A report by economists at The Brattle Group finds that operating batteries to simultaneously capture benefits from multiple value streams (also known as "stacked benefits") could yield more value than using batteries to target individual applications alone.
The analysis identifies current challenges to capturing multiple benefits of battery storage and highlights policy options for mitigating these challenges.
Prepared for Eos Energy Storage with funding from the California Energy Commission (CEC), the Brattle report assesses the potential economic benefits of energy storage in California. Eos is a manufacturer of grid-scale energy storage solutions that is supplying systems for two CEC-funded energy storage demonstration projects hosted by Pacific Gas & Electric and the University of California San Diego. An Eos system was used as the basis for battery operational characteristics in Brattle's analytical framework.
While much of the existing research on energy storage value focuses on isolated applications of the technology, the Brattle report uses a modeling approach to estimate the benefits of using battery storage to capture multiple value streams.
"We have found that, in many cases, the value of 'stacked' benefits of battery storage compares favorably to the current cost of new batteries," says Ryan Hledik, a Brattle principal and co-author of the report.
Based on an assessment of the value of battery storage in California, the Brattle report finds:
• Using recent market data and accounting for realistic battery operations, the total value of "stacked benefits" in California for one kilowatt/four kilowatt-hours of battery storage could be around $280/kW-year. By comparison, recent estimates of battery costs have been in the range of $200 to $500/kW-year (though they vary by technology type and configuration).
• Avoided capacity costs, frequency regulation, and energy price arbitrage are the largest sources of quantified value; however, the "depth" of each market needs to be taken into consideration when valuing large quantities of energy storage.
• Accounting for the "stacked" benefits of battery storage by optimizing battery dispatch across all analyzed value streams significantly increases the total value of the battery relative to any individual value stream (by a factor of at least two to three times over individual use cases).
Despite the higher value of capturing multiple benefits, the Brattle study points out challenges to fully realizing this value. Some may be overcome through policy initiatives, such as new or revised retail rate designs, which could more fully reflect the time-varying nature of the cost of generating and delivering electricity.
"Costs of energy storage are expected to continue to decline, and market adoption is likely to increase as a result," says Roger Lueken, a co-author of the report. "Both retail and wholesale policy considerations will become increasingly important as the market penetration of energy storage grows."