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Technology Corridor

Energy Storage Systems
Fortnightly Magazine - September 2004

costs for a large super-critical gas-fired unit. The numbers in this figure represent costs per on-off cycle and load-follow cycle. Although the cost per load-follow cycle is low, since there can be hundreds of them per year for a unit, their annual total cost contribution can add up significantly.

Results

For the periods simulated, overall generation cost reductions (associated with reduced cycling and start-ups) ranged from 5 to 28 percent. The benefit is highest during periods when system loads are most volatile.

For the scenario modeled, which is based on the "with" ESS and "without" ESS simulations, the benefit associated with reduced cycling and start-ups was about $16/kW of storage capacity per year. Based on experience, the authors expect that the annual benefit would vary greatly depending on the mix of generation units, and we estimate that a reasonable range is $5/kW-yr to $20/kW-year. Using a cost escalation of 2 percent and a discount rate of 10 percent, for an ESS life of 20 years, that is approximately $50/kW to $200/kW of storage (net present value).

The authors emphasize that this analysis was limited to one system, and that annual values are based on extrapolations from a 10-day simulation. These extrapolations are based on several Aptech studies using varying seasonal conditions of loads and resources.

ESS capacity could provide significant benefit if used to reduce cycling and start-ups for generation fleets with a mix of coal- and gas-/oil-fueled plants that are primarily steam-boiler type plants (Rankin cycle) and with a significant portion of older plants.

Though it is unlikely that storage would be justified based on the reduced cycling amount alone, arguably that benefit should be included in any estimate of total benefits of ESS, when evaluating the merits of and overall value proposition for a specific ESS project. It is significant enough to make the difference if financials of a given ESS project are marginal.

To develop a better indication of the potential importance of this concept for the energy storage industry, we recommend the following steps:

  • "Inventory" generation fleets or regions for which the benefit is highest;
  • Develop preliminary market potential estimates; and
  • Work with at least two specific generation entities to simulate and verify the benefits.

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