When I buy food, the marginal cost of a bite from the food is very close to the average cost of a bite, because if I eat 5% more food this week, I have to buy 5% more food next week.
Contrast this with the case of listening to music on my stereo: if I listen to 5% more music on the stereo, I don't have to buy 5% more music, and I don't have to replace the stereo 5% sooner. The marginal cost is near zero: just the small amount of electricity the stereo uses, plus a tiny amount of wear and tear. Maybe I only listen to music three hours a week and the stereo cost me $313 and lasts for 20 years, so the average cost per hour is $0.10. But the marginal cost of listening for an additional hour this week is much lower than that.
Utility-scale batteries are more like the stereo than the food.
Contrast this with the case of listening to music on my stereo: if I listen to 5% more music on the stereo, I don't have to buy 5% more music, and I don't have to replace the stereo 5% sooner. The marginal cost is near zero: just the small amount of electricity the stereo uses, plus a tiny amount of wear and tear. Maybe I only listen to music three hours a week and the stereo cost me $313 and lasts for 20 years, so the average cost per hour is $0.10. But the marginal cost of listening for an additional hour this week is much lower than that.
Utility-scale batteries are more like the stereo than the food.