September 12, 2017

Capturing Multiple Benefits of Batteries Could Add Significant Value to California Energy Storage, According to Brattle Economists

A report released today by Brattle economists finds that operating batteries to simultaneously capture benefits from multiple value streams (i.e., “stacked benefits”) could unlock significantly more value than using batteries to target only individual applications. The analysis identifies current challenges to capturing multiple benefits of battery storage and highlights policy options for mitigating these challenges.

Prepared for Eos Energy Storage with funding from the California Energy Commission (CEC), the Brattle report provides an assessment of the potential economic benefits of energy storage in California. Eos is a manufacturer of grid-scale energy storage solutions that is supplying systems for two CEC-funded energy storage demonstration projects hosted by Pacific Gas & Electric and the University of California San Diego. An Eos system was used as the basis for battery operational characteristics in Brattle’s analytical framework.

While much of the existing research on energy storage value only focuses on isolated applications of the technology, the Brattle report employs a modeling approach to more comprehensively estimate the benefits of using battery storage to simultaneously capture multiple value streams.

“We have found that, in many cases, the value of ‘stacked’ benefits of battery storage compares favorably to the current cost of new batteries,” noted Ryan Hledik, a Brattle principal and co-author of the report. “Our analysis focused on the California market, but the conclusions are broadly relevant to other markets in North America and around the globe.”

Based on an assessment of the value of battery storage in California, the Brattle report finds:

  • Using recent market data and accounting for realistic battery operations, the total value of “stacked benefits” in California for one kilowatt/four kilowatt-hours of battery storage could be around $280/kW-year. By comparison, recent estimates of battery costs have been in the range of $200 to $500/kW-year (though they vary significantly by technology type and configuration).
  • Avoided capacity costs, frequency regulation, and energy price arbitrage are the largest sources of quantified value; however, the “depth” of each market needs to be taken into consideration when valuing large quantities of energy storage.
  • Accounting for the “stacked” benefits of battery storage by optimizing battery dispatch across all analyzed value streams significantly increases the total value of the battery relative to any individual value stream (by a factor of at least two to three times over individual use cases).
Despite the significantly higher value of capturing multiple benefits, the Brattle study points out challenges to fully realizing this value. Some of these challenges may be overcome through new policy initiatives, such as new or revised retail rate designs, which could more fully reflect the time-varying nature of the cost of generating and delivering electricity.

“Costs of energy storage are expected to continue to decline, and market adoption is likely to increase as a result,” remarked Brattle Associate Roger Lueken, a co-author of the report. “Both retail and wholesale policy considerations will become increasingly important as the market penetration of energy storage grows.”

The report, “Stacked Benefits: Comprehensively Valuing Battery Storage in California,” is authored by Brattle Principal Ryan Hledik, Associate Roger Lueken, Senior Research Analyst Colin McIntyre, and Policy and Marketing Associate Heidi Bishop.

Associated Experts
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Principal
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+1.415.217.1000
Mr. Hledik has expertise in assessing the economics of smart grid investments and policies. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4
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Associate
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