Energy Storage Research And Analysis Report: Key Experiences In The Coming Decades (i)

THIS REPORT IS THE LATEST IN A SERIES OF REPORTS RELEASED BY THE NATIONAL RENEWABLE ENERGY LABORATORY (NREL) ON FUTURE RESEARCH INTO ENERGY STORAGE (SFS). THE FUTURE OF ENERGY STORAGE RESEARCH (SFS) IS A MULTI-YEAR RESEARCH PROJECT THAT EXPLORES HOW ENERGY STORAGE SYSTEMS ARE IMPACTING THE OPERATIONS AND DEVELOPMENT OF THE U.S. POWER INDUSTRY.

THIS STUDY ANALYZES AND EXAMINES THE IMPACT OF ADVANCES IN ENERGY STORAGE TECHNOLOGY ON UTILITY-SCALE ENERGY STORAGE DEPLOYMENT AND ADOPTION OF DISTRIBUTED ENERGY STORAGE SYSTEMS, AS WELL AS THE IMPACT ON FUTURE POWER SYSTEM INFRASTRUCTURE INVESTMENT AND OPERATION. SOME OF THE QUESTIONS THAT THE NATIONAL RENEWABLE ENERGY LABORATORY (NREL) TRIED TO ANSWER DURING THE COURSE OF ITS RESEARCH INCLUDE:

·how does the cost and performance of an energy storage system change over time?

·even without drivers or policies to increase the share of renewable energy, what is the role of daytime energy storage in the power sector?

·in the u.s., what is the amount of economically viable deployment of daytime energy storage, both on a utility-scale and on a distribution scale?

·what factors might drive this deployment?

·how will the increase in installed capacity of daytime energy storage affect grid operations?

THE NATIONAL RENEWABLE ENERGY LABORATORY'S (NREL) FUTURE OF ENERGY STORAGE RESEARCH (SFS) SERIES OF REPORTS SUMMARIZES KEY LESSONS LEARNED FROM ITS RESEARCH PROCESS AND WILL HELP SHAPE THE FUTURE OF ENERGY STORAGE VISION. 

THE FUTURE OF ENERGY STORAGE RESEARCH (SFS) SERIES OF REPORTS PROVIDES DATA AND ANALYSIS TO SUPPORT THE U.S. DEPARTMENT OF ENERGY'S (DOE) "ENERGY STORAGE GRAND CHALLENGE," A COMPREHENSIVE PROGRAM DESIGNED TO ACCELERATE THE DEVELOPMENT, COMMERCIALIZATION, AND UTILIZATION OF NEXT-GENERATION ENERGY STORAGE TECHNOLOGIES AND HELP THE UNITED STATES MAINTAIN ITS GLOBAL LEADERSHIP IN ENERGY STORAGE. THE ENERGY STORAGE CHALLENGE USES A USE CASE FRAMEWORK TO ENSURE THAT ENERGY STORAGE TECHNOLOGIES CAN COST-EFFECTIVELY MEET SPECIFIC NEEDS, INCORPORATING A WIDE RANGE OF TECHNOLOGIES ACROSS MULTIPLE CATEGORIES: ELECTROCHEMICAL ENERGY STORAGE, MECHANICAL ENERGY STORAGE, THERMAL ENERGY STORAGE, AND POWER ELECTRONICS.

energy storage deployments for decades to come

energy storage systems are likely to become key elements of a low-carbon, flexible and resilient future grid.

renewable energy generation in the u.s. the power sector has increased dramatically over the past few years and is expected to see significant growth in the future. in addition, as more and more customers emphasize the importance of clean energy deployment while maintaining reliable operation of power systems, the united states and countries around the world are paying more attention to the use cases of solving power system outages, and pay more and more attention to research and analysis on power system reliability and resilience.

at the same time, the cost of energy storage technologies, especially battery energy storage systems, has fallen sharply over the past few years, and more different energy storage technologies are being developed. these factors have increased concerns about the important role that energy storage systems play as a critical decarbonized asset and ensure that the evolving grid has access to reliable electricity.

energy storage systems offer many potential benefits to the grid. energy storage systems can store and provide electricity and complement the electricity of wind power facilities and solar power generation facilities, providing power when the availability of these resources is reduced. when combined with renewable or other clean energy sources, energy storage systems have the ability to reduce greenhouse gas emissions.

energy storage systems can also improve the utilization of transmission lines while offsetting or slowing the construction of new power generation facilities to provide peak capacity or meet the need for operational reserves. finally, distributed energy storage systems can reduce operational pressure on the grid during periods of peak demand. this flexibility is important for the expected growth of electric vehicles and the potential load increase for other end-use electrifications.

