On the economics of storage for electricity: Current state and future market design prospects

Abstract

Since the early beginnings of the electricity system, storage has been of high relevance for balancing supply and demand. Through expanded electricity production by variable renewable technologies such as wind and photovoltaics, the discussion about new options for storage technologies is emerging. In addition, the electricity markets were subject to remarkable alterations. Some developments which describe these changes are increasing electricity generation from variable renewables and the continuing decentralization. These developments have led, among other required transformations, to demands for additional capacities of storage technologies. However, their economics will play a crucial role in their effective market penetration in the following years.The core objective of this work is to conduct a review on the relevance of storage options for electricity and its costs, economics, welfare effects, and on issues of electricity market design. In addition, based on expected Technological Learning prospects for future economics are derived. The major result is that the perspectives of electricity storage systems from an economic viewpoint are highly dependent on the storage's operation time, the nature of the overall system, availability of other flexibility options, and sector coupling. All market-based storage technologies have to prove their performance in the large electricity markets or if applied decentralized, the (battery) systems compete with the electricity prices at the final customers level when the battery costs are also taken into consideration. Yet, new storage capacities should only be added when it is clear that electricity generation from variable renewables will also be expanded in a way that excess generation is expected.

The Thermo‐Economic Potential of ORC‐Based Pumped‐Thermal Electricity Storage: Insights from the Integrated Design of Processes and Working Fluids

“…The SIC for PSH is expected not to change from today to 2030 because the underlying cycles are based on established technologies and no major additional learning effects are expected. [ 81 ] Thus, we assume the same SIC in 2030 as for today, which is a conservative assumption. All costs are converted to SIC per electrical output capacity in .…”

Prospects of electricity storage

“…Valuable research of technical characteristics is expanded in this paper with electricity storage analysis from an economic point-of-view. With the expansion of renewables, research of electricity storage economics, such as [6][7][8], is needed for the utilization of these systems and improving performances of intermittent variable generation. Analysis of selected technologies, considering different perspectives such as their profitability, technical maturity, and environmental aspect, is a valuable addition to the previous research on electricity storage systems.…”

No Alarms and No Surprises Dynamics of Renewable Energy Curtailment in California

“…Electricity storage will have a major role on the integration of variable renewables (López Prol and Schill 2021;Haas et al 2022). Although batteries could be used to store excess electricity, reducing thus renewable energy curtailment, marginal storage costs are still higher than the value of the excess electricity (see section 5.2).…”