LCOS (Levelized Cost of Storage)
The average cost per MWh discharged over a storage asset’s lifetime, including investment, operation, charging energy and efficiency losses.
The levelized cost of storage (LCOS) adapts the LCOE concept to batteries, pumped hydro and other storage. Because storage does not generate energy, the denominator is lifetime discharged energy, and the cost side must include the energy bought to charge it and losses from round-trip efficiency.
Key drivers are CAPEX per kWh and per kW, annual cycles, depth of discharge, cycle life and degradation, round-trip efficiency (85 to 90% for lithium-ion, 70 to 85% for pumped hydro) and the cost of capital.
Utility-scale 4-hour lithium-ion systems fell sharply in price, with BloombergNEF reporting turnkey system costs of about 165 USD/kWh in 2024, and lower in China. Lazard LCOS 2025 places utility-scale standalone storage roughly 115 to 250 USD/MWh, excluding charging cost in some cases. Pumped hydro LCOS is often 100 to 200 USD/MWh for long-lived assets with high utilisation.
LCOS is sensitive to utilisation: a battery cycled daily has a far lower LCOS than one used weekly. Since storage earns money from price spreads and ancillary services, LCOS should be compared with achievable revenue rather than with generator LCOE.
Related terms
All terms →- LCOE (Levelized Cost of Electricity)
The constant price per MWh that recovers all lifetime costs of a power plant, discounted to present value, divided by its discounted lifetime output.
- Round-trip efficiency
The share of energy put into a storage system that can be recovered on discharge, measured at a defined boundary (cell, DC, or AC grid connection).
- Cycle life
The number of full charge-discharge cycles a battery can deliver before its capacity falls to a defined end-of-life threshold, usually 70–80% of rated capacity.
- BESS (Battery Energy Storage System)
A complete grid- or site-connected battery installation, including cells, battery management, power conversion, thermal management and controls.
- Pumped hydro storage
Energy storage that pumps water to an upper reservoir when electricity is cheap or abundant and releases it through turbines when power is needed; the largest form of grid storage worldwide.
- CAPEX
Capital expenditure: the upfront investment to build an energy asset, usually quoted per kW of capacity for power plants or per kWh for storage.