Page - 162 - in Water, Energy, and Environment - A Primer

congestion, adequacy of supply, energy arbitrage (buying electricity at a lower price and selling at a higher price), spinning/non-spinning reserve, and energy for black start after a shutdown. Historically, energy storage has been expensive, and initial attempts at evaluating its economic value have focused on single applications of the type mentioned above. Early studies concluded that storage was too costly for widespread use. Nevertheless, several recent studies have questioned this conclusion, pointing out that storage batteries and other storage devices can be used for more than one purpose, each with its own revenue potential (60, 61). They point out that focusing just on levelized cost of energy (LCOE), the usual metric used in comparing electricity costs, can be misleading. When applied to energy storage such an approach fails to take into account the full range of values and revenue benefits offered by storage, and that the full economic value offered by a storage technology varies depending on the application. This perspective can change the financial viability of energy storage projects, and the broad conclusion now is that energy storage should be evaluated as a totally new and different entity. Admittedly, evaluating the economics of energy storage is difficult. For example, batteries are not strictly a supply or demand-side technology, but rather can serve as either load or generation depending on whether they are charging or discharging. In many cases today storage devices are used for only a small fraction of their availability, and they could be used formore so-called ‘stacked’ applications. 9.4 COSTS The cost of energy storage is a rapidly moving target, as more and more companies announce storage products, and consumers and utilities begin to appreciate the full value of storage technologies. Today, costs are falling and markets are Water,Energy, andEnvironment–APrimer162