Soft costs = Stubborn costs

I came across a research report on the state of battery systems. The report talked about the massive battery system (residential, commercial, utility scale) deployments coming over the next decade. Battery systems growth will alter our grid and how we think about centralized power generation and storage.

One chart (seen below) in the document shows the total cost of a system in 2021 and 2025, as split between hardware and software. Hardware is the materials and equipment. Software is all of the permitting, design, sales, and non-scalable “people-related” expenses.

Studying this chart shows a trend most in the energy field know: the soft costs are stubborn… and may actually be the harder costs to solve! While hardware costs drop 20-30% over this time period, the soft costs fall at a far slower rate… and become an increasingly large percentage of the overall system cost over time.

This same trend usually happens at the intersection of analog, and regulated industries that are being affected by declining cost curves. At Energize we know that there are many great organizations and investors that focus on balance of systems innovations. Energize is laser-focused on digital applications that address the energy transition. These digital applications tend to best serve the soft costs, so we look forward to finding investments that streamline that part of the cost equation. By delivering efficiencies there, the industry should grow even faster.

(Reach out to Tyler Lancaster and Katie McClain for the experts internally on digitizing the analog world for streamlined process)