AS THE COST OF ENERGY STORAGE SYSTEMS CONTINUES TO FALL AND THE GRID INTEGRATES MORE VARIABLE RENEWABLES, MODELING FROM THE NATIONAL RENEWABLE ENERGY LABORATORY (NREL) SUGGESTS THAT THE DEPLOYMENT OF ENERGY STORAGE DEPLOYMENTS IN POWER SYSTEMS WILL INCREASE SIGNIFICANTLY OVER THE NEXT FEW DECADES. BUT IT ALSO RAISES QUESTIONS SUCH AS HOW ENERGY STORAGE SYSTEMS WILL AFFECT HOW THE GRID OPERATES AND EVOLVES IN THE COMING DECADES.

BECAUSE ENERGY STORAGE SYSTEMS HAVE CHARACTERISTICS THAT AFFECT POWER GENERATION, TRANSMISSION, AND DISTRIBUTION, THE VALUE OF QUANTIFYING ENERGY STORAGE SYSTEMS IS MORE COMPLEX THAN QUANTIFYING THE VALUE OF RENEWABLE ENERGY GENERATION FACILITIES SUCH AS SOLAR POWER GENERATION FACILITIES OR RENEWABLE ENERGY GENERATION FACILITIES SUCH AS WIND POWER GENERATION. THROUGH THE FUTURE OF ENERGY STORAGE STUDY (SFS), THE NATIONAL RENEWABLE ENERGY LABORATORY (NREL) AIMS TO DEEPEN ITS UNDERSTANDING OF HOW ENERGY STORAGE SYSTEMS ADD VALUE TO POWER SYSTEMS, HOW MUCH VALUE THEY ADD TO THEM, HOW MANY ENERGY STORAGE SYSTEMS CAN BE DEPLOYED ECONOMICALLY, AND HOW ENERGY STORAGE DEPLOYMENTS AFFECT THE OPERATION AND EVOLUTION OF POWER SYSTEMS.

The Future of Energy Storage Study (SFS) first defines a four-phase framework that increases energy storage deployment and duration over time, creates some long-term projections for the deployment of daytime energy storage systems in the United States (less than 12 hours), and then applies detailed production costs and agent-based modeling to better understand the role of energy storage systems. The study's main conclusion is that energy storage deployments have significantly increased potential – at least five times the installed capacity of today's cumulatively deployed energy storage systems by 2050, which will play an integral role in determining the optimal future cost of the grid mix. Based on an analysis of the Future of Energy Storage Study (SFS), previous work, and additional analysis of this report, the study identifies 8 key insights into the future of energy storage systems and their impact on power systems. These important lessons learned can help policymakers, technology developers, and grid operators prepare for the coming wave of energy storage deployments:

key experience 1: the installed capacity of energy storage systems is expected to grow rapidly

the future of energy storage study report points to the huge economic potential of the u.s. The power sector's adoption of daytime energy storage and demonstrates the growing cost-competitiveness of energy storage systems. using advanced large-scale capacity expansion models, it was found that daytime energy storage systems (lasting < 12 hours) were competitive in terms of cost in a variety of scenarios, and the study made a series of cost and performance assumptions about energy storage systems, wind power facilities, solar power facilities, and natural gas power plants.

FIGURE 1 SHOWS THAT IN ALL SCENARIOS, THE TOTAL INSTALLED CAPACITY OF THE ENERGY STORAGE SYSTEM DEPLOYED IN THE FUTURE IS 100GW TO 650GW. AND THIS BROAD SCOPE IS DRIVEN BY A NUMBER OF FACTORS, INCLUDING THE COST OF ENERGY STORAGE SYSTEMS (KEY REALIZATION 2), NATURAL GAS PRICES, AND RISING COSTS OF RENEWABLE ENERGY. EVEN THE MOST CONSERVATIVE SCENARIOS WILL INCREASE FIVEFOLD COMPARED TO THE INSTALLED CAPACITY OF 23GW OF ACCUMULATED 23GW OF ENERGY STORAGE SYSTEMS DEPLOYED BY 2020, MOST OF WHICH ARE PUMPED STORAGE POWER GENERATION FACILITIES.

it is worth noting that renewable energy and energy storage systems will be deployed in large quantities even without additional carbon reduction policies, indicating their increasing cost competitiveness as a resource for providing energy and capacity services.

