battery is often expressed in the number of complete cycles it can endure before its performance drops significantly.
• Battery Degradation (Fading): Use (cycles) and time lead to a gradual reduction of the battery's maximum capacity. The 10 kWh battery, after a few cycles, might only hold 9 kWh, then 8 kWh and so on, until it reaches the 60% of initial capacity as specified. This is normal and expected.
• Total Energy Throughput: This is the figure essential for the LCOS. It is not simply the nominal capacity multiplied by the cycles (10 kWh * 6500 cycles = 65,000 kWh). This is because the capacity decreases over time. We must consider the energy delivered in each cycle, knowing that the energy per cycle decreases as the capacity decreases.

Simplified Calculation of Total Deliverable Energy

To get a simple but reasonable calculation of the total deliverable energy, we can average the useful capacity over the life of the battery. The battery starts with 10 kWh and ends with 6 kWh (the 60% with 10 kWh).

• Initial capacity: 10 kWh
• Capacity at End of Life: 10 kWh * 60% = 6 kWh
• Estimated Average Lifetime Capacity: (10 kWh + 6 kWh) / 2 = 8 kWh

Now, we can estimate the total energy the battery will deliver in its 6,500 cycles using this average capacity:

• Total Deliverable Energy ≈ Average Capacity * Number of Cycles
• Total Deliverable Energy ≈ 8 kWh/cycle * 6,500 cycles = 52,000 kWh

This estimate (52,000 kWh) represents the total amount of “petrol” you can get from this battery over its lifetime, taking degradation into account.

The LCOS Calculation

Now that we have the total deliverable energy and the initial cost, we can calculate the basic LCOS:

LCOS=Total Dispatchable EnergyTotal Cost​

In our simplest case, we consider only the purchase cost as “Total Cost”:

LCOS=52.000 kWh€4.900​

$$LCOS\approx €0,094\text{ per kWh}$$

So, based only on the initial cost and estimated lifetime, each kilowatt-hour of energy you use from this battery “costs” you about 9.4 Euro cents.

What's Missing for a More Complete Calculation? (Additional Factors)

The calculation we made is an excellent basis, but an LCOS truly complete should consider other factors that influence the actual cost:

1. Operating and Maintenance (O&M) costs: There are costs for monitoring, software, any minor technical interventions, cleaning (if necessary). These, although often low for residential batteries, should be added to the total cost.
2. Round Trip Efficiency (RTE): No storage system is efficient at 100%. During charging and discharging, some energy is lost (dissipated as heat). The typical RTE for lithium batteries is between 85% and 98%. If the RTE is of the 90%, this means that in order to draw 1 kWh from the battery, you have to have input about 1.11 kWh. This reduces the energy actually usable than the energy fed in, effectively increasing the cost per kWh delivered. For a more precise calculation, the deliverable energy (52,000 kWh) should be multiplied by the RTE (e.g. 52,000 * 0.90).
3. Costs or Value at End of Life: What happens to the battery when it reaches 60% capacity? Are there disposal or recycling costs? Is there any residual value (perhaps for less demanding use, the so-called “second life”)? These factors also affect the final total cost.
4. Discount Factor (Discount Rate): In a complete financial analysis, one would consider the value of money over time. One euro spent today is worth more than one euro spent 10 years from now. This factor, typical of financial analysis, would make the calculation more complex but more economically accurate.

Conclusion

The calculation of the Levelised Cost of Storage (LCOS) is a powerful tool for assessing the cost-effectiveness of a battery system. Using the data provided (purchase cost, capacity, life cycle and end-of-life capacity), we estimated a basic LCOS of approximately €0.094 per kWh for your battery.

This value gives you a clear idea of the intrinsic cost of the energy you will store and use from your battery over its lifetime. Remember that this is an estimated value and that factors such as efficiency, operating costs and end-of-life management will influence the final LCOS in a more in-depth analysis.

Understanding LCOS empowers you to make informed choices about energy storage, maximising the long-term value of your investment.