ORIGINAL REPORTING: How Much Battery Energy Storage Is Enough?

Battery energy storage is getting cheaper, but how much deployment is too much? As renewable penetrations rise, batteries are the answer to variability, but it is not clear when buying more storage stops increasing reliability.

Herman K. Trabish, June 30, 2020 (Utility Dive)

Editor’s note: The drive for energy storage continues to expand but call for other DER and renewable resources is also growing.

When asked how to best plan for battery storage in a future power mix, utilities, resource planning consultants, and researchers had the same answer: It depends. The key variables are the system's current and projected renewables and storage penetrations. But drilling into the complexities of planning for the right amount of battery storage in a least-cost future resource mix dominated by renewables revealed critical insights about how to properly value storage for the reliability it provides.

Planners have made "substantial progress" in "capturing the complex value of battery storage for reliability," National Renewable Energy Laboratory (NREL) Senior Researcher and Group Manager Daniel Steinberg said during a California Energy Storage Association (CESA) May 22 webinar. Ways to value shorter duration storage in planning are "actively being improved," but long-duration storage methods are only "developing."

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Arizona Public Service (APS), the first investor-owned utility to choose solar-plus-storage over a natural gas peaker unit, uses "multiple future scenarios" to plan for its storage needs, APS VP for Resource Management Brad Albert told Utility Dive. "There is no perfect scenario. We could not have predicted a pandemic in 2020. Strategic planning requires judgments."

There are conditions in which overbuilding renewables is more cost-effective than deploying storage. And the value of battery storage for reliability changes significantly as costs fall and penetrations of variable renewables and storage rise on the system. Precise analytics, like the Effective Load Carrying Capability (ELCC) calculation, could simplify planning decisions, some stakeholders said. But others said no calculation substitutes for judgment.

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Though utilities have long recognized the value of pumped hydro, compressed air, and concentrating solar's thermal storage, those technologies have not proved cost-effective and scalable for storing energy. Two recent solicitations turned planners' attention to batteries.

First, Xcel Energy's landmark 2016 all-source solicitation brought bids as low as $21/MWh for wind-plus-storage and $36/MWh for solar-plus-storage. "Until about 2016, it was assumed batteries were too expensive and planners wouldn't even include them in their modeling," Energy Storage Association (ESA) VP for Policy Jason Burwen told Utility Dive. "Now, something like 80% of utility [resource planning] models look at storage and some are selecting purely on its cost-competitiveness."

Xcel Energy "recently transitioned" to Anchor Solutions' EnCompass software which allows multiple scenario, hourly modeling of storage options "for both capacity and energy arbitrage values," Xcel VP for Strategic Resource and Business Planning Jonathan Adelman emailed Utility Dive. Using the new tool's modeling "for every hour of the year," Xcel Minnesota's 2019 long term plan included four-hour battery storage for the first time, to "help us meet our capacity needs," Adelman said… click here for more

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