Electricity Storage
be able to deliver for a period additional power beyond its nameplate capacity. The addition of storage is effectively the same as an addition of generating capacity, just one that can deliver only over a short period. Instead of a power system with installed generation capacity of 12 GW to serve baseload demand of 6 GW and a peak of 10 GW, the same system could have installed generating capacity of 10 GW with storage capacity sufficient to deliver the equivalent of 2 GW power for the four hours of highest demand in case of an outage. Storage becomes reserve capacity; it’s not just an addition to existing generation capacity, but an alternative to new generation capacity.
Load Following The problem with storage is not electricity’s only unique
characteristic. Another is the way in which demand for electricity changes. Metals and crude oil do not have significant daily fluctuations in demand; gas does, but the impact is moderated by normal supply in combination with release from storage. Storage for these commodities is long rather than short term and seeks to take advantage of prices further forward rather than a few hours. Oil stored today might be sold for delivery next month or even next year. Gas is stored in summer for the winter season. For electricity, the immediate aim of storage is to take
advantage of the daily fluctuations in demand and capture the often large price differential between low and peak demand periods. For example, the production of 100 MWh of electricity in the middle of the night might sell at US$20/MWh, making US$2,000. Storage reduces the recoverable electricity to 80 MWh. Release is profitable at any price above US$25/MWh. When the cost of storing electricity is considered, the focus
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is on the loss of power inherent in the storage system, not the costs incurred in warehousing, as for metal, or in tanks, as for oil. Pump storage, is for example, about 80% efficient. Therefore to make it profitable, the difference in electricity price between low and high demand periods must outweigh the loss in power incurred by the process of storage and retrieval, as well as standard operational and capital costs.
When the cost of storing electricity is
considered, the focus is on the loss of power inherent in the storage system ...
Paradoxically, the capacity to deliver more electricity at
peak time, from existing generation capacity plus storage, will reduce peak prices and thus the profitability of storage. Over the long-term, as storage capacity increases, peak time prices should trend downwards towards a price based on the marginal efficiency of the storage technology employed. As efficiency improves, the differential between peak and baseload prices should fall further. Equally, baseload prices should rise, as suppliers would
start switching output to storage, i.e. withdrawing generating capacity from the market as prices fall towards or below their breakeven cost of production. Storage reduces the need for plant flexibility. Although it will depend greatly on the amount of storage in relation to generating capacity, the tendency would be to smooth out the peaks and troughs not, it should be noted, of demand, but of prices. This introduces an additional factor in the form of Demand
Side Management (DSM), which is increasingly being used to smooth out peaks in demand. It too would act to moderate peak
worldPower 2010
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