I usually write this blog in finnish, but since these thoughts originated from the comments to a recent post in Carbon Commentary this one will be in english. (See especially the comments by J. M. Korhonen and Dominic Hofstetter.) I want to understand some general issues regarding attractiveness of electricity storage and also how storage schemes are likely to differ between intermittent power sources and baseload power sources.
Since storage would pay for itself from the spread of electricity prices at different times, as a first step, I wanted to know how much do the prices actually vary. I checked this for the Swedish market and show the result in the figure. In Sweden the average range for daily variation in price is about 18 euros/MWh. Data implies that the price varies from about 0.75 times the daily mean price (typically) at night to about 1.25 times the mean price during peak demand.
Swedish spot prices (2012)
So each stored kWh should make a profit from this spread and cannot therefore cost more than this. So it would seem that for large scale electricity storage to be interesting, the cost should certainly be less than about 10 euros/MWh. Unfortunately storing electricity is costly.
Over the lifetime the prices per kilowatt hour can vary from hundreds of dollars to thousands. If we optimistically assume a cost of 100 euros/kWh, to get the cost for a single cycle to the 10 euros/MWh range implies around 10000 cycles. If there is one cycle per day, this implies a lifetime of around 30 years. For battery systems both the cost assumption as well as the lifetime assumption are quite unrealistic. Pumped hydro is somewhat more realistic (although it has its share of problems…see here), but it is geologically limited resource and implies flooding large areas of land.
What kind of efficiency should we expect from our storage system? Let us say we have an efficiency E so that to get 1 kWh of stored electricity for sale, we need to spend 1/E kilowatt hours during storage and lose “minimum price/E” worth of sales. Selling the stored electricity will gain us (at best) “maximum price” and in order for the process to make sense efficiency must be much better than about “minimum price/maximum price”. With Swedish figures anything that has a roundtrip efficiency less than around 60% makes no sense. Naturally, less efficient the system is less it should cost so that it can still make a profit within that 18 euros/MWh range.
Increasing amount of wind power in the grid will increase price volatility. Why this would be desirable is unclear. Typically increased uncertainty is a thing to avoid since it increases the likelihood of proverbial shit reaching all the way up to the proverbial fan. Here it would seem that we first pay someone subsidies for extra volatility and then someone else to get rid of it. Maybe there is beauty in here, but it does seem well hidden. In any case increased volatility can make some storage schemes more viable, but who would build such storage? Currently wind power producers are guaranteed a market AND the price so they do not have an incentive to move their production to some other time periods using storage. For storage the system should be changed so that wind power producers do not get guaranteed prices and have to find actual customers for their product. However, even then the volatility increases to make (theoretical) large scale storage viable would have to be very dramatic and storage schemes would still have to compete with generators burning stored energy contained in fossil fuels.
How would a storage scheme coupled to say wind power compare with a scheme coupled to a baseload power plant? Even if the size of the storage would be the same, storage for wind power would have to live with much larger swings in power levels. A 1 GWe baseload power plant could store night time production at a rate from zero 0 to 1 GWe. If same amount of electricity is produced with wind power storage would be fed with anything between zero and 3 GWe. This would add to the costs. Similar conclusions apply to the rate at which the storage is discharged. If it has to cope with baseload plant dropping off grid, output of 1 GWe is enough. If it has to compensate for swings in wind power production, much more might be required. (Also, it might not be a good idea to put large mass of water moving upwards and then suddenly stop. Reliable pump power seems more fit for this purpose, but someone with required engineering skills can correct me if I am wrong.)
Since the output of a baseload power plant is also predictable, it seems clear that anyone who has storage to spare will find it easier to make a profit by coupling this storage to a baseload power plant. Finally, it should be noted that with wind power storage for about 12 hours is not enough to create a wholly renewable system. Not even close. With such a short time storage we would still need reliable (fossil fuel based most likely) power plants with capacity that is enough to cover all electricity consumption. On the other hand, 12 hours of storage coupled to a baseload power plants would go some way towards removing the need for peaking power plants.
