1. Does the grid need energy storage?
Eric Hittinger, Rochester Institute of Technology

2. The “Holy Grail” Narrative
Common theme. In what way is it the holy grail? Argument isn’t about the current grid, but as a technology needed to manage all our new solar and wind. Last one gets at that.
Image: Shutterstock

3. What does the market say?
Is there evidence in market prices that storage is needed? Capacity markets – indicating a need for resources to meet peak demand - are mostly flat, though some have dropped a lot as new resources like demand response are allowed. FR – indicating a need for fast-ramping resources - is down in many places. The variability in energy prices – indicating the value of moving energy around – is also pretty flat. In California, the first place to look for the effects of renewables, it has gone up a bit.
Capacity Price Figure: Byers, C., Levin, T., & Botterud, A. (2018). Capacity market design and renewable energy: Performance incentives, qualifying capacity, and demand curves. The Electricity Journal, 31(1),
NY data from NYISO, CAISO data from LCG Consulting

4. Energy storage competes directly with natural gas generation
New York City
Washington, DC
Chicago
Natural gas generators provide fast ramping, frequency regulation, and work well with wind/solar. Some work that we did a few years back to see how much money storage could make in electricity markets and comparing that to the natural gas price. Because NG sets the daily high price, it affects the amount of money storage can make from arbitrage. Similar effect for FR. Renewables are coming, but NG can provide the ramping and fill-in services that are required.
Hittinger, E., & Lueken, R. (2015). Is inexpensive natural gas hindering the grid energy storage industry?. Energy Policy, 87,

5. Energy storage also competes with other flexibility tools
Projected Demand Response Investment (Navigant)
But maybe you think NG won’t stay cheap forever or that we’ll start to constrain it with policy. There are other tools on the way, too. DR is limited, but a very cheap way to handle variability. Lots of storage folks were excited about the curtailment of wind and negative prices in West Texas, but the state solved that problem with new transmission to the load centers. California is leading an effort to expand the western balancing area. An often overlooked solution is to just dump excess energy. That is just good economics – as solar energy gets cheaper, we don’t care as much. Beer/water

6. Does the grid really need energy storage?
Let me ask this.
Images: Pixels.com (creative commons license)

7. Peaker plants were never that great anyway…
It was always silly to build a power plant that we expect to use for 5 hours per year. Peaker plants were our best solution given current technology. U of M storage workshop concluded that storage is better than new peakers in next 5 years. A third of peaking capacity could be replaced by 4-hr storage by 2027 (GTM report). Does this mean that storage will replace all natural gas generators?
Figures from: Minnesota Energy Storage Strategy Workshop, Modernizing Minnesota’s Grid: An Economic Analysis of Energy Storage Opportunities (2017)
Manghani, R., Energy Storage for Peaker Plant Replacement: Economics and Opportunity in the U.S. (2018) GTM Research

8. The Economics of Bears versus Sharks
Very expensive - because of low utilization
Better - higher capacity factor
Great - I prefer to run all day
Meeting annual peak
(0-10 hrs/yr)
Mid-cycling
(4 hrs/day, 800 hrs/yr)
Longer-term fill-in
(run for days during high load/low RE periods)
Easy – small capacity & I run the rest of the year too
Harder – more storage needed & kept in reserve
Gosh – ask again in a decade or two…
Storage is a different beast. It isn’t a generator, so it doesn’t rely on high prices. Rather it wants price variability. Storage can provide services like crazy, but is energy-limited. So just like a battle between a bear and a shark, the conditions matter a lot.
Images: Pixels.com (creative commons license)

9. Where should storage be placed?
Solar
Load
Additional wind and solar improve the value of storage, but that doesn’t mean renewables+storage projects are best There are some reasons to site storage at your solar/wind generation: tax credits, AC/DC conversion, financing, siting But profitable operation of storage is generally independent of co-located wind/solar. So why constrain it to that location?
Transmission
A lot of excitement for solar+storage projects, but primary driver is tax credits. One of the things that becomes apparent if you model the operation of renewables plus storage facilities is that you operate the two assets independently. Increased demand causes the need for new generation, but we usually don’t put the generators at the load centers.

10. Distributed storage solves a variety of problems
Rate design challenges: simplicity and fairness (assuming the technology at the time)
Complicated by rate design issues – rates were designed with the assumption that a storage-like technology didn’t exist, meaning that current rate design a) sometimes motivates bad behavior and b) doesn’t compensate for good behavior
Chang, J. et al, The Value of Distributed Electricity Storage in Texas (2014) The Brattle Group

11. Storage doesn’t need to be cost-effective for every application today
T&D upgrade deferral
Demand shaping for C&I
If costs can fall as fast as the market expands, storage has a long way to go
Frequency Regulation
Storage Value
Replacing peaker plants
Competitive solar/wind+storage
System-wide energy arbitrage
Potential Market

12. So what is the future of energy storage?
Does the grid need energy storage?
No. But we probably want a lot of it.
What should storage be?