The two fastest growing sources of renewable energy, wind and solar, are intermittent – they don’t always generate power when you need it. The obvious solution is to add storage, such as batteries, to move some of the electricity to when demand is greatest. Elon Musk is betting a Gigafactory that consumers will be interested, while California has mandated adding 1.3 gigawatts of storage to the grid before the decade is out.
But there are a number of different types of storage, each of which has distinctive properties: how fast electrons can be shuffled in and out, how easy it is to expand the storage capacity, and so on. All of these have different costs, and figuring out which storage is the most economically viable is a serious challenge.
Three academics from MIT have decided to take on that challenge. They have tried to calculate when it makes economic sense to add storage to sustainable projects in three different locations in the US. Their analysis indicates that options finances are similar right now, but only for options other than batteries.
Run the numbers
The authors decided to model three different states: Texas, where the winds are strong; California, which is experiencing a solar bomb; and Massachusetts, which is not an optimal location for generating renewable energy. They also considered different storage technologies. These include a number of different types of batteries (lead-acid, sodium-sulfur, lithium-ion, and so on), as well as compressed air storage and pumped hydropower. In compressed air, air is pumped into an underground cavern and used to supplement fossil fuel generation, while pumped hydropower is like a hydroelectric dam that can also work in reverse.
For each location, the authors optimized the use of storage to get the best price for electricity generated from renewable sources. In concrete terms, this meant modeling the storage discharge so that the energy generated from a renewable plant was always sold when demand (and therefore price) was highest.
Renewable energy sources have a long way to go before it makes sense to connect them to a giant storage pool.
Of course, this storage comes at a price. In the next step, the team considered two factors that vary based on the type of storage used: the cost of energy, which is how much it costs to build the capacity to shuffle electrons in and out of the system; and the cost of energy, the price involved in building a larger storage pool.
The results indicate that storage in both Texas and Massachusetts is more valuable for wind than for solar, but the differences are not significant. The total value of storage is highest in California and Texas.
But that value still isn’t great. Only two of the technologies available today (compressed air and pumped hydropower) actually add value to wind and solar energy. Adding storage would only be profitable at prices slightly lower than those currently available in the market ($1.5 per watt for wind). At that point, storage increases wind profitability by 11 percent. Renewable energy sources therefore have a long way to go before it makes sense to connect them to a giant storage pool. And batteries have to go even further before it makes sense to use them to build up that storage pool.
The authors also made projections using expected changes in costs for both renewables and storage technology. In some cases these pushed more potential scenarios towards profitability.
A rapidly changing market
However, the analysis was limited in a number of ways. Storage can provide a wide range of valuable services, including grid stabilization and frequency management. If the storage is also used for those purposes, it becomes more profitable to have one. In addition, the U.S. energy market does not currently have so many renewables that the price of electricity is consistently affected by them in most locations. Once states begin to see massive mid-day spikes in solar power, for example, it will drive down the price of that energy and make storage more attractive.
But not everything makes storage look positive. In the recent past, the price of renewable energy has fallen dramatically, faster than the price of storage. If that trend continues, it will spell trouble for storage, as it becomes more profitable to sell the power at a reasonable price than to spend money building storage to hold it for when the price is high. And if you do want to spend money, it makes more sense to spend it on adding more sustainable capacity.
In many ways, this analysis therefore provides a snapshot of a rapidly changing market. But the tools the authors developed to perform the analysis can be updated and modified to accommodate future changes. And as more states make it mandatory to put storage on the power grid, this analysis can certainly help policymakers understand what types of storage make the most economic sense.
Nature climate change2016. DOI: 10.1038/NCLIMATE3045 (About DOIs).