The duration of energy storage significantly impacts its overall cost, affecting both the installation costs and the levelized cost of storage (LCOS). Here’s how different factors influence the cost:
Impact of Duration on Costs
- Installation Costs:
- Batteries: For lithium-ion batteries, increasing the duration (e.g., from 4 hours to 10 hours) typically requires more batteries, thus increasing the total installed cost. For example, in 2021, LFP lithium-ion batteries for a 100 MW, 10-hour system cost about $356/kWh, while the cost increases with longer durations due to the need for more batteries.
- Mechanical Storage: Technologies like Compressed Air Energy Storage (CAES) and Pumped Hydro Storage (PHS) offer cost advantages for longer durations. For instance, CAES is significantly cheaper than batteries at durations over 10 hours, due to lower marginal costs for increasing storage capacity.
- Levelized Cost of Storage (LCOS):
- LCOS decreases as duration increases up to a point (typically around 10 hours), because the fixed costs are spread over more energy output. However, at very long durations (e.g., 100 hours), LCOS may increase due to limited annual discharge cycles, affecting the overall cost-effectiveness.
- Long-Duration Storage Benefits:
- Long-duration storage (beyond 10 hours) can provide significant system-wide benefits, including seasonal energy arbitrage and reducing renewable energy curtailment, which can justify higher upfront costs.
Cost Trends and Innovations
- Cost Reductions: The cost of energy storage technologies is declining. For instance, lithium-ion battery costs have dropped significantly, and further innovations are expected to reduce costs across various technologies.
- Future Expectations: Achieving cost targets like the U.S. Department of Energy’s $0.05/kWh for long-duration storage requires further innovation and investment in technologies such as flow batteries and compressed air storage.
In summary, the duration of energy storage influences both the upfront installation costs and the LCOS, with different technologies offering advantages at various durations. As the energy sector evolves, innovations aim to reduce these costs further.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-does-the-duration-of-energy-storage-impact-its-overall-cost/
