The International Renewable Energy Agency (IRENA) has attempted to define the value of energy storage in a bid to nudge policymakers into introducing financial rewards which drive deployment of the technology and hence accelerate the energy transition.
The multilateral body’s Electricity Storage Valuation Framework (ESVF) attempts to address the issue of “missing money”, which occurs when the value of energy storage is not recognized sufficiently for investors to get projects off the ground.
The high cost of large scale energy storage facilities, notwithstanding advances made with lithium-ion systems, makes the need to recognize the value such installations can offer more urgent, although IRENA predicts total installed costs could fall 50-60% by 2030 if manufacturing can be optimized and the volume of raw materials required reduced.
IRENA says offering multiple services from energy storage is key to unlocking the technology’s value. The value to be gained by offering energy arbitrage – buying when the wholesale power price is low, storing it and releasing it to satisfy high demand – can be significantly boosted by also offering grid ancillary services such as frequency regulation, voltage control and black start support – rapid energy supply after black-outs – especially if such services are financially rewarded.
For example, a portion of a facility’s energy storage capacity could be withheld from arbitrage and kept for operational grid reserves, provided payment for the latter was persuasive enough.
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