Beyond cost reduction: Improving the value of energy storage in electricity systems

TL;DR

This paper introduces the market potential method to evaluate and compare the value of diverse energy storage technologies in electricity systems, emphasizing the importance of value over mere cost reduction for system optimization.

Contribution

It presents a novel market potential valuation method for multiple energy storage technologies and demonstrates its application in a European power system model.

Findings

High-cost hydrogen storage can be more valuable than low-cost variants.

Modifying storage sizing and interactions can reduce system costs by 10%.

Focusing on technology value enhances system cost-effectiveness.

Abstract

An energy storage technology is valuable if it makes energy systems cheaper. Traditional ways to improve storage technologies are to reduce their costs; however, the cheapest energy storage is not always the most valuable in energy systems. Modern techno-economical evaluation methods try to address the cost and value situation but do not judge the competitiveness of multiple technologies simultaneously. This paper introduces the market potential method as a new complementary valuation method guiding innovation of multiple energy storage. The market potential method derives the value of technologies by examining common deployment signals from energy system model outputs in a structured way. We apply and compare this method to cost evaluation approaches in a renewables-based European power system model, covering diverse energy storage technologies. We find that characteristics of high-cost hydrogen storage can be more valuable than low-cost hydrogen storage. Additionally, we show that modifying the freedom of storage sizing and component interactions can make the energy system 10% cheaper and impact the value of technologies. The results suggest looking beyond the pure cost reduction paradigm and focus on developing technologies with suitable value approaches that can lead to cheaper electricity systems in future.