Bill Gates on Tuesday called for "new inventions" in energy storage to make generating power from solar and wind more economical.
In a blog post accompanying his annual letter, the Microsoft founder said storing energy in lithium-ion batteries for use when the sun has set or the air is still costs triple the average kilowatt-hour of electricity in the United States.
"This is why we need new inventions that improve our ability to store energy cheaply and efficiently," Gates wrote. "Getting them will make it even easier for solar and wind to be a big part of our zero-carbon future."
This figure is based on the capital cost of a lithium-ion battery amortized over the useful life of the battery. For example, a battery that costs $150 per kilowatt-hour of capacity with a life cycle of 500 charges would, over its lifetime, cost $150 / 500, or $0.30 per kilowatt-hour.
So if a consumer tried to store enough electricity in this lithium-ion battery to run her house, she would be paying at least $0.30 per kilowatt-hour for the battery.
According to the EIA, the average price of electricity for consumers in the United States is around $0.10 per kilowatt-hour. The European Union, where prices average 20 cents per kilowatt-hour, and India, where they range from 2 to 15 cents, would see similarly dramatic increases.
The problem is twofold. The way electricity is priced in the United States provides poor incentives for storing excess solar and wind energy, and batteries are expensive.
Electricity is more expensive during the day, when solar panels generate energy, and cheaper at night. Utility companies will buy consumers' excess solar generated during peak hours and recirculate it into the power grid, then sell it back at a cheaper night rate, when solar panels aren’t producing energy.
Therefore, there's little incentive for people to use solar-storage batteries that hang onto energy during the day if they could be selling it at peak prices to the utility companies and buying it back later on the cheap.
That remains a problem in most states.
But Gates is wrong to harp on the high costs of energy storage technology, according to Matt Roberts, executive director of the trade group Energy Storage Association.
"There's sort of this perception that costs need to come down for something to happen," Roberts told The Huffington Post by phone on Tuesday. "This cost focus is a bit of a red herring. What we need to see out there is more value focus."
For businesses, the long-term benefits are clear. The historic climate accord reached in Paris last year provides a framework for building a low-carbon economy, and it signals to companies that renewable energy will be a smart investment right now, even if the tangible benefits won't show for another few years.
The costs of storing energy are likely to decrease by 50 percent in the next five years, according to Roberts. That makes sense. Electric automaker Tesla, which released two storage batteries last year, is building a $5 billion manufacturing plant in Nevada called the Gigafactory, which at its peak is projected to produce more lithium-ion batteries in a day than were produced in the entire world in 2013.
Roberts said Gates would better serve the renewable energy movement by highlighting the positive outlook for energy storage instead of noting obstacles that are already in decline.
"Those costs are still coming down," he said. "But the big thing that unlocks this is value."