Is Energy Storage a Near Reality or a Pipe Dream?

By Kolby Hoagland | July 11, 2014

The inability to store electricity on the scale of a regional grid has led to the inefficient power industry that we know today. The fundamental nature of electricity requires that a regional electrical grid have sufficient generating capacity available to meet peak demand even if that demand is only reached for an instant. While base load power plants have capacity factors up to 90%, peaker plants have capacity factors around 10%. This means that over the course of a year, peakers may only operate at full capacity for a total of 3 days. The consequence is a considerable number of power assets that sit unutilized for most of their operational lives. Having idled assets establishes an inefficient economic model for grid operators. Energy storage, in theory, would level load across the grid by storing electricity through troughs in demand (at night) and release the stored electricity back onto the grid during peaks (during the day, particularly hot summer days). A large scale, grid-connected energy storage system could create a more level day-to-day load and reduce the need for inefficient peakers. If realized, electrical energy storage would revolutionize the power sector, including the biomass power sector. Today’s DataPoints will offer a brief overview of where battery storage technology lies by looking at their current break even costs associated with these technologies.

Energy storage is not anything new. Pumped hydro, flywheels, and compressed air have long been used and investigated as modes of energy storage. Though each of these technologies have strong niche applicability, the scale of energy storage needed to effect grid-wide change on regional loads cannot be filled completely by pumped hydro, flywheels, and compressed air. For that reason, significant research and effort has been put into battery systems that, if deployed on broad enough scale, could meet society’s demands on the grid.

Much of the data in my blog has been condensed from an article by Schalk Cloete where he analyzes the three predominant battery technologies: lead-acid, lithium-ion, and flow. The principle metric that Cloete uses to compare battery technologies is the spread between the prices of what you could buy the power (to store in the battery) and then sell back to the grid. For example, if you buy power at $30 MWh, say at night, and sell it at $80 MWh at 3pm the next day the spread would be $50 MWh. Cloete offers what the breakeven spread would be given the current estimates of capital cost, O&M, project lifetime, efficiency, purchase price, and discount rate of the three battery technologies: lead-acid, lithium-ion, and flow batteries. The analysis is based off work by Duke University and simply offers insight into where the current cost these battery technologies lie.

Lead-acid Batteries

Lead-acid batteries have a relatively short life-span when compared to the other battery options. After 2000 cycled (a single charge and discharge = 1 cycle), the efficiency of a lead-acid battery issignificantly reduced.  Along with a shorter lifetime, lead-acid battery should only be discharged to 50% to preserve a 2000 cycle life. Fully discharging a lead-acid battery significantly reduces its life. Despite a lower cost in producing lead-acid batteries, the shorter life and lower depth of discharge of lead-acid batteries leads Cloete to conclude that even under the lowest cost scenario the breakeven spread would be $800/MWh, meaning that wholesale electricity price would need to be $10 MWh at night and $810 during the day, an unlikely day-to-day scenario.

Li-Ion Batteries

Lithium-ion batteries have longer lifetimes (5000 cycles) and have a higher efficiency than lead-acid batteries, which makes the economics slightly better than lead-acid batteries. Li-ion batteries also suffer from the inability to fully discharge if the battery life is be maintained. Though economically better than lead-acid batteries, Cloete acknowledges that Li-ions are far from market ready. Given that the current spread in the whole sale electricity market is predominantly below $100 (except for on rare occasion), both Li-ion and lead-acid batteries are far from becoming an economically wise option for energy storage.

Flow Batteries

Flow batteries, Vanadium Redox Flow Batteries (VRB) in particular, differ from Li-ion and lead-acid batteries with long lifetimes and ability to be fully discharges. They are also durable and more easily scalable. As you move the right in the chart below the economics of VRBs starts to look a bit better than Li-ion and lead-acid batteries. None-the-less, the breakeven spread of VRB technology is still on an order of magnitude greater than the current spread of the wholesale electricity market.

Flow Batteries

Innovation around energy storage will see it through to commercial scale applications, but when is not known. The wind and solar industry look to energy storage to solve their intermittency issue. However, energy storage should not only be seen as an opening for pairing with wind and solar. The biomass power industry should consider energy storage as an opportunity to augment its base load nature. Significant efficiency is lost in throttling gensets and ramping of boilers. If production loads could be maintained regardless of demand and the excess electricity stored, biomass power producers would get the most out of their fuels and assets. Biomass installations prosper when they are incorporated into diverse systems that have multiple revenue streams. A dynamic system that incorporates energy storage into a biomass power installation would strongly augment the resiliency and capabilities of biomass installations and the industry. 



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