In the transition to a decarbonized electric power system, variable renewable energy (VRE) resources such as wind and solar photovoltaics play a vital role due to their availability, scalability, and affordability. However, the degree to which VRE resources can be successfully deployed to decarbonize the electric power system hinges on the future availability and cost of energy storage technologies.
In a paper recently published in Applied Energy, researchers from MIT and Princeton University examine battery storage to determine the key drivers that impact its economic value, how that value might change with increasing deployment over time, and the implications for the long-term cost-effectiveness of storage.
“Battery storage helps make better use of electricity system assets, including wind and solar farms, natural gas power plants, and transmission lines, and that can defer or eliminate unnecessary investment in these capital-intensive assets,” says Dharik Mallapragada, the paper’s lead author. “Our paper demonstrates that this ‘capacity deferral,’ or substitution of batteries for generation or transmission capacity, is the primary source of storage value.”
Other sources of storage value include providing operating reserves to electricity system operators, avoiding fuel cost and wear and tear incurred by cycling on and off gas-fired power plants, and shifting energy from low price periods to high value periods — but the paper showed that these sources are secondary in importance to value from avoiding capacity investments.
For their study, the researchers — Mallapragada, a research scientist at the MIT Energy Initiative; Nestor Sepulveda SM’16, PhD ’20, a postdoc at MIT who was a MITEI researcher and nuclear science and engineering student at the time of the study; and fellow former MITEI researcher Jesse Jenkins SM ’14, PhD ’18, an assistant professor of mechanical and aerospace engineering and the Andlinger Center for Energy and the Environment at Princeton University — use a capacity expansion model called GenX to find the least expensive ways of integrating battery storage in a hypothetical low-carbon power system. They studied the role for storage for two variants of the power system, populated with load and VRE availability profiles consistent with the U.S. Northeast (North) and Texas (South) regions. The paper found that in both regions, the value of battery energy storage generally declines with increasing storage penetration.
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