Battery Energy Storage is Getting Cheaper, But How Much Deployment is Too Much?

on July 1, 2020

When asked how to best plan for battery storage in a future power mix, utilities, resource planning consultants, and researchers had the same answer: It depends.

The key variables are the system’s current and projected renewables and storage penetrations. But drilling into the complexities of planning for the right amount of battery storage in a least-cost future resource mix dominated by renewables revealed critical insights about how to properly value storage for the reliability it provides.

Planners have made “substantial progress” in “capturing the complex value of battery storage for reliability,” National Renewable Energy Laboratory (NREL) Senior Researcher and Group Manager Daniel Steinberg said during a California Energy Storage Association (CESA) May 22 webinar. Ways to value shorter duration storage in planning are “actively being improved,” but long-duration storage methods are only “developing.”

Arizona Public Service (APS), the first investor-owned utility to choose solar-plus-storage over a natural gas peaker unit, uses “multiple future scenarios” to plan for its storage needs, APS VP for Resource Management Brad Albert told Utility Dive. “There is no perfect scenario. We could not have predicted a pandemic in 2020. Strategic planning requires judgments.”

There are conditions in which overbuilding renewables is more cost-effective than deploying storage. And the value of battery storage for reliability changes significantly as costs fall and penetrations of variable renewables and storage rise on the system. Precise analytics, like the Effective Load Carrying Capability (ELCC) calculation, could simplify planning decisions, some stakeholders said. But others said no calculation substitutes for judgment.

From bidding to planning

Though utilities have long recognized the value of pumped hydro, compressed air, and concentrating solar’s thermal storage, those technologies have not proved cost-effective and scalable for storing energy. Two recent solicitations turned planners’ attention to batteries.

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Fractal Energy Storage ConsultantsBattery Energy Storage is Getting Cheaper, But How Much Deployment is Too Much?