INSIGNIFICANT BUT INCOMPLETE DECARBONIZATION SIMULATION SCENARIOS, CARBON EMISSIONS FROM THE U.S. POWER SECTOR HAVE BEEN REDUCED BY 46 TO 82 PERCENT COMPARED TO 2005, AND BY 2050, THE SHARE OF VARIABLE RENEWABLE ENERGY (VRE) IN THE TOTAL INSTALLED CAPACITY OF AVAILABLE ENERGY IN THE U.S. WILL REACH 43 TO 81 PERCENT. ENERGY STORAGE SYSTEMS WITH A DURATION OF 4 TO 6 HOURS ARE TYPICALLY USED AND DRIVEN BY INTRINSIC SYNERGIES WITH SOLAR POWER FACILITIES (KEY EXPERIENCE 5), BUT LONGER DURATION ENERGY STORAGE SYSTEMS ARE USUALLY DEPLOYED IN SUBSEQUENT MODELING YEARS (KEY EXPERIENCE 7). INDUSTRY EXPERTS ALSO EXPLORE THE MAIN DRIVERS BEHIND THE GROWTH OF ENERGY STORAGE SYSTEMS AND THE EVOLUTION OF ENERGY STORAGE SYSTEMS.

Figure 1.In the reference case, the installed capacity of the energy storage system deployed in the United States by 2050 will grow to about 200GW, and the duration range of deployment (left) means that the energy storage capacity of the energy storage system is about 1,200GWh (right), and its deployment range is wide.

key experience 2: it is expected that the cost of energy storage systems will continue to decrease in the near future, and lithium-ion battery energy storage systems will continue to lead the market share for a period of time

THE ENERGY STORAGE TECHNOLOGY MODELING INPUT DATA REPORT IN THE FUTURE OF ENERGY STORAGE RESEARCH (SFS) SERIES PREDICTS FUTURE DEVELOPMENTS IN THE COST OF UTILITY-SCALE BATTERY ENERGY STORAGE SYSTEMS AND OTHER ENERGY STORAGE TECHNOLOGIES THAT DRIVE MOST OF THE EXPECTED GROWTH IDENTIFIED IN KEY EXPERIENCE 1.

most of the stationary energy storage systems expected to be deployed in the short term are battery energy storage systems, especially lithium-ion battery energy storage systems. at least in the short term, the dominance of lithium-ion battery energy storage systems in the energy storage market is driven by their growth in several markets, including consumer electronics and stationary energy storage applications as well as electric vehicles.

figure 2 provides an example of the historical and future costs of lithium-ion battery packs, showing the rapid decline in energy storage system costs in recent years. the chart also shows that the vast majority of batteries are used for transportation applications, which is probably the most important driver of battery technology development and battery cost reduction.

THE NATIONAL RENEWABLE ENERGY LABORATORY (NREL) USES VARIOUS FUTURE COST PROJECTIONS FOR UTILITY-SCALE BATTERY ENERGY STORAGE SYSTEMS TO ASSESS OVERALL SYSTEM COSTS, INCLUDING INVERTERS, SYSTEM BALANCING, AND INSTALLATION. FIGURE 3 SHOWS AN EXAMPLE OF THE COST PREDICTION OF A BATTERY ENERGY STORAGE SYSTEM USED IN THE FUTURE STUDY OF ENERGY STORAGE (SFS) REFERENCE SCENARIOS WITH A DURATION OF 2 TO 10 HOURS

figure 2 the cost of lithium-ion batteries has fallen by more than 80% over the past decade and is expected to continue to decline on the basis of the continued scale of production driven by demand for electric vehicles.

