Category Archives: Energy Storage

Energy storage for the smart grid

Distributed Storage II: Power System Simulation Of The Benefits Of Distributed Storage

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Dominic Geraghty


Types of Storage Systems

Energy storage is available in the form of commercial bulk storage, e.g., CAES, pumped storage, large battery systems. It is also available as distributed energy storage (DES) systems, e.g., dispersed small batteries located at the facilities of industrial, commercial or residential energy users.  Sometimes these DES systems are operated in conjunction with distributed PV generation.

Bulk energy storage can create benefits for energy-users, utilities, regional power system operators (ISOs), and society as a whole. For example, bulk storage, operated by power system operators (ISOs, integrated utilities, transmission system operators, and distribution utilities), can reduce operating costs, defer capital expenditures, increase system reliability, and reduce price volatility. These benefits can be quantified using an integrated power system/market model.

To date, most of the studies of bulk storage conclude that the value that it provides to the system does not justify its high costs, while caveating that there may be situation-specific locations where net value is created

Benefits of Distributed and Bulk Energy Storage Systems

DSC_0184 150-x150DES can reduce customers’ electricity bills, shave peaks, reduce power system costs, increase reliability, reduce price volatility, reduce required reactive power support, and, when aggregated, provide an arbitrage opportunity in electricity markets.

Here, we present a scenario depicting the deployment of DES and present a preliminary quantification of its value, based on a detailed power system and market simulation model, and contrast this result with the preliminary quantification of the value of a bulk storage system in the same region.

Scenario Description

Location/year: ERCOT/2015

DES system:

  • Installed cost, post any incentives/subsidies: $1,600/kW
  • Amount: 120 x 2 MW systems, distributed across 60 buses

Bulk storage system:

  • Installed cost, post any incentives/subsidies: $1,250/kW
  • Amount: 100MW, located at a transmission bus

Preliminary Scenario Results

The DES system reduced peak Locational Marginal Prices (LMPs) at all 60 buses – the largest reduction at a node was $3.50/MWh. The bulk storage system produced an average LMP reduction of $1.50/MWh.

The DES system created production cost-savings to the power system (net societal benefits) of approximately $171 million for the year, with higher cost-savings occurring in the high-demand summer months. The sources of these savings were peak shaving, reduced peak hour LMPs, ancillary services, and lower consumer bills. The bulk storage system experienced insufficient arbitrage opportunities and did not provide any significant benefits to the system.

The present value of the ratio of 15-year benefits to costs was 3.02 for the DES system, and 0.28 for the bulk storage system. The internal rate of return (IRR) for both types of installations was modest: the DES system was estimated at 4.6%, and the bulk storage system, 0.78%.

The following table summarizes the main results:

System Wide Savings

Bulk Storage ($millions)

Distributed Storage ($millions)

 Production Costs Savings/Net  Societal benefit



 Changes in Producer Surplus



 Changes in Consumer Surplus



 Congestion Cost Savings



This quantification does not include the value of increased local reliability for end-use customers related to DES, or the reduction in price volatility and potential deferrals of transmission or distribution capital expenditures for both types of storage installations.

11. DSC_0118-150x150-150x150Given the very large societal benefits of DES, consideration could be given to transferring some of that benefit to further increase the incentives provided to DES systems -- the objective would be to increase the IRR for such investments until volume production presumably reduces their $/kW cost. Of course, this consideration is based on the assumption that such systems are not owned/rate-based by utilities. In order to spread the risk fairly, this incremental incentive could be structured contractually to be paid out in performance-based increments over the life of the system, instead of as an up-front reduction of the capital cost.

All of the above simulations were conducted using the UPLAN software suite of LCG Consulting, and sponsored by EPRI (unpublished, but with permission).

Distributed Energy Storage (I): What Benefits Constitute the “Benefits Stack”?



Dom Geraghty


Distributed Energy Storage (DES) (I): Aren’t We Missing Some of the Benefits in the “Benefits Stack”?

Energy storage, while providing unique and valuable benefits, is relatively expensive.  Based on studies and demonstrations to date of the usual set of bulk and distributed applications, it appears that there is an approximately $250/kW to $500/kW “gap” by which the costs exceed the benefits (see below). But have all the benefits been counted?

Simulation models used for these evaluations to date have not been capable of faithfully simulating the operation of storage facilities within the power system as a whole, calculating all of the potential benefits, and certainly not of co-optimizing these benefits.  It’s a complicated problem.

That leads us to ask: Would a more holistic simulation and a more complete benefits’ “stack” help us close the cost/benefit “gap”? Continue reading

Distributed Storage – Archive

For "BizCase Challenges" document, see here.

Best References

Energy Storage Benefits and Costs:

Sandia Report: "Energy Storage for the Electricity Grid: Benefits and Market Potential Assessment Guide", Jim Eyer et al., Fenruary 2010

EPRI Report: "Benefit Analysis of Energy Storage: Case Study with Sacramento Municipal Utility District", 2011, Report #: 1023591 (private communication)

OGE, Analysis of Renewables Integration, 2011 (private communication)

Related EPRI White Paper: "Electricity Energy Storage Technology Options", Dan Rastler, December 2010

Mark Rawson (SMUD), "Panel 3: Utilities' Perspective of Energy Storage", 2011 Integrated Energy Policy Report, Committee Workshop on Energy Storage for Renewable Integration, April 28, 2011, Sacramento, CA

EPRI Presentation: "Energy Storage System Costs - 2011 Update -- Executive Summary", Dan Rastler et al.

Southern California Edison: "Moving Energy Storage from Concept to Reality", 2011

Pacific Northwest National Laboratory, DOE: "Energy Storage for Power System Applications: A Regional Assessment for the Northwest Power Pool (NWPP)", April 2010 -- includes chapter on "Arbitrage Opportunities for Energy Storage"

National Renewable Energy Laboratory, DOE: "The Role of Energy Storage with Renewable Electricity Generation", January 2010

KEMA PIER Report for California Energy Commission: "Research Evaluation of Wind Generation, Solar Generation, and Storage impact on the California Grid", June 2010

Rahul Walawalkar, "Critical Factors for Developing Economically Viable Electricity Storage Projects", Presentation, Storage Week, San Diego, CA, July 14th, 2009

Other References

Final Report, California Energy Commission (CEC) / New Power Technologies (NPT) / Southern California Edison (SCE) Project Using GRIDfast (December 2010)