USAID Energy Storage Decision Guide for Policymakers

Abstract

As countries worldwide aim to achieve their Nationally Determined Contributions (NDCs) under the United Nations Framework Convention on Climate Change Paris Agreement and update their NDCs in preparation for the 2021 United Nations Climate Change Conference, policymakers, regulators, and power sector planning agencies are increasingly faced with complex decisions about how to develop power systems that are reliable, affordable, and clean. Ambitious power sector transformation strategies, along with continually falling costs of renewable energy technologies, are driving higher levels of gridconnected variable renewable energy (VRE). 1 And because higher penetrations of VRE can drive an additional need for power system flexibility, decision makers are increasingly looking to emerging grid solutions such as energy storage to ensure reliable and cost-effective integration of VRE. 2Energy storage is one of several sources of power system flexibility that has gained the attention of power utilities, regulators, policymakers, and the media. Falling costs of storage technologies and improved performance and safety characteristics, particularly for lithium-ion battery energy storage, have made energy storage a compelling and increasingly cost-effective alternative to conventional flexibility options such as retrofitting thermal power plants or transmission network upgrades. In just the last decade, the cost of lithium-ion battery packs has dropped by 89% (BloombergNEF 2020). Cost declines for battery technologies have been driven by a combination of R&D efforts and increased manufacturing capacity for the electric vehicle sector, and this trend is projected to continue well into the next decade. Between 2018 and 2040, energy storage installations are projected to grow over 100 times (BloombergNEF 2019).The purpose of this report is to arm relevant decision makers with the initial layer of information they need to understand energy storage and to make informed policy, regulatory, and investment decisions around grid-connected energy storage. While many of the case studies presented in this report are based on experiences from the U.S. and Europe, the lessons learned can be applied to power sectors in emerging economies. Importantly, this report covers topics related grid-connected energy storage for power sector applications. The term "grid-connected" implies that the storage system is interconnected to a centralized power system. Topics related to off-grid, micro-grid and mini-grid energy storage applications are not covered in this report, nor are procurement practices for energy storage. Energy storage is poised to become a major component of power systems of the future.Energy storage has been instrumental for the development of affordable and reliable electricity supply since nearly the inception of modern power systems. More recently, technology advancements and rapidly falling costs for newer technologies, particularly battery energy storage systems, have ignited interest among utilities, policymakers, and end-use e...

A geographically disaggregated approach to integrate low-carbon technologies across local electricity networks

“…Conventionally, overloads and voltage rise have been avoided by upgrading cables and transformers 22 . Impacts can also be reduced or eliminated with flexibility through deployment of distributed storage 17,[23][24][25] and/or demand-side response [26][27][28][29] to reduce local electricity consumption at times of peak load, and/or increase consumption at peak PV generation 23,25,30 . GB distribution system operators (DSOs) are beginning to tender for these flexibility services to alleviate stresses on particular regions of distribution networks 31,32 .…”

“…The electricity distribution system in GB is organized across a range of spatial scales associated with different voltage levels [16][17][18] . Medium-voltage networks, referred to here as regional, distribute voltage from transmission networks to low-voltage networks.…”

Geographically disaggregated approach to integrate low carbon technologies across local electricity networks

“…The electricity distribution system in GB is organised across a range of spatial scales associated with different voltage levels 15,41,47 . Low voltage distribution networks, referred to here as local networks, serve individual households and small commercial electricity users (typically at 230-400V).…”

“…In a conventional network upgrade approach, overloads and voltage rise would be avoided by upgrading cables and transformers 14 . Impacts could also be reduced or eliminated through deployment of distributed storage [15][16][17][18] and/or demand side response (DSR) [19][20][21][22] , which could reduce local electricity consumption at times of peak load, and/or increase local electricity consumption during times of peak PV generation 16,18,23 .…”

Thermal battery cost scaling analysis: minimizing the cost per kW h

“…Energy storage technologies have the potential to reduce operational costs, improve energy efficiency, and provide environmental benefits when employed in various applications. Grid-scale energy storage [1][2][3][4] enables energy generated by intermittent renewable energy sources to be delivered on-demand; energy can be stored when renewable energy is abundant and used when renewable energy is scarce. Well-explored grid-scale storage technologies include pumped hydro, 5 compressed air, 6 mechanical flywheel, 7 electrochemical batteries, 8 and thermal batteries.…”