Capturing Multiple Benefits Of Batteries Could Add Significant Value To California Energy Storage, According To Brattle Economists

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Sep 12, 2017, 11:15 ET

BOSTON, Sept. 12, 2017 /PRNewswire/ -- A report released today by economists at The Brattle Group finds that operating batteries to simultaneously capture benefits from multiple value streams (i.e., "stacked benefits") could unlock significantly more value than using batteries to target only individual applications. The analysis identifies current challenges to capturing multiple benefits of battery storage and highlights policy options for mitigating these challenges.

Prepared for Eos Energy Storage with funding from the California Energy Commission (CEC), the Brattle report provides an assessment of the potential economic benefits of energy storage in California. Eos is a manufacturer of grid-scale energy storage solutions that is supplying systems for two CEC-funded energy storage demonstration projects hosted by Pacific Gas & Electric and the University of California San Diego. An Eos system was used as the basis for battery operational characteristics in Brattle's analytical framework.

While much of the existing research on energy storage value only focuses on isolated applications of the technology, the Brattle report employs a modeling approach to more comprehensively estimate the benefits of using battery storage to simultaneously capture multiple value streams.

"We have found that, in many cases, the value of 'stacked' benefits of battery storage compares favorably to the current cost of new batteries," noted Ryan Hledik, a Brattle principal and co-author of the report. "Our analysis focused on the California market, but the conclusions are broadly relevant to other markets in North America and around the globe."

Based on an assessment of the value of battery storage in California, the Brattle report finds:

Using recent market data and accounting for realistic battery operations, the total value of "stacked benefits" in California for one kilowatt/four kilowatt-hours of battery storage could be around $280/kW-year. By comparison, recent estimates of battery costs have been in the range of $200 to $500/kW-year (though they vary significantly by technology type and configuration).
Avoided capacity costs, frequency regulation, and energy price arbitrage are the largest sources of quantified value; however, the "depth" of each market needs to be taken into consideration when valuing large quantities of energy storage.
Accounting for the "stacked" benefits of battery storage by optimizing battery dispatch across all analyzed value streams significantly increases the total value of the battery relative to any individual value stream (by a factor of at least two to three times over individual use cases).

Despite the significantly higher value of capturing multiple benefits, the Brattle study points out challenges to fully realizing this value. Some of these challenges may be overcome through new policy initiatives, such as new or revised retail rate designs, which could more fully reflect the time-varying nature of the cost of generating and delivering electricity.

"Costs of energy storage are expected to continue to decline, and market adoption is likely to increase as a result," remarked Brattle Associate Roger Lueken, a co-author of the report. "Both retail and wholesale policy considerations will become increasingly important as the market penetration of energy storage grows."

The report, "Stacked Benefits: Comprehensively Valuing Battery Storage in California," is authored by Brattle Principal Ryan Hledik, Associate Roger Lueken, Senior Research Analyst Colin McIntyre, and Policy and Marketing Associate Heidi Bishop.

About The Brattle Group

The Brattle Group analyzes complex economic, finance, and regulatory questions for corporations, law firms, and governments around the world. We are distinguished by the clarity of our insights and the credibility of our experts, which include leading international academics and industry specialists. For more information, please visit www.brattle.com.

About Eos Energy Storage

Eos' mission is to deliver energy storage solutions that enable safe, reliable, and affordable electricity for utilities and their customers. Eos produces a long-life, inherently safe, and easy-to-install DC battery system designed for grid-connected as well as commercial and industrial markets. The Eos Aurora® is the lowest-cost and highest-performance energy storage system designed to optimize grid infrastructure, enhance reliability, and control energy costs. Eos is located in Edison, NJ, and New York, NY. For more information, please visit www.eosenergystorage.com.

About The California Energy Commission

The California Energy Commission is the state's primary energy policy and planning agency. The agency was established by the California Legislature through the Warren-Alquist Act in 1974. It has seven core responsibilities: advancing state energy policy, encouraging energy efficiency, certifying thermal power plants, investing in energy innovation, developing renewable energy, transforming transportation and preparing for energy emergencies.

SOURCE The Brattle Group