While energy storage with a duration of more than four hours has the potential to revolutionize the integration of renewable energy into the U.S. power grid, it has only accounted for less than 10% of the storage deployed since 2010. However, a recent publication by the National Renewable Energy Laboratory (NREL) suggests that this could change with a shift towards net winter demand peaks.
The Role of Energy Storage in a Low-Carbon Future
NREL’s Storage Futures Study (SFS) has been instrumental in analyzing the fundamental role of energy storage in maintaining a resilient, flexible, and low-carbon U.S. power grid up to 2050. The study identified economic opportunities for the deployment of hundreds of gigawatts of 6- to 10-hour storage, even without new policies aimed at reducing carbon emissions.
Longer-duration energy storage has the potential to enhance grid resilience,” stated Paul Denholm, NREL model engineering senior research fellow and lead author of the publication. “Greater storage capacity offers advantages, whether it’s the ability to store more renewable energy or meet the winter energy demand.”
Historical Focus on Four-Hour Energy Storage
In the United States, four-hour energy storage has traditionally been favored for hot summer days when energy demand peaks are shorter and can be effectively supplemented with low-cost solar energy. As a result, markets have incentivized four-hour duration while discouraging longer durations. Several wholesale market regions have implemented a fixed “four-hour capacity rule,” which fully compensates storage systems with a minimum duration of four hours. This means that a six-hour battery would not generate any additional revenue compared to a four-hour battery. Consequently, approximately 40% of new storage capacity in 2021 and 2022 had a duration of exactly four hours.
In addition to the fixed capacity rule, there is limited incremental value for energy storage beyond four hours when it comes to time-shifting or arbitrage value. While markets appreciate the ability of storage to store low-cost off-peak energy and sell it during times of higher prices, there is a diminishing economic incentive for durations exceeding four hours. The attractiveness and cost-effectiveness of lithium-ion batteries have played a significant role in this lack of motivation for developing longer-duration energy storage systems, especially during the summer months.
The Shift towards Net Winter Demand Peaks
As extreme weather conditions become more frequent and building heating systems are electrified, peak demand in winter is becoming more substantial than in summer. Winter demand peaks also tend to be longer, particularly at night when solar energy is not available. The deployment of solar energy will accelerate the transition towards net winter peaks across the country, providing an added incentive for the development of longer-duration storage. Certain regions in the United States are already experiencing winter peaking.
“Energy storage has the potential to meet the growing winter demand,” explained Denholm. Increased storage capacity can also enhance transmission and resilience, further amplifying the value of long-duration energy storage systems exceeding four hours.
Advancing Energy Storage Technologies for Grid Reliability
To unlock the value of longer-duration storage, it is crucial to advance storage technologies and emphasize the benefits of additional storage capacity. Various technologies, such as thermal storage or next-generation compressed-air energy storage, have the potential to achieve cost parity with lithium-ion batteries and offer longer service lifetimes. The development of new battery storage technologies is also an avenue to explore. However, these emerging technologies must compete with the Li-ion market, which is growing rapidly due to the rising popularity of electric vehicles. Therefore, widespread deployment will be crucial for proving the viability of these new technologies.
“We have promising technologies that, with further development, can meet winter demand peaks and compete with lithium-ion technology,” Denholm noted. “Grid reliability is our ultimate goal, and greater storage capacity can help us achieve it.”
Read the full technical report and learn more about NREL’s Storage Futures Study. Learn more about NREL’s energy analysis research, and sign up for NREL’s energy analysis newsletter.
Article from NREL. By Justin Daugherty and Madeline Geocaris.
