The location of energy storage projects significantly impacts their emissions reduction potential due to variations in the carbon intensity of the electricity grid at different times and places. This effect can be understood through the concept of Locational Marginal Emissions (LMEs), which measure the hourly emissions intensity at specific grid nodes.
Key Points on Location and Emissions Reduction Potential:
- Variation in Emissions Intensity: Storage reduces emissions most effectively when it charges during periods of low carbon intensity (e.g., when excess renewable energy is available) and discharges during periods of high emissions intensity (when fossil fuel plants are likely operating). Locations where the difference (“spread”) between high and low hourly emissions intensity is greatest provide the highest emissions reduction potential for storage projects.
- Economic Incentives Based on Location: In some regions, like California’s CAISO SP15 Hub, storage can achieve emissions reductions comparable to solar power. These locations have large emissions intensity differences that allow storage to shift energy use to cleaner times. However, current market structures typically do not reward storage for carbon abatement as solar does (via Renewable Energy Credits). Emerging carbon accounting methods that capture locational emissions impacts could create new revenue streams for storage projects and incentivize siting in high-emission-reduction-potential locations.
- Grid and Market Conditions Influence Outcomes: The potential emissions reductions from storage projects also depend on market conditions and grid status. For example, in Texas’s ERCOT market, standalone storage projects located in areas with high renewable generation and flexible grid conditions show promising emissions reductions, estimated at tens of thousands of metric tons of CO2 annually for current projects and potentially millions if the storage fleet expands and is optimally sited.
- Current Challenges: Many storage projects deployed today prioritize energy arbitrage (buying low-cost electricity and selling high-cost electricity) without explicit consideration of emissions impacts. As a result, some storage installations do not reduce emissions and can even increase carbon emissions if they charge when the grid is dirtier. Proper valuation and incentives accounting for locational emissions are needed to guide project development toward locations where storage truly lowers emissions.
In summary, the emissions reduction potential of energy storage projects depends critically on their location because it determines when and how storage charges and discharges relative to the carbon intensity of the grid. Projects sited in areas with large hourly variations in marginal emissions and aligned with clean energy availability can significantly reduce emissions. Effective policies and market designs that incorporate locational marginal emissions data will be essential to unlocking this potential.
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