Energy Storage Economics


The challenge of decreasing the gap between intermittent renewable power and 100% reliability is affordable storage of that energy. The ability to store renewable power will help relieve congestion on utilities companies, and smooth out variations in power that occur independent of renewable-energy generation. The ability to find cost-effective storage could transform the electronics, cars, and turbine industries.

Costs for energy storage are falling and could be $200 per kilowatt-hour in 2020 —half of the current price— and $160 per kilowatt-hour or less in 2025. Identifying the most economical projects and highest-potential customers for storage has become a priority for a diverse set of companies including power providers, grid operators, battery manufacturers, energy-storage integrators, and businesses with established relationships with prospective customers such as solar developers and energy-service companies.

Managing Demand Charge

Customers are sometimes charged for using power during peak times (demand charge). Energy storage can be used to lower peak consumption, thus reducing the amount customers pay for demand charges. As storage costs fall, the optimum size of energy storage increases for existing customers.

Scale Renewable Power

Energy storage can smooth out or firm wind and solar-farm output, reducing the variability of power produced. The incremental price for firming wind power can be as low as 2-3 cents per kilowatt-hour. Solar-power firming generally costs as much as ten cents per kilowatt-hour, because solar farms typically operate for fewer hours per day than wind farms.

Residential Solar Storage

The combination of solar and storage becomes worthwhile when specific market and regulatory conditions are in place to make the value of storage greater than the cost of installing it. This can happen when excess production can be stored for later consumption, thus reducing the consumers need to buy power from the grid.

Regulating Frequencies

Grids experience continual imbalances between power generation and consumption because millions of devices are turned on and off in an uncorrelated way. These imbalances cause electricity frequencies to deviate, and if unchecked could even affect the stability of the grid. Storage systems are particularly well suited to frequency regulation because of their rapid response time and ability to charge and discharge efficiently.