4 ms·

1) I think you're off by about 2x for wholesale lithium battery prices; they are closer to 300 USD/kW-hr. 2) a) The economics of battery energy storage are eff

1) I think you're off by about 2x for wholesale lithium battery prices; they are closer to 300 USD/kW-hr. 2) a) The economics of battery energy storage are effectively a type of arbitrage in time, where you get some fraction of depth-of-discharge over the time in question. 2) b) In the most limiting case, lets assume that battery energy storage is only being used for daily cycling, that the maximum cycle depth is 75%, and that the investor expects to break even in 5 years. In order to be viable at that breakeven time, the price of energy needs to swing by over 0.22 USD/kW-hr over the day (RMS !). Considering that bulk energy is only 0.05 USD/kW-hr now (average!), that's a huge amount of volatility that needs to be exposed to the market. I suspect that if customers are exposed to that volatility instead, that we will see enough voluntary adjustment on the demand side of the market to prevent 5x swings in price. With that much volatility available, consumers will demand the savings that aggressive time-of-use pricing offers in such a market. On the other hand, the economics become much more favorable for energy storage in the frequency support market. For example, the market for primary frequency reserve (PFR) operates on 15 minute time scales and faster. Therefore, the time between battery cycles is two orders of magnitude smaller than the bulk storage market. Right now, there is enough PFR on the US grid (via coal-fired steam and gas-turbine power) that the price for PFR is very low. But as renewables continue to displace fossil fuels as a fraction of total power, the price for PFR will start to creep up.

epistasis 11y ago
Agreed, storage is arbitrage, but arbitrage that's going to have a ton of economic purpose and necessity, not just somebody being a middleman. The Chevy Bolt's batteries have been widely reported to cost $145/kWh, see for example [1]. I'm not sure what's excluded from the whole component to get to the price, but it's a point of reference at least. The full life of various lithium ion batteries is still being studied and will vary with chemistry, but roughly a partial cycle seems to count as a partial cycle in terms of battery life. So if you're only cycling 75% capacity on a day, then you'll make up the extra 25% in longer life. Most studies I've read of lithium ion battery life but the number of cycles at 1000 +/- 200, to maintain "most" of the battery's capacity, which is why I used the conversion factor of 1000. I would believe a 25%-40% swing in practice, in either direction. Peaker power plants quite frequently operate at over $0.30/kWh, more than 6x the cost of bulk energy. Energy storage is already gaining in this space [2]. Of course, consumers never see $0.05/kWh pricing, averaging $0.12/kWh nationwide, which is why residential solar makes so much sense for so many people. Consumers that choose demand-based pricing are already exposed to price swings on the order of $0.20/kWh in time-of-use plans both on Southern California Edison [3] and PG&E [4]. The speed with which solar and batteries are changing is going to catch a lot of people in the energy industry completely flat-footed. [1] http://cleantechnica.com/2015/10/05/chevy-bolt-battery-cells-145kwh-new-chevy-volt-with-autonomous-driving/ http://cleantechnica.com/2015/10/05/chevy-bolt-battery-cells... [2] http://www.bloomberg.com/news/articles/2015-12-22/batteries-gaining-favor-over-gas-peaker-plants-in-california http://www.bloomberg.com/news/articles/2015-12-22/batteries-... [3] https://www.sce.com/wps/portal/home/residential/rates/Time-Of-Use-Residential-Rate-Plans/!ut/p/b1/pVJNU4MwEP0tHjjSbAgt0VvUSmH6YcWPwqUTaEpRSBCi1X9vqr101NaOOe3uvH15u_tQgmYokfy1yLkulOTlJk968zC4ZNh3nWASjT1gOOqP_OmQ9JlrALEBwC-PwWc_pj4bBBEE_nXXhSD0bsHzIkyvPPSAEpRkUtd6heI2E_NMSS2kngtpwTa2oBFtsTBRwUuTcC3anZpdl1xuiOqsWKC4y3mPpnRpc0yE7dIU29wzKcWLLHVFl6QCb4XvUXZg8PDQZOYDpxldjHIji-uVXcilQrNvqmdavXxtYYfuxnMM3X1_ODnHDlBnCzj1oT8IJwZwOyUQkCmMI8YIQG8L2HMJozgvVfp51ZjJlFAjrRFL0Yim89KY8krruj2zwIL1et3JlcpL0clUZcFPLSvVajTbRaLYrNX7fW8ERUfeaT_hFI4mDP9g6eLx-TlhxpgbA76ZKf_nzLq6qyh5t5PYfrqh76R8rar5eGxydvIBImdFHQ!!/dl4/d5/L2dBISEvZ0FBIS9nQSEh/ https://www.sce.com/wps/portal/home/residential/rates/Time-O... [4] http://www.pge.com/en/myhome/saveenergymoney/plans/tou/index.page http://www.pge.com/en/myhome/saveenergymoney/plans/tou/index...?
- brandmeyer 11y ago
  With regards to cycle life, the amount of cycle life you get by reducing the depth of discharge is very nonlinear. Some internal studies show it be a strong power ((1/fractional_depth)^4 or more).