All of the above is of course purely theoretical. I do not see any reason to believe that the cost for electricity storage would become so low as to make it economically viable in anything but fringe applications. Perhaps more viable route is to use night time production to produce heat and fuels that would reduce emissions outside the electricity sector?
Updated on 19.3.2013: Anders Örbom raised an issue in Twitter as to how representative Sweden is due to price levelling effects of their hydro power. I hand’t thought of that and I used swedish data mainly since that I had readily available. From the link in the text one can also get the spot price in Germany. It turns out that in Germany the daily variation is stronger and amounts to about 39 euros/MWh on average. So there the storage can cost more than in Sweden and still be interesting. Nevertherless, to get the price low enough is still a huge challenge even in Germany.
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18/03/2013 at 6:07 PM
Robert Wilson
Good post
As you say the two key questions are around how you get a business case in place for storage, and whether it can actually allow you to get close to 100% renewables.
There’s probably no way to make wind farms etc. pay for this, as far as I can tell. Mainly because there isn’t a 1-1 relationship between % of renewables and cost of back up, so it’s probably a nightmare to regulate. Pumped storage, as you outlined, would be an option. Though there are a couple of problems. It’s limited in most countries. Also, the economics are slightly questionable for wind back up. I think pretty much all pumped storage globally has been built with nuclear power plants in mind. So, as you say, something like a 1 GW nuclear power plant could provide 1 GW at peak, and then use say 0.3 GW to store power in a pumped storage plant.
Let’s call the ratio of actual stored energy: potential maximum energy stored in pumped storage/battery the “capacity factor” for it. The lower this is the poorer the economic case is for storage. It seems clear that the capacity factor will be significantly lower for storing electricity from wind than nuclear, and coal for that matter. In fact, an aim for 100% renewables probably makes storage more technically essentially, but quite possibly makes the econonomics of storage weaker.
Whether this can actually make 100% renewables feasible is debatable. Anyone who uses a smart phone is aware that batteries do run out. Conceivably some countries will need 3 or possibly more days of electricity just sitting in storage at all times in case of an unexpected lull in wind. It’s hard to to see how this level of storage can work in reality.
Another more difficult point is gas. A lot of countries are now considering offering gas plants capacity payments to just sit around and wait for periods of low wind, but be paid for doing it. If these come into place the economics of storage will be even worse than before. Though, I guess the wind-gas scenario may not be impacted that much by this.
18/03/2013 at 7:20 PM
Jani-Petri Martikainen
Yes, I agree with all you say. This concept of “capacity factor” for storage is something that I have been reaching for as well. You do not want costly investment lying idle. Capacity payments for gas plants seem obvious in the framework that has a taboo on nuclear. Then adding wind and solar with priority access pretty much automatically creates a need for capacity payment or some similar mechanism to the same effect. I hate the idea. You have this huge infrastructure lying underutilized and costing money. At first sign of economic difficulties capacity payments will go out of the window and in comes an approval to burn more fossil fuels.
18/03/2013 at 7:43 PM
Robert Wilson
Jani
Good points. One of the obvious points here is that despite what most greens believe no-nuclear is not a “small is beautiful” scenario. You basically have to have enough wind capacity to provide 3-4 times electricity demand when it’s windy. This is already a huge amount of infrastructure with a very big geographic foot print. On top of this you need to do one of two things: build enough gas power plants to provide perhaps all of peak electricity demand, or probably more than the majority. Or else build enough storage, so that it can receive excess electricity when it’s windy. And that’s not even mentioning the obvious need for super grids etc. So, it’s clear that if you want small scale electricity generation saying no to nuclear won’t deliver it.
