Tool to quantify the value of energy storage from EPRI


Haresh Kamath,
Program Manager
for Energy Storage
Research, EPRI
Palo Alto, CA, U.S.A. — (METERING.COM) — June 20, 2013 – A new tool to enable utilities and other energy sector stakeholders to assess the economics of energy storage and better assess its viability and role in their systems has been released by the Electric Power Research Institute (EPRI).

The Energy Storage Valuation Tool comprises a step-by-step user interface, into which the user enters data for energy storage use cases. Three main categories of input data are leveraged:

  • Grid service technical requirements defined by electric system needs and benefit calculation inputs
  • Financial assumptions for the storage owner, including discount rate and tax assumptions
  • Cost, performance, size, and configuration of the storage system technology.

With this information, the tool then simulates storage operation to meet all technical requirements of the grid service and maximize its remaining potential in the energy and ancillary service markets. Outputs include lifetime, annual, daily, and hourly valuation and operation data.

“The Energy Storage Valuation Tool can play a valuable role in clarifying the value and the variables of energy storage in the grid,” said Haresh Kamath, program manager for Energy Storage research at EPRI.  “It can inform business plans, regulatory proceedings and public discourse related to storage, and allows users to see the underlying calculations of the model.”
The tool has been applied by EPRI in a project for the California Public Utilities Commission. In this project approximately 30 cases for energy storage were analyzed covering three different general use cases, including transmission connected bulk energy storage, short duration energy storage to provide ancillary services, and distribution connected energy storage located at a utility substation. Under the assumptions provided by the California PUC, the majority of cases returned benefit-to-cost ratios greater than one, and the majority of cases returned breakeven capital cost of energy storage ranging from $1,000 to $4,000/kW installed, according to the EPRI report, Cost-Effectiveness of Energy Storage in California.

Other findings (under the California PUC assumptions) included:

  • Storage system duration of 2 hours exceeded cost effectiveness of 4 hours for assumed “base case” battery storage system
  • A storage system 10 year usable battery life had substantially better cost effectiveness than 5 year usable battery life.
  • Regulation service provided a significant proportion of the value in most cases, with cases with a 2x price multiplier for storage providing “fast regulation” returning significantly more cost effective results
  • High energy and ancillary service prices resulted in more cost effective results for energy storage
  • Projects beginning in 2020 had better cost effectiveness results than 2015, due primarily to technology cost reductions and higher value for capacity, energy, and ancillary services.