The Value of Energy Storage for Grid Applications

Posted: May 16, 2013 - 19:51 / NREL / Reports

Electricity storage technologies have had limited deployment in the U.S. power grid, despite the multiple benefits they can provide. One of the challenges faced by storage developers is quantifying their value, especially considering benefits that may not be fully captured within U.S. electricity markets. 

This analysis used a commercial grid simulation tool to evaluate several operational benefits of electricity storage, including load-leveling, spinning contingency reserves, and regulation reserves. Storage devices were added to a utility system in the western United States, and the operational cost of generation was compared to the same system without the added storage. This operational value of storage was estimated for devices of various sizes, providing different services, and with several sensitivities to fuel price and other factors. Overall, the results followed previous analyses that demonstrate relatively low value for load-leveling but greater value for provision of reserve services. The value calculated by taking the difference in operational costs between cases with and without energy storage represents the operational cost savings from deploying storage by a traditional vertically integrated utility. In addition, we estimated the potential revenues derived from a merchant storage plant in a restructured market, based on marginal system prices. Due to suppression of on-/off-peak price differentials and incomplete capture of system benefits (such as the cost of power plant starts), the revenue obtained by storage in a market setting appears to be substantially less than the net benefit provided to the system. This demonstrates some of the additional challenges for storage deployed in restructured energy markets. 

Further analysis is required to estimate the impact of renewable penetration and generation mix on storage value. In addition, there are several additional sources of value that have not been quantified in detail, such as the benefits of siting storage on distribution networks and additional payments that might be received for storage providing fast-response regulation services.