On current and future economics of electricity storage

Albert Hiesl, Amela Ajanovic and Reinhard Haas

Greenhouse Gases: Science and Technology, 2020, vol. 10, issue 6, 1176-1192

Abstract: Increasing electricity generation from variable renewable energy sources, such as wind and solar, has led to interest in additional short‐term and long‐term storage capacities. The core objective of this paper is to investigate the costs and the future market prospects of different electricity storage options, such as short‐term battery storage and long‐term storage as pumped hydro storage, as well as hydrogen and methane from power‐to‐gas conversion technologies. The method of approach is based on a formal economic framework with a dynamic component to derive scenarios up to 2040. The major conclusion is that the economic prospects of storage are not very bright. For all market‐based storage technologies it will become hard to compete in the wholesale electricity markets and for decentralized (battery) systems it will be hard to compete with the end users’ electricity price. The core problem of virtually all categories of storage are low full‐load hours (for market‐based systems) and low full charge/discharge cycles (for decentralized batteries). However, any new storage capacity should be constructed only in a coordinated way and if there is a clear sign for new excess production, in this case from variable renewables. In addition, for hydrogen and methane there could be better economic prospects in the transport sector due to both, higher energy price levels as well as a general lack of low carbon fuel alternatives. © 2020 The Authors. Greenhouse Gases: Science and Technology published by Society of Chemical Industry and John Wiley & Sons, Ltd.

Date: 2020
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https://doi.org/10.1002/ghg.2030

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Persistent link: https://EconPapers.repec.org/RePEc:wly:greenh:v:10:y:2020:i:6:p:1176-1192

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