Figure 3: The reference scheme for utility-scale battery energy storage systems is expected to continue to reduce costs. The left side measures costs on a dollar/kWh (energy storage capacity) basis, while the right side measures costs on a dollar/kW (installed capacity) basis. The forecast assumes a 60MW battery energy storage project

The left curve of Figure 3 shows the total cost of the energy storage capacity (kWh) of the energy storage system, which is a common measure in the battery industry. This is the total cost of installing the energy storage system. For fixed energy storage applications, it also includes electricity-related costs (related to storage and conversion) and energy-related costs (energy storage media). Electricity-related costs don't usually increase with duration, which means they're the same for 2-hour energy storage systems and 10-hour energy storage systems, which is why energy storage capacity (kWh) costs decrease as duration increases. The cost breakdown of electricity and duration is shown in Figure 4. The curve on the right shows the cost of installed capacity (kW), a measure of the cost of traditional power generation facilities used by utilities. With this measure, its cost increases with the duration. As the duration increases, battery cost is a major component of battery energy storage systems. As battery costs fall over time, longer-lasting battery energy storage systems fall faster than the overall cost of shorter-lasting battery energy storage systems.

although most of the energy storage systems deployed in recent years are battery energy storage systems, various energy storage technologies may enter the market as costs fall or the value of long-term energy storage increases (key experience 7). figure 4 summarizes the capital cost estimates for 15 different types of energy storage systems and different stages of commercialization. to arrive at the total cost, the installed capacity-related cost (x-axis) is multiplied by the number of hours (duration) and added to the power-related cost (y-axis). figure 4 also depicts the cost areas of this relationship, which may be more or less suitable for short-term or long-term applications. using battery energy storage systems as a benchmark, the blue line represents a market segment where alternative technologies are (or maybe) more cost-effective when commercialized.

it is important to note that for most energy storage technologies, the distinction between these power and energy-related components is not absolute, and it can be difficult to distinguish these components. many other important factors are not illustrated in figure 4, including charge-discharge round-trip efficiency and potential site selection limitations.

because of the difference between electricity and energy-related costs, some technologies may be more suitable for different energy storage applications based on the desired duration. low-power technology costs (but high energy costs) may be more suitable for short-term applications, while devices with higher power-related costs but lower energy-related costs may be more competitive in long-term applications. the relative importance of various applications is discussed in key experience 3. as the grid evolves, longer applications (key experience 7) are likely to play an increasing role, which may increase the chances of adopting more energy storage technologies. the area on the far left of figure 4 contains very low-cost energy-related technologies (using underground caves or reservoirs) that are well suited for the application of seasonal energy storage systems (key experience 8).

overall, battery energy storage systems currently dominate the energy storage market, but other energy storage technologies are likely to continue to improve in the future. as power systems evolve and the role of energy storage systems changes over time, they may have new market opportunities if other technologies can compete with battery energy storage systems in terms of cost.

Figure 4: The cost of energy storage capacity (USD/kWh) and installed capacity cost (USD/kW) of various energy storage technologies. Energy storage technologies with low costs associated with installed capacity but high costs associated with energy storage capacity may be more suitable for short-term energy storage applications, while energy storage technologies with higher costs associated with installed capacity and low costs associated with energy storage capacity may be more competitive in long-term energy storage applications. As technology evolves and commercializes, expected costs may change

key realization 3: the ability to provide fixed capacity is a major driver of cost-competitive energy storage deployments

THE ABILITY OF ENERGY STORAGE SYSTEMS TO PROVIDE FIXED CAPACITY IS A MAJOR DRIVER OF THE FUTURE OF ENERGY STORAGE RESEARCH (SFS) REPORT. IN THE FOUR PHASES OF UTILITY-SCALE ENERGY STORAGE DEPLOYMENT, THE FRAMEWORK FOR THE EXPANSION OF ENERGY STORAGE IN POWER SYSTEMS DISCUSSES THE MULTIPLE SOURCES OF VALUE PROVIDED BY ENERGY STORAGE SYSTEMS, WHICH DRIVES MOST OF THE EXPECTED GROWTH IDENTIFIED IN KEY EXPERIENCE 1.

FUTURE OF ENERGY STORAGE RESEARCH (SFS) MODELING EVALUATES FOUR SOURCES OF VALUE THAT ENERGY STORAGE SYSTEMS PROVIDE TO THE GRID:

·fixed capacity: meet user demand during peak demand in the power system and replace the capacity of traditional power generation facilities such as natural gas power generation facilities.

·energy time shift: stores lower-priced electricity during periods of low net demand and releases electricity during periods of high net demand. this includes avoiding unusable renewable energy generation capacity.

·operating reserves: rapid response to imbalances between supply and demand caused by random changes and disruptions. several types of reserves include frequency regulation and emergency reserves.

