A narrow focus on levelized cost of electricity alone can be misleading when it comes to comparing the array of storage technologies available, according to a recent report by the World Energy Council.
For this report — entitled E-storage: Shifting from Cost to Value, Wind and Solar Applications — a cost modeling process was employed that repeatedly uncovered the same issues, namely the importance of defining the business model under consideration and how the storage plant was being operated.
With regard to pumped storage hydropower in particular, the report indicates the lowest cost reduction from the 2015 study period to 2030 of all the technologies, due to the current maturity level of the technology. In fact, the report says, “Pumped storage hydropower and compressed air energy storage are the most mature and other technologies bring a cost and risk premium due to their lower levels of commercial maturity.”
In fact, world energy storage capacity is dominated by pumped storage, with analysis by the U.S. Department of Energy showing this provides more than 97% of the total storage capacity in operation.
Pumped storage was also found to have some of the lowest specific investment costs, which is a metric that describes the installation cost for power and energy storage capacity. Pumped storage also has one of the lowest levelized costs of storage of all the technologies studied, which includes mechanical (pumped storage, compressed air energy storage, liquid air energy storage and flywheels), thermal (thermos-chemical, sensible thermal and latent thermal), chemical (hydrogen storage, synthetic natural gas), electrochemical (lithium-ion battery, lead acid battery, NaS battery and redox flow battery)and electrical (super-capacitors) storage systems.
The goal of this report was to analyze what the cost base of an array of storage technologies really means, and the report includes recommendations for policymakers regarding energy storage, including:
— Focus less on an investment cost only approach for storage technology assessment, where only technologies with the lowest levelized cost of storage are rewarded
— Examine storage through holistic case studies within a specific context, rather than place faith in generic cost estimations
— Accelerate the development of flexible markets, working with transmission and distribution system operators and regulators to help quantify and realize the true potential value of increasing system flexibility
— Establish policy support and an enabling regulatory framework to facilitate further commercial deployment of storage technologies
— Consider storage as a key component when planning for grid expansion or extension