I agree with your point about capacity payments being pretty risky. A great problem with renewables is that you can’t really get lock in, except with hydro. So, if the UK was somehow to get >80% renewables it will probably have a gas infrastructure that’s capable of powering the entire grid by itself. Wind farms last about 20 years. So, if you end up with major economic problems you can just decide to not build new wind farms and just run the gas plants all the time. The opposite of course is true for nuclear power. The stations will last 60 years. So, the infrastructure is basically locked in for half a century.
I might have a look at historic wind farm output and see if I can do a back of the envelope calculation of how much storage you would actually need.
18/03/2013 at 8:53 PM
Jani-Petri Martikainen
In the BNC set of posts (also available here of course) I made some estimates on the amount of storage if we aim for wholly wind or solar powered system. So I am very interested in what you find. My estimate for storage was about 10% of yearly production. Also, the required power levels for input and output were very large. As far as I remember some (largely clueless) commenter provided a link to a paper doing a similar estimate for Ireland. The figure was a bit higher than my estimate. Look for Heide et al.
18/03/2013 at 10:33 PM
Robert Wilson
Thanks Jani
I got the paper. I may have had the same clueless person my blog a while back. Linked to a pseudo-academic paper on carbon emissions from wind farms. It’s a tricky thing to do model properly because wind farm output varies a bit. The UK in 2010 was 10% lower than other years. And I think some other countries are more volatile. So, a 100% wind system would probably require significant over capacity.
18/03/2013 at 9:25 PM
Proteos
To provide a few figures from the real world:
* in nuclear heavy France, there 5GW of pumping stations. Total production year in, year out is 5-6TWh. A capacity factor of say 12%, with nuclear power plants running at a capacity factor of 75%.
* Thus we can see that exports are an ordre of magnitude higher: last year net exports from France were 45TWh. At first, it’s cheaper to build more HV lines than storage, especially in a free trade zone with liberalized markets. The issue for HV lines is not so much their price in monetary terms, but their political cost.
* There is another means of storage, with hot water: 17TWh of electricity is consumed this way in France, mainly by night.
As you say, the yield of the storage facility is essential. If it’s lower than 70%, today, it’s not even worth thinking expanding it beyond short term storage or emergencies. And chemical storage is really bad from that point of view: a round trip from electricity to electricity via hydrogen or methane has a yield of only 30-40% at best! The lower the yield, the more interesting it becomes to simply throw out the excess energy.
Intermittency is also very very bad. You can’t hope to have a capacity factor of more than 15% with storage from wind alone (with a wind capacity factor of 30%), and realistically it will be much lower. And it becomes really horrendous with the german wind capacity factor of 18%.
18/03/2013 at 10:40 PM
Robert Wilson
Proteos
Hot water is an interesting point. This is useful for nuclear power, as it gives nukes something to do at night when demand slumps. It’s probably close to useless for wind power because the actual demand is pretty inelastic. People need hot water when they need it. And certainly people aren’t going to be heating water when it’s windy for use when it’s not. So, it’s energy storage that’s only really useful for dispatchable power sources.
18/03/2013 at 10:46 PM
Robert Wilson
Proteos, again
Your point about HV lines being a more attractive option is also quite relevant. In the medium term building an IC to another country is likely to be much easier and economical than building storage. The money made by selling excess wind to another country ought to be more economical than storing it. It’s hard to imagine it not being. After all in one scenario you are basically paying money yourself to do something with the electricity. In the other one you are getting money for it. So, ICs are probably best seen as medium term competitors with storage options.
19/03/2013 at 12:19 AM
Proteos
Robert,
HV lines are economically more attractive — note that it’s what the EC pushes — but not politically. There must be a lot of political support for them to go ahead. Local opposition is often strong. But again, you right: it will help in the medium term (up to 20 years) but after that, something else will be necessary.
I agree that hot water needs a predictable source of power. But it’s the point: there is a price to pay for the inpredictability of wind and solar power. Here it is: you have to turn to the least efficient forms of storage to make ends meet and have a 100% renewables system. You must also find people ready to shift their consumption at short notice. All of this is not free, whether we talk about money or politics.
