Study: Even At Current Prices, Energy Storage Makes Economic Sense For Many Renewables Projects

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Even at current market prices, various different energy storage options make economic sense for renewable energy projects in some locations, according to new research from MIT.

The energy storage options profiled by the study included: battery systems, pumped hydroelectric storage, and compressed air energy storage, amongst others. While these options are economically a good choice in some locations, in other locations, they are not.

The study also found that “regardless of the particular circumstances at a given location, certain features of how electricity prices fluctuate are common across locations and do favor some specific types of storage solutions over others.”

“Researchers and practitioners have struggled to compare the costs of different storage technologies,” stated Jessika Trancik, the Atlantic Richfield Career Development Assistant Professor of Energy Studies at MIT. “Because of the multiple dimensions of cost and the fact that no technology dominates along all dimensions. Storage technologies can only be compared by looking at the contexts in which they are going to be used.”

The study examined the current situation in 3 different states — California, Texas, and Massachusetts. The findings indicate that, while energy storage systems often make sense in Texas and California today, they typically don’t in Massachusetts. The researchers involved are planning to continue the work, examining other states as well.


The press release notes pumped hydro’s particular usefulness in Texas. “In these systems, excess power is used to pump water uphill to a reservoir for storage, and then the water is released through a turbine to generate power when it is needed. The increased revenue the plant can produce, by waiting to sell the power into the grid until spot-prices for electricity — the constantly-changing market rate that electricity distributors pay to producers — are at their peak, would exceed the costs of the added storage system.”

Continuing: “Further, they found that such pumped hydro storage provides more value than a storage system using lead-acid batteries even though its power capacity components would cost several times more. This is because a pumped hydro system has lower energy-capacity costs than lead-acid battery system. (Energy capacity refers to the overall amount of energy that can be stored in the system, and power capacity refers to how much energy can be delivered at a given moment from that system). A compressed air storage system could also add value comparable to that of the pumped hydro system. However, batteries are attractive, the researchers note, because they can be installed essentially anywhere and do not rely on natural features that exist only in some locations.”

As noted by the researchers, while most recent work on energy storage systems being used in conjunction with renewables has focused on the smoothing out of intermittency, what matters most to investors is likely to be the price curve as opposed to the demand curve.

The researchers also made note of the fact that, while the opportunity for adding storage capacity is there now, it may not last — owing to the fact that if the price of renewables falls faster than that of energy storage, then it’ll often simply be cheaper to add more production capacity (rather than storage capacity). That has been the focus of many a discussion here on CleanTechnica.

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James Ayre

James Ayre's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy.

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14 thoughts on “Study: Even At Current Prices, Energy Storage Makes Economic Sense For Many Renewables Projects

  • What are current prices!

    • Define cycle. Some leaf batteries were cycled in a leaf till they lost too much capacity, and then they were repurposed for grid storage, or datacenter storage. The size of those cycles is not constant. Then there is the thing about round trip efficiency. All these questions will make for some employment opportunities. 🙂

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  • In this situation I presume there is a resultant period of excess electricity production through overcapacity. Considering that this electricity would indeed be wasted, or at least be of a low value, the ideal scenario is to use this low cost factor to further reduce the price of hydrogen through electrolysis. If the cost of electricity is currently about 55% of the cost of the hydrogen produced (using DoE figures), including all other cost components (stack/equipment/service cost) then this significantly reduces the price of hydrogen dispensed, potentially half the DoE figure of $4.00/kg by 2020.

    • That is almost certainly a bad assumption.

      There will be significant “opportunistic loads” on the future grid. EVs and grid storage will be a couple of major ones.

      The grid is not going to overbuild a huge amount and then give that power away. This is the “free electricity” myth so many hydrogen and synfuel advocates dream about.

      If I own a solar farm I am not going to give you my output for free. Pay for it or I’ll just not turn on the switch. Same for the grid, utilities won’t move electricity from wind and solar farms to your hydrogen plant for free. They will demand payment.

      Then there will be millions of EVs that normally will not charge more than is needed for normal daily driving. Power price goes down and they will stock up. And the price will go down only after the utilities have filled up their massive storage facilities.

      Daniel, you are beating a dead horse. Do a search of this site for hydrogen articles and you’ll see that your ideas have been discussed and shown to be invalid.

      • While Bob is right, I think a homeowner or solar farm owner who is overproducing will have a strong incentive to install *his or her own batteries* onsite rather than giving away the output or curtailing it. This is going to drive battery installs.

    • That same electricity could produce more passenger miles for less money and not need new infrastructure. FCEV are a now dying dead end.

  • It is likely that for large grids we will end up with over capacity of RE. The question then becomes by how much? 1.25x – 3x but before you worry you head on that look where we are today; total energy oil/coal/gas is still > 80% world wide. Note that nuclear, hydro, and bio-burning make up most the rest. So do your studies, and add storage systems where maximum profits are. That and the “island” systems that are reaching high RE %s. But for 95% of the worlds grids the focus should be on RE deploy, deploy, deploy. Note I expect and am not overly bothered that batteries will likely be matched with a gas peak plants. This will happen let gas plants be more cost effective and stay around longer. Will let gas run at best efficiency and use the batteries to follow load.

    • Of course the best way to speed both storage and RE up would be end government support for fossil fuel and add a fee/dividend system to prove in at least the health externals.

  • This is a very interesting article. How will this affect 3rd world countries in Africa whereby grid power is not stable. I feel that RE and energy storage will play a vital role for major projects and industries operating in these area?

    • Yes, including India and parts of Asia. That is already happening.

  • There are many places where pumped storage hydro is a viable solution and much cheaper than batteries. In Japan they built a pilot plant on a cliff that uses sea water, thus eliminating the need of lower reservoirs. Appropriate materials and maintenance must be used to avoid corrosion and biofouling, but this storage solution can be built wherever there is a cliff high enough, being its storage potential only limited by the size of the top reservoir with virtually infinite water availability.

    • Even better places are rivers with high bluffs next to flood plains. Build lower reservoir next to river on flood plain. Build upper reservoir on nearby bluff or top of hill. Build pipes and reversible generator in between reservoirs. Fill lower reservoir when river is running high, rainy season. Begin use of your hydro storage. Very long term use, so very low cost like regular hydro-electricity in long run. No salt water invasion of water table. No salt water biofouling.

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