Guest post by Roger Caiazza
One of the biggest issues with plans to replace fossil fuels with renewable energy is intermittency. At some point that can only be addressed by energy storage but tracking down those costs is difficult. I recently found a recently released report from the National Renewable Energy Lab (NREL): “2018 U.S. Utility-Scale Photovoltaics-Plus-Energy Storage System Cost Benchmark” that provides information that can be used to estimate the costs of the energy storage option.
According to the NREL summary, authors Fu and Margolis, along with fellow NREL researcher Timothy Remo, provide NREL’s first cost benchmarking of energy storage and PV-plus-storage systems. The abstract for the report states:
“Market growth for utility-scale photovoltaic (PV) systems has been rapid for several years. Today, with the cost reductions of energy storage technologies, combining PV and energy storage has become feasible and beneficial, especially for the areas that have only PV standalone systems and need to shift the peak load to meet electricity demand in the evening. Overall, utility-scale PV plus energy storage systems can provide dispatchable energy and reliable capacity. This study details cost factors, including labor costs, material costs, overhead, and permitting costs using a system-level bottom-up cost modeling approach. We use this model to benchmark PV-plus-storage installation system cost and identify the cost difference for AC- and DC-coupled systems and duration variation. Finally, we assess the cost reduction opportunities of co-locating PV systems with energy storage systems in order to indicate the possible economic impacts of the PV-plus-storage configuration and help future research and development (R&D) effects in the context of U.S. energy storage policymaking.”
I was interested in the cost benchmark aspects of U.S. Li-ion standalone energy storage systems. NREL calculates that “For a standalone storage system, assuming a constant battery price of $209 per kilowatt-hour (kWh), the installed system costs vary from $380/kWh for a four-hour battery system to $895/kWh for a 30-minute battery system.” I evaluated their data and provide cost estimates for different durations below.
Table 3 in the NREL document, Detailed Cost Breakdown for a 60-MW U.S. Li-ion Standalone Storage System with Durations of 0.5–4 Hours, provides the information necessary to extend their projections to different durations. I have included that table below. For example, NREL estimated the installation labor and expense cost ranging from 0.5 hours to 4 hours. I fit a linear regression model to describe the relationship between that and other costs and energy storage duration so I could extend the cost estimates. I use Statgraphics Centurion software from StatPoint Technologies, Inc. to do my statistical analyses because it provides flexible plotting and regression tools. Statgraphics enables the user to choose the best relationship from 27 different linear regression equations. In this evaluation in every instance, the reciprocal-X model (Y = a + b/X) statistic was the best choice and every regression had an R-squared coefficient great than 99.9% which indicates a strong relationship and suggests that these estimates are good enough for this analysis.
The last table lists the estimate cost breakdown $/kWh parameters for a 60-MW U.S. Li-ion standalone storage system. This analysis estimates installed system costs vary from $343/kWh for an eight-hour battery system and $355/kWh for a six-hour battery system. The table provides the parameters so that the $/kWh value for any duration system can be calculated.
I think it is best to put these numbers into some context relative to the grand plans proposed by Progressive politicians. On July 3, 2019, New York State Governor Andrew Cuomo announced “$55 million for energy storage including commercial and residential storage projects on Long Island. This program will be launched with an initial rollout of nearly $15 million in incentives from the New York State Energy Research and Development Authority. Energy storage projects supported by this Long Island initiative will advance progress toward achieving New York’s target of 3,000 megawatts of energy storage deployed by 2030 – the equivalent to powering 40 percent of New York’s homes.” If they use Li-ion batteries and the duration of the batteries is four hours the 3,000 MW goal alone will cost $4.56 billion at a rate of $380/kWh. In other words the $55 million will advance this goal 1.2% or 36 MW and 145 MWh assuming 4-hour duration batteries.
One final note, I have heard it said elsewhere that energy storage publicity is lax when it comes to information value. The press release is no exception. Cuomo’s target is 3,000 MW and while knowing the power target is nice what we really need to know is the energy (MWh). I had to assume 4-hour duration because I have never seen any value given by Cuomo or his minions. The announcement does claim that 3,000 MW can “power 40% of New York’s homes”. The New York State Energy and Research Development Authority Patterns and Trends document notes that New York State sales of electricity to the residential sector totaled 50,831 GWh and total sales were 147,803 GWh in 2016. According to the New York State Independent System Operator Load and Capacity Data report for 2019 the state summer capability was 39,295 MW. If we assume that residential power in MW is proportional to residential sales to total sales then the residential capability is 13,336 MW and the 3,000 energy storage target is 22% of the power sold to New York homes.
Roger Caiazza blogs on New York energy and environmental issues at Pragmatic Environmentalist of New York. This represents his opinion and not the opinion of any of his previous employers or any other company he has been associated with.
NREL Table 3. Detailed Cost Breakdown for a 60-MW U.S. Li-ion Standalone Storage System with Durations of 0.5–4 Hours
Calculated Cost Breakdown $/kWh Parameters for a 60-MW U.S. Li-ion Standalone Storage System
UPDATE – corrected Li-Ion battery total costs and total energy system costs for 8-hour and 6-hour duration systems