·avoid retrofitting or upgrading transmission facilities: offset or reduce the need to upgrade or retrofit transmission facilities by deploying energy storage systems in areas where power is restricted, charging when power is plentiful, and discharging local transmission systems as they approach or reach maximum power capacity.

energy storage systems can provide multiple services at the same time or at different times (often referred to as "value stacking"). to determine the relative value of these services in an evolving grid, the study simulated a variety of scenarios to start or shut down energy storage systems to provide the ability to transfer reserves, capacity, and time individually or in combination. while the value of transmission delays is important, it is difficult to isolate from each other and is very regional, so there is no attempt to isolate the value of delayed transmissions.

figure 5 shows an example of a use case that limits the services that an energy storage system can provide shows that capacity services are more important than energy time-shifting or operational reserves in order to achieve the maximum potential of the energy storage system. the impact of transmission-related benefits, which are important but very regional, is not taken into account in figure 5.

STUDIES HAVE SHOWN THAT BY 2050, THE UNITED STATES WILL DEPLOY ABOUT 200GW OF ENERGY STORAGE SYSTEMS. WHEN IT OFFERS ONLY ENERGY TIME-SHIFTED SERVICES, IT REALIZES 30% OF ITS "ALL FOUR SERVICES" POTENTIAL. HOWEVER, IF THE ENERGY STORAGE SYSTEM ONLY PROVIDES FIXED CAPACITY AND HAS ECONOMIC VALUE, A 150GW ENERGY STORAGE SYSTEM MAY BE DEPLOYED. THE PROVISION OF OPERATIONAL RESERVE SERVICES WILL ONLY INCREASE DEPLOYMENT IN RELATIVELY SMALL AMOUNTS, IN PART DUE TO THE LIMITED OPERATIONAL RESERVES REQUIRED AND THE SATURATION OF RESERVE REQUIREMENTS DUE TO ENERGY STORAGE SYSTEMS DEPLOYED PRIMARILY TO PROVIDE CAPACITY AND TIME-SHIFTED SERVICES.

overall, this suggests that energy storage systems are able to provide stable energy storage capacity and offset the demand for traditional power generation to meet peak demand, which is critical to reaching its full potential. the actual capacity of an energy storage system to provide fixed capacity depends largely on its duration and correlation with the duration of peak net load in the deployment area. the duration of the net load peak is affected by a variety of factors, including solar and incremental energy storage system deployment (key 5 and key 7).

key takeaway 4: energy storage systems aren't the only flexible option, but their cost reductions have changed compared to other options.

the ability to increase the flexibility of the power system, meet peak demand, and help address variability in net demand increases is often expressed in the form of a flexible supply curve. figure 6 provides an example of this concept, illustrating the resources that can provide flexible services.

historically, energy storage systems have been seen as one of the most costly options for increasing grid flexibility. however, cost reductions may change their relative position on the elastic supply curve. despite this shift, it is important to emphasize that energy storage systems are just one of several resources that can provide flexibility to the grid to better align the supply of electricity with the demand for electricity.  

elastic supply curve figure 6

cost-effective decarbonization requires taking into account the potential flexibility of all resources, including largely untapped in terminal electricity demand. flexible demand can be achieved through a variety of mechanisms, from price signals to the concentration of distributed energy sources to flexible ev charging, which can provide many of the same services as energy storage systems, including reducing peak net demand and changing the timing of variable generation.

figure 7 shows the flexible demand and the enormous potential of energy storage systems in the power sector. these results are derived from a supplementary analysis of the present report. columns 1 and 3 in the figure provide the results of the underlying scenario. columns 2 and 4 assume additional demand response deployments to assess their impact on energy storage systems and overall investment decisions. in these cases, the need for flexibility reduces the overall demand for energy and the value of energy time transfer. as a result, energy storage system deployments have decreased, especially when energy storage systems are moderately costly, highlighting the need for flexibility and potential competition between energy storage systems.

to thoroughly understand the potential opportunities for demand response deployment, more research is needed. take into account implementation costs, social acceptance, availability during net peak periods (which may change as variable generation deployments increase), and implementation mechanisms. while energy storage systems may be increasingly competitive with resources such as flexible demand, the lowest-cost decarbonization needs analysis can help enable a range of flexible options for renewables and other clean energy sources.

figure 7. as load flexibility and responsiveness increase, the demand for energy storage capacity will decrease by 2050 for low renewable energy//battery cost scenarios, regardless of whether there is a high demand response