epistasis 11y ago

Agreed, storage is arbitrage, but arbitrage that's going to have a ton of economic purpose and necessity, not just somebody being a middleman. The Chevy Bolt's batteries have been widely reported to cost $145/kWh, see for example [1]. I'm not sure what's excluded from the whole component to get to the price, but it's a point of reference at least. The full life of various lithium ion batteries is still being studied and will vary with chemistry, but roughly a partial cycle seems to count as a partial cycle in terms of battery life. So if you're only cycling 75% capacity on a day, then you'll make up the extra 25% in longer life. Most studies I've read of lithium ion battery life but the number of cycles at 1000 +/- 200, to maintain "most" of the battery's capacity, which is why I used the conversion factor of 1000. I would believe a 25%-40% swing in practice, in either direction. Peaker power plants quite frequently operate at over $0.30/kWh, more than 6x the cost of bulk energy. Energy storage is already gaining in this space [2]. Of course, consumers never see $0.05/kWh pricing, averaging $0.12/kWh nationwide, which is why residential solar makes so much sense for so many people. Consumers that choose demand-based pricing are already exposed to price swings on the order of $0.20/kWh in time-of-use plans both on Southern California Edison [3] and PG&E [4]. The speed with which solar and batteries are changing is going to catch a lot of people in the energy industry completely flat-footed. [1] http://cleantechnica.com/2015/10/05/chevy-bolt-battery-cells-145kwh-new-chevy-volt-with-autonomous-driving/ http://cleantechnica.com/2015/10/05/chevy-bolt-battery-cells... [2] http://www.bloomberg.com/news/articles/2015-12-22/batteries-gaining-favor-over-gas-peaker-plants-in-california http://www.bloomberg.com/news/articles/2015-12-22/batteries-... [3] https://www.sce.com/wps/portal/home/residential/rates/Time-Of-Use-Residential-Rate-Plans/!ut/p/b1/pVJNU4MwEP0tHjjSbAgt0VvUSmH6YcWPwqUTaEpRSBCi1X9vqr101NaOOe3uvH15u_tQgmYokfy1yLkulOTlJk968zC4ZNh3nWASjT1gOOqP_OmQ9JlrALEBwC-PwWc_pj4bBBEE_nXXhSD0bsHzIkyvPPSAEpRkUtd6heI2E_NMSS2kngtpwTa2oBFtsTBRwUuTcC3anZpdl1xuiOqsWKC4y3mPpnRpc0yE7dIU29wzKcWLLHVFl6QCb4XvUXZg8PDQZOYDpxldjHIji-uVXcilQrNvqmdavXxtYYfuxnMM3X1_ODnHDlBnCzj1oT8IJwZwOyUQkCmMI8YIQG8L2HMJozgvVfp51ZjJlFAjrRFL0Yim89KY8krruj2zwIL1et3JlcpL0clUZcFPLSvVajTbRaLYrNX7fW8ERUfeaT_hFI4mDP9g6eLx-TlhxpgbA76ZKf_nzLq6qyh5t5PYfrqh76R8rar5eGxydvIBImdFHQ!!/dl4/d5/L2dBISEvZ0FBIS9nQSEh/ https://www.sce.com/wps/portal/home/residential/rates/Time-O... [4] http://www.pge.com/en/myhome/saveenergymoney/plans/tou/index.page http://www.pge.com/en/myhome/saveenergymoney/plans/tou/index...?

brandmeyer 11y ago
With regards to cycle life, the amount of cycle life you get by reducing the depth of discharge is very nonlinear. Some internal studies show it be a strong power ((1/fractional_depth)^4 or more).