ECONOMIC PERFORMANCE AND SYSTEM VALUE OF BATTERY ENERGY STORAGE SYSTEMS AS LONG-LIVED INFRASTRUCTURE ASSETS IN DECARBONIZING POWER GRIDS

Abstract

The battery energy storage systems (BESS) are being increasingly approached as short-duration flexibility resources, however they are also long-lived infrastructure resources that define investment requirements, reliability performance, and decarbonization economic results. The paper is a synthesis of peer-reviewed evidence regarding the economic performance and system value of BESS in present-day power grids based on the valuation of multiple services, long-term capacity expansion effects, and lifecycle factors including degradation and cost measures. In methods of modeling, one common result is that storage value is extremely system- and penetration-specific and usually motivated by averted generation capacity, less congestion and cycling of traditional plants, congestion reduction and transmission deferral, and enhanced operation flexibility in large portions of variable renewable (de Sisternes et al., 2016; Mallapragada et al., 2020; Denholm and Hand, 2011). Simultaneously, fully monetizing such benefits of the system can be barred by the market and regulation regulations, especially with limited storage to one type of asset or a number of products, which restricts service stacking and increases regulatory risk (Forrester et al., 2017). We also consider cost and performance indicators, such as the levelized cost of storage and levelized cost of energy storage concept, and demonstrate how a lifetime, utilization, and degradation have to be explicitly considered in a long-lived asset analysis (Obi et al., 2017; Comello and Reichelstein, 2019; Zia et al., 2019). Then we describe the framework of how BESS can be evaluated as infrastructure, which combines: (i) value of system planners in the increase of capacity, (ii) market value under changing product definitions, (iii) cost of lifetime and decreasing degradation-aware dispatch, and (iv) resilience in the response to temporal resolution and uncertainty in models (Poncelet et al., 2016; Scott et al., 2019). The synthesis underlines the reasons why BESS investments should be considered as portfolio infrastructure- the long-lived value can be found through the steady planning, flexibility accurate modeling and market designs to enable the storage to give numerous offerings during its life span.