Long-Term Value of Grid Storage Is All About Capacity, Study Finds

The grid is heading in the direction of more renewables, with or without overarching policies to guide it . There’s general agreement that the ability to store electricity will become more valuable as this happens, but the exact value of energy storage in a dynamically evolving electrical system is hard to pin down.

A new study from current and former MIT energy-system modelers attempts to quantify this. Rather than looking at the value of a single battery project or the role of energy storage in a fully decarbonized grid, as previous studies have contemplated, the researchers tested the value of energy storage as the grid’s wind and solar penetration increases to 50 percent and beyond, and as energy storage deployment grows. These dynamics will play out in many parts of the grid over the next 15 or 20 years.

This approach, published in the journal Applied Energy , captures the dynamic interactions between renewables, storage, natural-gas plants and transmission networks. And it allows the authors to quantify which uses for storage produced the most benefit for that evolving system.

“It turns out that capacity avoidance or capacity deferral is the biggest source of value for energy storage in that long-run context,” said co-author Jesse Jenkins, who now teaches at Princeton University. “Storage, as an asset, allows you to make better use of other fixed assets in the system.”

That’s a shift from today’s grid, where batteries largely found a path to market through the quick-reacting service of frequency regulation. The need for that service quickly gets saturated as storage deployment expands; the long-term adoption of storage will rely more on the capacity role. Some developers are already finding ways to monetize that, but market rules often don’t allow full compensation for the thing that’s theoretically most valuable about storage technology.

Needs change as renewables grow

Energy storage displaces other capacity investments in three major ways, according to the study:

Reducing variable renewable investments . Storage can shift generation that would otherwise be curtailed so that the system delivers more clean electricity production from a given amount of renewable capacity.

Replacing thermal generators (namely, gas peaker plants) for peak-hour electricity delivery. Storage is well suited to knock off peakers that run rarely and for only a few hours at a time. This is starting to happen in select markets.

Deferring transmission upgrades by holding power during congested periods and delivering it when the wires have more capacity.

To give a sense of the grid’s regional variety, the study modeled a “North” grid inspired by load profiles and renewables production in New England and New York, and a “South” grid resembling Texas.

The calculated system value of storage increases as renewable penetration rises but falls as...