Overview of Energy StorageCost Analysis

Pre-Conference WorkshopHouston, TX

January 24, 2011

Dr. Susan M. Schoenung

Longitude 122 West, Inc.

Menlo Park,CA 94025 USA

ELECTRICITY STORAGE: BUSINESS AND POLICY DRIVERS

1

Outline of Presentation

• Review of energy storage systemconfigurations and components

• Capital cost analysis

• Life cycle cost analysis

• Present value analysis

• Some results

• Summary and conclusions

Fuel Cell*Electrolyzer

Hydrogen

Power Conversion

H2O

Energy Storage SystemConfigurations and Components

PCSEnergyStorage

Unit~

3Ø AC

Source/Load

PCS

Load

EnergyStorage

~

Source

3Ø AC

Load Management

Power Quality

Energy Storage System Applications

• Bulk storage

• Distributed storage

• Power quality

Application

Category

Discharge

power range

Discharge

time range

Stored energy

range

Representative

Applications

Bulk energy

storage

10 - 1000 MW 1 - 8 hrs 10 - 8000 MWh Load leveling,

spinning reserve

Distributed

generation

100 - 2000 kW 0.5 - 4 hrs 50 - 8000 kWh

(0.05 - 8 MWh)

Peak shaving,

transmission

deferral

Power quality 100 - 2000 kW 1 - 30 sec 0.1 - 60 MJ

(0.028-16.67

kWh)

End-use power

quality and

reliability

Energy Storage SystemTechnologies

Lead-acid batteriesLi-ion batteriesHigh-speed flywheelsLow-speed flywheelsSMESSupercapacitors

Lead-acid batteriesNa/S batteriesNi/CdLi-ion batteriesZn/Br batteriesV-redox batteriesHigh-speed flywheelsCAES-surfaceLead-carbon asymmetric

capsHydrogen fuel cellHydrogen engine

Lead-acid batteriesNa/S batteriesRegenesysZn/Br batteriesNi/CdCAESPumped hydroLead-carbon asymmetric

caps

Power QualityDistributed GenerationBulk Energy Storage

Operational Use Profiles

Category/DefinitionHours ofStorage Use/Duty Cycle

RepresentativeApplication

Long-duration storage,frequent discharge

4 – 8*1 cycle/day

250 days/year

Load-levelling,source-following

Long-duration storage,infrequent discharge

4 – 8* 20 times/year Capacity credit

Short-duration storage,frequent discharge

0.25 – 1**

4 15 minutes of cycling

250 days/year =1000 cycles/year

Frequency or arearegulation

Short-duration storage,infrequent discharge

0.25 – 1** 20 times/yearPower quality,

momentary carry-over

Costs

• Capital: up-front investment costs forstorage unit, power electronics andbalance-of-plant

• Replacement costs: storage systemcomponents

• Operating costs: energy, O&M

Capital Cost Calculation

Costtotal($) = Costpcs($) + [Coststorage($) + CostBop($)]

Estorage(kWh) = Power(kW) x time (hr)

Costtotal($) = [P(kW) x Costpcs($/kW)] + [Coststorage+BOP($/kWh) x time (hr) x Power(kW)]

Costtotal($/kW) = Costpcs($/kW) + Coststorage+BOP ($/kWh) xtime (hr)

Message: The storage and power electronics are usually costed separately!

General Capital Cost Trends

• Storage range:– $250 - $1000/MWh

– depends on technology

• Power conditioning system range:– $150 - $500/kW

– Depends on usage, discharge & chargetimes

– Depends on technology

Examples for power quality (20 sec)

0

100

200

300

400

500

600

700

800

900

Lead-acid

battery

Zn/Br Va++ Li-ion Pb-C hybrid Flywheel Supercaps

Cap

ital

Co

st,

do

llars /

kW

Storage

Power conditioning

Examples for power quality (1 sec)

