The value of storage in electricity generation: A qualitative and quantitative review

• Published in: Journal of energy storage 2020-12, Vol.32, p.101872, Article 101872
• Main Author: Elshurafa, Amro M.
• Format: Article
• Language: English
• Subjects: Cost; Electricity market; Levelized cost of storage; Power system; Storage; Value of storage
• ISSN: 2352-152X; 2352-1538
• DOI: 10.1016/j.est.2020.101872

•Provide a thorough review of electricity storage evaluation methods.•Discuss in detail advantages and disadvantages of evaluations methods.•Review covered the literature for distributed- and utility-scale storage.•Include evaluations for both energy and ancillary services provision.•Consider vertically-integrated and market environments for utilities. Electricity storage (ES) is a technology that can complement variable renewable generation in the widely sought low-carbon future. Given the several unique features of ES, it is important for utilities, investors, and regulators to understand how ES evaluation is conducted for effective deployment. Thus, this paper reviews how the literature associates a monetary value to ES technologies. It was found that evaluation has been done via the levelized cost of storage (LCOS) calculation, production-cost models, and market-based models. Each of these methods results in a monetary value different in nature: the LCOS provides a standalone average break-even cost, production-cost models provide overall cost savings gained for the entire power system from ES deployment, and market-based models provide the compensation that storage would receive if it were to compete in the market. Advantages and disadvantages of each method were discussed. The review revealed also that storage finds the most value in providing ancillary services. Given current market/regulatory restrictions, it is argued that in the near-term ES will be more valuable in vertically-integrated utilities as opposed to market environments. Finally, current ES deployment efforts can benefit from the previous renewables uptake that occurred in the past two decades.