Binks Institute for Sustainability: The value of energy storage in a ‘zero carbon’ energy system, with applications to UK

As the global economy is transitioning away from high carbon energy resources, it is widely expected that a large share of future electricity will be generated from renewable energy sources, such as wind and solar (see, for example, IEA (2023)). However, due to the intermittent nature of the renewable energy sources, electricity storage systems are expected to play a crucial role in balancing variations in wind and solar output to continuously meet electricity demand. 

A variety of technologies are available for energy storage, each with its own advantages and disadvantages. Some of the most common technologies include: pumped hydroelectricity storages, electrochemical battery energy storages, mechanical energy storages (compressed-air energy storage, flywheels, gravity storages and pumped heat electrical storages), thermal and phase transition energy storages (liquid to air transition energy storages and thermal sand batteries) and hydrogen (Junge et al. 2022). While pumped hydroelectric storage is a mature technology and can store large volume of energy, it application is naturally limited by geographic conditions. This project will focus on other utility-scale energy storage technologies.  

The value of utility-scale energy storage derives, broadly, from two channels: energy arbitrage—charging when there is excess electricity and discharging when the demand is high—and ancillary services such as fast response and frequency control, both of which depend crucially on the electricity prices (Martins and Miles, 2021). However, as more storage capacities are built, the charging and discharging of storage will have an impact on electricity prices therefore affecting the value of the storage. Secondly, the value of storage is also dependent upon the location – it is likely more valuable in remote locations where there is large amount of renewable energy capacity but limited demand. 

Thus, we propose this project to look at the following aspects of energy storage. The first is to model the trade-off between the duration (hence the cost) of different storage technologies and the value of energy storage, taking into account the price impact of charging and discharging as well as the degradation of storage technologies. This will require a good understanding of the different storage technologies as well as the economics of electricity markets. 

The second is to model the price of a ‘net zero’ electricity system which is dominated by renewable energy resources using weather data (which can be obtained from the metro office) with a focus on the spatial patterns. The value of energy storage can then be studied in both the energy market and ancillary services markets. 

While there are some studies examining some aspects of energy storage (see, for example, NREL (2021) for the cost of storage, and Karaduman (2021) for a study applied to Australia market), the above angles haven’t been extensively studied, certainly not in the context of British electricity market. The outcome from this project is expected to have 2-3 world-leading or internationally excellent publications as well as policy impact.

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