Clarifying the Confusion – Storage and Cost Effectiveness


by Chris Edgette, Senior Director, California Energy Storage Alliance and Charlie Barnhart, Postdoctoral Scholar, Global Climate and Energy Project, Stanford University

Is storage cost effective?  Misinterpretations of a Stanford study[1] on the energetic performance of energy storage recently published in Energy and Environmental Science appear to have added to the confusion surrounding this topic.  To clarify a few misconceptions, we (California Energy Storage Alliance, or ‘CESA’) teamed with the Charles Barnhart, the lead-author of the Stanford study, to set the record straight.

The Stanford Study compared the energetic costs of energy storage resources to the energetic losses due to curtailment of wind and solar generation. Considerations of other key benefits delivered by real-world deployment of storage assets were beyond the scope of the study. Just like energetic performance, the benefits listed below add to the environmental, societal, and economic value of storage.

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1.     Energy offset: Energy discharged from a grid storage resource is likely to offset production by traditional fossil generators.  Chart 1 compares the energy intensity of various forms of storage charged by wind or solar to the energy intensity of natural gas peakers.

Energy intensity is the lifecycle cost of energy production per unit of energy delivered to society.  Lower intensity values mean that less energy is invested in a resource for the energy delivered.  On average, wind or solar resources coupled with storage are less energy intense than peaking power plants.

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Chart 2 shows an intensity comparison between peakers and various forms of storage charged by curtailed renewable energy.

The difference in this chart is that it was assumed that the energy used to charge the storage device would otherwise have been curtailed.  Thus, the energy input value for the storage device is considered to be zero.  Recent Long Term Procurement Planning studies by E3 have shown that renewable curtailment is likely in the next decade. Until the power grid achieves adequate flexibility to accommodate wind and solar power, curtailed energy presents energetic and market opportunities.

2.     Time value: As noted in the study, “The value of available energy depends on time, location and need.”  This dispatchability of energy storage provides operational benefits.  Time value is key to determining the cost effectiveness and environmental benefit of energy storage on the grid.

3.     Greenhouse Gas (GHG) Production: The study’s energetic evaluation did not account for GHG or pollution differences between resources.  A gas peaker releases CO2 and other GHGs during combustion, so the peaker will produce more GHGs per kilowatt hour than a solar or wind farm, even at comparable energy intensities.

4.     Recycling: The study does not account for recycling of storage systems or components.

5.     Additional Benefits: In addition to wind or solar energy shifting activities addressed by the Stanford Study, grid-connected energy storage resources can provide many additional benefits for the electric power system, society and the environment:

a.      Spinning reserve: Backup power reserved by the system operator replaces another generator or transmission resource that drops offline.  While most storage resources can provide this benefit with minimal standby loss, a fossil generator must expend fuel in preparation for a reserve event.

b.     Frequency regulation: Regulation responds rapidly to changing grid loads and generation.  Fast energy storage responds to regulation needs 2-3 times faster than traditional fossil resources.

c.      Peaking capacity: Energy storage peaking capacity avoids costly startups of gas peaker plants.

d.     Transmission and distribution upgrade deferral: Energy storage can smooth customer load or renewable generation at key times, allowing utilities to cost effectively defer or avoid expensive system upgrades.

e.      Transmission congestion relief: Transmission congestion causes high locational pricing and potential curtailment of load.  Energy storage can alleviate congestion and reduce electricity prices.

f.       Voltage support: Energy storage can provide voltage support to the grid instead of specific grid infrastructure.

g.      Locational benefits: Energy storage can be installed in locations where traditional generation might not be feasible, increasing the value of delivered energy while reducing pollution in urban centers.

h.     Reliability: Energy Storage may provide backup power to increase grid security and reliability.

Commercialized energy storage devices operating on the grid today provide a variety of benefits.  For example, Xtreme Power’s  and Duke Energy’s 36 MW Notrees project provides ramping control and time shifting, while AES Energy’s 32 MW Laurel Mountain project provides wind ramping and regulation services. When evaluating the cost effectiveness of energy storage, these services must be considered – particularly for system planning and resource procurement.  

Based upon the above, we would like to emphasize points which should be accounted for in discussions related to the study:

1.     Stored energy from wind resources has a lower energy intensity than most fossil generators.

2.     Even at comparable intensities, solar resources will produce energy without the GHG impacts of fossil generators.

3.     Time of Delivery effects increase the environmental and societal benefit attributable to storage.

4.     Quantifying a storage system’s ability to provide grid services was outside of the study’s purview, but could point to environmental and societal benefits.

5.     Storage technologies have varying energetic performances, but increased lifecycles will lead to improved energetic cost-benefit ratios of all storage technologies.

In conclusion, the Stanford Study builds our understanding of the broad, societal-scale energetic performance of storage paired with renewables by providing useful energy performance metrics. It should not be taken out of an energetic context.  The study’s authors at Stanford and CESA agree: energy storage will play a crucial role in cleaner, more sustainable electric power systems.

Charles Barnhart, the Study’s lead author, and his colleagues at Stanford are working on additional research studies that will take into account many of the above points.  Their work should further expand our understanding of the energy value of energy storage on the grid, while pointing to deployment strategies that optimize the economic and environmental benefit of energy storage.  We look forwar
d to seeing and discussing the results as this groundbreaking modeling effort moves forward.


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