Why storage may never beat wasting wind

Energy storage is often lauded as the solution to wind power's variability, but it is costly and unnecessary until wind accounts for at least half of all generation.

If wind contributes less than that, modest curtailment makes more economic sense.

The notion that wind energy needs storage is widespread. If the price is right, storage for electricity systems enables "cheap" electricity to be used to charge a store when demand is low. Electricity from the store can then be fed into the system when demand — and the price — is high.

Moreover, there are likely to be more opportunities for this in electricity networks with large amounts of wind energy, with storage often seen as a means of levelling the output of variable renewables.

This kind of dedicated storage faces a number of challenges, however, as it adds to the generation cost of renewables. That extra cost needs to be less than the additional value of constant power over variable power. There are other challenges, as the store needs to be very large to ensure the levelling can continue during long periods of low wind.

A number of analyses have looked at the break-even cost for storage. Although this varies depending on the particular market framework, most of these studies have concluded that the price needs to be below EUR800 per kilowatt.

The economics of storage

Many of the papers that discuss the prospects for storage do not consider the economics at all, even though these are crucial.

Electricity derived from storage facilities has a generation cost, just like any other generation technology. It has a fuel cost — the cost of the input electricity used for charging — plus operation-and-maintenance costs and, most importantly, capital cost repayments.

Moreover, the load factor of storage facilities cannot exceed about 40%, as it will inevitably spend 50% of the time charging up and the overall efficiency of the charge-discharge cycle rarely exceeds about 80%. This is because the most efficient systems, for example pumped storage, pump water with an efficiency of around 90%, but when that water is released and converted into electricity, the efficiency is again around 90%, leaving overall efficiency just over 80%. With capital costs of around €1,000 per kilowatt, generation costs are roughly similar to those of wind energy.

That is why dedicated storage is unlikely to be economic. Even if a storage facility can be charged with zero-cost electricity, its added generation cost is likely to be at least €30-40/MWh, increasing the cost of wind by about 50%. The added value, however, is likely to be somewhat less than this. The difference between the value of wind (variable power) and the value of landfill gas (firm power) in the UK was about €5/MWh last year, based on the auction prices realised by the Non-Fossil Purchasing Agency.

Working with variability

It must be remembered that electricity networks are used to coping with variability. As the International Energy Agency's recently published Harnessing Variable Renewables report observes: "Variability and uncertainty are not new challenges; power systems have long taken them into account." Electricity networks can function with wind — what matters is the additional uncertainty. The Danish network operator has looked at the prospects for 100% wind — without storage — and concluded it can be managed.

The enthusiasm for storage possibly stems from the realisation that some wind energy may need to be rejected once its contribution to the power system exceeds around 25%. Although this appears wasteful, it may be the most economic solution.

Economic viability

Irrespective of the amount of wind energy on a network, storage has the potential to enable power systems to operate more efficiently — absorbing energy at periods of low demand and releasing it at periods of high demand. The introduction of large quantities of wind energy into electricity networks is likely to widen the difference between the high and low prices in the electricity market and that may facilitate the construction of cost-effective storage.

Just exactly how large the quantities of wind need to be for storage to become economically viable has been explored in a scientific paper published in international journal Energy Policy.

The paper, "Pumped storage in systems with very high wind penetration", by Aidan Tuohy of the Electric Power Research Institute in the US and Mark O'Malley of Ireland's University College Dublin, examines the link between storage costs and the threshold at which they may become viable.

The analysis, which includes detailed representation of the variability and uncertainty of wind power, was carried out with reference to the Irish electricity system and so the conclusions may not be fully transferable to other countries. Based on an installed cost for storage of €1,500/kW, the study concluded energy storage would be viable with a wind contribution of around 50% — or less if installed costs are lower.

Tuohy and O'Malley's paper concludes that storage is not viable at low wind penetration levels as the lost revenue from a modest level of curtailment is small. Adding storage would then push up the overall cost of electricity.

Other factors that influence the viability include the test discount rate assumed for financial calculations, the carbon price, the lifetime of the storage facility and whether it is assumed to be displacing open-cycle gas turbines or combined-cycle gas turbines.

Technical constraints

Another set of issues arises in parts of some electricity networks where there may be constraints due to the capacity of transmission lines. Storage may be more economical than an additional transmission line and that is the focus of some current work.

The availability of appropriate technology is still an issue. A recent UK government committee observes: "No evidence we received persuaded us that advances in storage technology would become available in time materially to affect the UK's generating requirements up to 2020." Meanwhile, a report published last year by the Boston Consulting Group concluded "there is little to suggest that a storage solution is imminent".

Taken together with other recent studies, Tuohy and O'Malley's paper suggests that more objective views may be starting to prevail than the uninformed wind-energy-needs-storage approach of the past.

New possibilities

With work in progress on a wide variety of storage technologies across the globe, interest in the topic will continue. One potential development that may enable electricity systems featuring wind to find a use for surplus electricity is the move towards electric cars. This could be an inexpensive form of storage, in as much as network operators would not pay for the storage devices — the batteries.

Surplus electricity could be used to charge these and the electricity would not necessarily be returned to the system.


The chart below illustrates the relationship between wind power production and demand based on operational experience from Western Denmark over 24 hours.

At around 7.30am on 17 April 2010, the wind production of 1.6GW exactly matched the system demand. Between 3pm and 5pm, the wind power generated exceeded system demand.

If the electricity system in Western Denmark had not been connected to Norway, Sweden and Germany, the system operator would have had to constrain the output from the wind plant.

In 2010, wind energy generated about 28% of the electricity requirements in Western Denmark. There was around 2.4GW of wind power, feeding into a system with a minimum demand of around 1.25GW.

However, it is rare for all the wind to be generating and even more rare for this to occur during the summer period, when there is minimum demand. During 2010, there were only a few occasions when wind production exceeded system demand.

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