0

100

200

300

400

500

600

700

800

Adv Ba

tteries

PQ B

attery

-SMES

Low-S

peed

Flywhe

el

High-

Spee

d Flyw

heels

Supe

rcap

acito

rsHyd

roge

n Fu

el C

ell

Hyd

roge

n En

gine

w/storage

Co

st,

do

llars

Storage component

Power component

Example for voltage regulation (15 min)

0

200

400

600

800

1000

1200

Lead-acid

battery

Zn/Br Va++ Li-ion Pb-C hybrid Flywheel Supercaps

Cap

ital

Co

st,

do

llars/

kW

Storage

Power conditioning

Example for distributed storage (4 hrs)

0

500

1000

1500

2000

2500

Lead-acid

battery

Na/S Zn/Br Va++ Li-ion Pb-C

hybrid

CAES Pumped

Hydro

Cap

ital

co

st,

do

llars /

kW

Storage

Power conditioning

Example for bulk storage (8 hrs)

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Lead-acid

battery

Na/S Zn/Br Va++ Li-ion Pb-C

hybrid

CAES Pumped

Hydro

Cap

ital

Co

st,

do

llars /

kW

Storage

Power conditioning

Costs increase with discharge time

0

100

200

300

400

500

600

700

800

900

1000

0 1 2 3 4 5 6

Hours of storage

do

llars p

er k

W y

ear

Lead-acid battery

Na/S

Zn/Br

Va++

Li-ion

Pb-C hybrid

CAES

Pumped Hydro

Flywheel

Supercaps

Life-cycle Cost Analysis

Gives a better view of energy storage systemcost, because it considers differences in

• System operating life (payment period)

• Efficiency

• Operating cycles: hours/day, days/week,cycles per year

• Parasitic losses

• Replacement costs

Annual Cost Calculation

Levelized annual cost ($/kw-yr)

= Cost of capital (carrying charge on initialpurchase)

+ cost of fixed O&M

+ cost of variable O&M

+ annualized replacement costs

+ consumables (fuel and electricity)

Life-cycle Cost Analysis Input

• Capital cost: power, energy, Balance-of-Plant

• Round trip efficiency, AC-AC

• Operating costs: fixed O&M, variable O&M,electricity, fuel

• Replacement frequency and costs

• Parasitic losses (e.g., cooling)

• Economic assumptions: cost of electricity,fuel, interest and inflation rates

Example costs for power qualitysystems (10 year life, 20 secs storage)

Components of Annual Cost for Power Quality

Technologies

0

10

20

30

40

50

60

70

80

90

Lead-acid battery Advanced

battery

(projected)

Micro-SMES High speed

flywheel (1)

High speed

flywheel (2)

Low speed

flywheel

Supercapacitors

Annual

cost

, $

/kW

-yr

O&M Cost

Electricity Cost

Fuel Cost

Carrying Charges

Example Annual Costs for distributedstorage (10 yr life, 4 hrs storage)Cost Components for DG Technologies (4 hr

0

100

200

300

400

500

600

700

800

900

Lead-acid

battery

(flooded cell)

Lead-acid

battery

(VRLA)

Na/S Zn/Br V-redox Li-ion Ni/Cd High speed

flywheel

CAES-

surface

Hydrogen

fuel cell

Hydrogen

engine

Annual

cost

, $

/kW

-yr

Replacement Cost

O&M Cost

Electricity Cost

Fuel Cost

Carrying Charges

Example annual cost for bulk storage(20 yr life, 8 hrs storage)Components of Annual Cost for Bulk Storage Technologies (8 hr discharge) .