19/03/2013 at 5:31 AM
Jani-Petri Martikainen
Thank you! That is really useful to know. Here the has been some discussion of decarbonizing Helsinki region with a nuclear CHP. Most greens hate the idea, but there are few greens who are actually in favor. If such a plant were to be build where current reactors are (Loviisa) the tunnel for water costs quite a lot. Also issues with the size of the plant since a single large unit might be too risky (we really need the heating). Naturally, taking heat out reduces electricity output (-20% was the scale) and that could mess economics depending on what kind of prices one gets for hot water.
19/03/2013 at 5:45 AM
Jani-Petri Martikainen
…and CHP is especially attractive here since we already have a fossil fuel based CHP infrastructure.
19/03/2013 at 10:17 PM
Proteos
In fact, I’ve made a mistake, it’s not really the capacity factor of storage facilities I’m talking about, but the ‘storage factor’, how much pumping capacity is used throughout the year. With a capacity factor of 18% for wind, we can expect that there would be plenty of times when stored energy would be useful, but just only a few times where the storage could be replenished.
19/03/2013 at 9:02 AM
J. M. Korhonen
Excellent work. Did I understand correctly that you modeled at best 12-hour time-shifting of electricity?
I wonder what the economics would look like for longer time-shifting.
19/03/2013 at 9:22 AM
Jani-Petri Martikainen
For seasonal storage I suspect that low utilization of the storage would become an issue. Most of the year it would be idle waiting for the winter sales. However since the price difference is larger I am not sure where the tradeoffs are. The economics would certainly take a big hit as soon as those very high winter price peaks have been covered.
19/03/2013 at 9:13 AM
Jani-Petri Martikainen
What I wrote here doesn’t actually contain any simulations. Just the idea that somehow you can move the sales from low price period to high. I did mess around with some modelling with actual production profiles etc. There I assumed roughly 12 hours storage. I didn’t write anything on that yet, because how to run storage would be an optimization problem that takes more time. I would have to specify the amount of storage, the time for storage and then find the profile for charging and releasing power that maximizes sales. I am sure that this can be done, but it is too time consuming for me to do now. A simple minded idea of always charging if daily price is below daily mean and releasing power when it is above, gave roughly 10-20% increase in revenue. (A proper comparison between wind and baseload would require that specifications for storage are exactly same.) I am inclined to believe that as long as storage doesn’t influence the market prices much, the above estimate is pretty OK. Seasonal storage I ruled out. That could move sales from low summer prices to high winter prices. Such tech. would be nice.
19/03/2013 at 10:18 AM
J. M. Korhonen
For now, the best bet for such technology seems to be the methane storage discussed in Carbon Commentary. For the most part, there is existing storage capacity for months, and gas tank farms are not that expensive. If they won’t explode, that is.
I think the crucial determinator for nearly 100% RE + storage schemes is whether we can afford to burn ANY fossil fuels post-2050. (A cynic in me says we will, nevertheless, and that the question is largely academic.) If there’s space for, say 10% of today’s emissions, then methane storage just might be a good enough solution: as long as total fossil use can be kept below the sustainable limit, it doesn’t really matter whether the winter peak demand is supplied from fossil or renewable methane sources.
I once did some back of the envelope calculations suggesting that there might be a possibility for keeping on burning some fossil fuels without too much environmental consequences, but that needs to be updated.
In any case, the economics of such a scheme are doubtful at the least. On the other hand, from a current perspective, every serious CO2 reduction scheme is economically doubtful.
06/09/2014 at 7:49 PM
Synthetic fuels with excess electricity | PassiiviIdentiteetti
[…] Sooner or later we will have to decarbonize also transport and it is quite likely that it will involve production of synthetic fuels using carbon free electricity as an input. Let us think a bit what this implies for the power source used to power this production. (For some related thoughts with respect to electricity storage see here.) […]