Would reduced energy storage costs affect renewable electricity?

Co-located solar farm and energy storage facility (Primus Power)

STANFORD, CA - Some U.S. states and other regions of the world have set policy goals for all electricity generation to come from zero-carbon or renewable resources by 2050. Because wind and solar resources vary daily and seasonally, a reliable electricity system requires energy storage, flexible demand, or infrequent use of other zero-carbon generation technologies. The economics of energy storage depend on the frequency, magnitude, and duration of storage used. Moreover, investment in energy storage competes with investment in additional wind and solar generation capacity.

Fan Tong of the department of global ecology (DGE) at the Carnegie Institution for Science in Stanford, California assessed (August 2020) the effects of reductions in energy storage costs on electricity systems based only on variable renewable energy (VRE) resources such as wind and solar. He and co-authors Mengyao Yuan and Ken Caldeira, also of DGE, Nathan S. Lewis of the California Institute of Technlogy in Pasadena, California, and Steven J. Davis of the University of California, Irvine, in Irvine, California, found that in the least-cost systems, the role of energy storage shifts from filling hourly gaps when storage costs are high (>$100/kWh) to filling seasonal troughs when storage is near-free. To yield highly reliable electricity while minimizing curtailment of VRE generation, energy storage costs would need to decrease several hundred-fold (to ~$1/kWh) from current costs.

The amount of money spent on energy storage, for least-cost VRE/storage systems meeting continental U.S. electricity demand, would remain mostly constant. However, the total system costs may decrease substantially as a result of declining storage costs. New battery chemistries are needed to help meet cost targets for seasonal energy storage. These chemistries would be used infrequently in storage applications that use only abundant, inexpensive raw materials in conjunction with ultralow-cost manufacturing processes.

Steep diminishing returns for energy storage cost reductions in variable renewable electricity systems underscore a need for additional technologies to ensure the cost-effectiveness of zero-carbon energy. These include expanded electrification and demand response in heating, industry, and transportation, low energy-cost long-duration storage technologies (e.g., thermal storage, power-to-gas, and power-to-liquid fuels), and high-voltage direct-current (HVDC) transmission lines.

Potential tradeoffs between the private benefits of system cost reductions vs. the public benefits of energy storage expenditures suggest a need for public R&D support.

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