0

200

400

600

800

1000

1200

1400

1600

1800

Lead-acid

battery

(flooded

cell)

Lead-acid

battery

(VRLA)

Na/S Zn/Br Regenesys Ni/Cd CAES Pumped

Hydro

Pumped

Hydro with

Variable

Speed Drive

Annual

cost

, $

/kW

-yr

Replacement Cost

O&M Cost

Electricity Cost

Fuel Cost

Carrying Charges

Effect of system life on replacements

An

nu

al

Co

st,

$/k

W-y

r

0

100

200

300

400

500

600

700

Lead-acid

battery (flooded

cell)-10yr

Lead-acid

battery (flooded

cell)-20

Lead-acid

battery (VRLA)-

10yr

Lead-acid

battery (VRLA)-

20yr

Asymmetric

Capacitor -

Today-10yr

Asymmetric

Capacitor -

Today-20yr

Asymmetric

Capacitor -

Target-10yr

Asymmetric

Capacitor -

Target-20yr

y

Replacement Cost

O&M Cost

Electricity Cost

Fuel Cost

Carrying Charges

Sensitivities

• Operating life: shorter payback periodincreases annual cost

• Number of Operating cycles: morefrequent operation means more inputelectricity costs and possibly earlierreplacement

• Replacement costs

• Energy costs (electricity, natural gas)

• Variable O&M (function of efficiency)

Present Value Cost Analysis

Makes benefit and cost bases consistent.Parameters used:

• System operating life

• Discount rate

• Escalation rate

PV factor =

Present Value Cost Analysis

Parameter Value

General Inflation Rate 2%

Discount Rate 10%

Service Life 10 years

Utility Fixed Charge Rate 11%

Customer Fixed Charge Rate 15%

Fuel Cost, Natural Gas (surface CAES only) $5/MBTU

Electricity Cost, Charging 10¢/kWh

Some study results - SNL*

*Energy Storage Systems Cost Update: A Study for the DOE Energy Storage Systems Program

Some study results - EPRI**

**Electricity Energy Storage Technology Options:A White Paper Primer on Applications, Costs and Benefits

A benefit / cost example: Modular storage

“Modular Storage Opportunities: A study for USDOE ESS Program”

T&D deferral

• Arbitrage

• Auxiliary services

• Power quality

• Customer peak shaving

Costs and Benefits calculated as present worthfor 10-year operating life

Modular Storage Opportunities:Benefit / Costs (T&D deferral)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Lead

-acid

Con

vent

iona

lLe

ad-a

cid,

VRLA

Ni/C

d

Na/

S

Li-io

n

Zn/Br

V-redo

x

High-

spee

d fly

whe

els

Low-s

peed

flyw

heels

Lead

-car

bon

Cap

s.H2

Fuel C

ell

$/k

W P

resen

t V

alu

e

Cost ($PV/kW)

Benefit ($PV/kW)

Modular Storage Opportunities:Benefit / Costs (Power Quality)

0

100

200

300

400

500

600

700

800

900

1,000

Lead

-Acid

Batte

ry

VRLA

Bat

tery

Ni/C

d

Li-io

n

Zn/Br

High-

spee

d fly

whe

el

Low-s

peed

flyw

heel

Asym

met

ric cap

acito

r

$/k

W P

resen

t W

ort

h

Cost

Benefit

A benefit / cost example:wind-to-hydrogen

Summary

• Long-duration dispatch => large storage =>storage dominates capital cost

• Short-duration dispatch => small storage =>power electronics can dominate capital cost

• Be careful of replacement costs for long termuse.

• Benefit / cost value proposition difficult togeneralize; need customer specifics

Conclusions

• Energy storage has an important role to playin electric power:– Reduced fuel use

– Reduced emissions

– Improved system operation and cost efficiencies

• Capital cost of technologies: potential forreduction via mass manufacturing /economies of scale

• Cycle life important for many applications

• Combined benefits ideal for systemjustification

Acknowledgements

• DOE Energy Storage Systems Program

• Sandia National Laboratories

• Electric Power Research Institute

• Electricity Storage Association

• James Eyer, Distributed Utility Associates

• William Hassenzahl, Advanced EnergyAnalysis

Thank You for Your Attention!

Contact Information

Dr. Susan SchoenungLongitude 122 West, Inc.

885 Oak Grove Avenue, Suite 304

Menlo Park, CA 94025

(650)329-0845

susan.schoenung@sbcgobal.com