New analysis on energy storage technologies commissioned by the Australian Renewable Energy Agency suggests that the cost of storage is lower than most people might think.
The report emphasises that there is no silver bullet to cover all the storage needs – different technologies are suited to different time frames – but there is no reason to think that it will be any more expensive than using fossil fuels. In fact, it’s likely going to be much cheaper.
The study, titled “Comparison of Dispatchable Renewable Electricity Options: Technologies for an Orderly Transition, finds that whatever the storage need – be it one hour, five hours, 24 hours, several weeks – there is a renewable storage option that does not cost more than 1.5 and 2 times the cost of wind and solar itself.
And that is significant, given the expectation that wind and solar costs will continue to fall – and quite dramatically by the time that storage is needed in bulk as the grid nears the target of zero emissions, and likely 100 per cent renewables. Hopefully, this will happen by 2050, if not sooner.
The report confirms what many might think to be obvious: battery storage married with solar PV or wind is the cheapest option for short time-frames (and for many grid services), while pumped hydro is the cheapest option from about 6-24 hours, competing with solar thermal. And for long-term storage, hydrogen and biomass emerge as the cheapest options.
The report makes clear that the grid is changing from the “old world” dominated by (mostly coal) baseload and topped with more expensive gas, to one dominated by renewables topped with more expensive storage or dispatchable generation. It is what Michael Liebreich has described as a system built around “base-cost” renewables.
But the good news is that this modern, renewables-based system is cheaper than the fossil fuel version, and without the risks associated with fuel and carbon price.
“If you started with a clean sheet of paper, it would be unlikely that a mix of high capacity coal and gas would be cheaper than a mix of variable renewable energy and dispatchable renewables,” ITP Power’s Keith Lovegrove, one of the lead authors, told RenewEconomy ahead of a presentation on Tuesday evening.
The study also challenges the idea that one can be “technologically neutral”, which is particularly relevant as the federal Coalition government embarks on a rushed process to deliver new “dispatchable” generation – different storage times will deliver completely different answers.
“There is no single winner, and at each timescale there are multiple options that fall within a general least-cost band,” the report finds.
- “The likely least-cost future electricity system solution is a mix of both variable and dispatchable renewable technologies, durations and locations with an average cost of electricity considerably lower than dispatchable generation alone.”
But Lovegrove goes further, saying that in a period of transition, of the type highlighted in the graph above: “There is no earthly argument for building a new coal-fired generator in this country, even if you didn’t care about emissions.”
This report follows much other work from the CSIRO and Alan Finkel, which looked at the levels of storage needed as the system shifted to more and more renewables.
This latest study focuses on the costs. And it should be noted that because the report has taken so long to see the light of day, it is based on 2017 numbers that put the average cost of solar at just over $60/MWh. Solar and wind have likely fallen another 10 per cent, if not more, since then.
Still, the results are promising, and give huge confidence to the ability to effect this transition without anywhere near the sort of costs decried by technology sceptics.
Lovegrove says the biggest surprise from the research was that there was always something less than twice the cost of variable renewables for any timescale. “We not trying to pick winners, we trying to find as big a list of options as possible.”
In the shortest timeframe, batteries pared with individual wind or solar farms, or located in strategic locations on the grid to “balance” those variable renewables, emerge as the best option – particularly at a storage level of around half an hour. And battery storage costs are expected to fall significantly as production increases.
“This illustrates that short duration batteries are particularly suitable to the smoothing of wind and PV electricity generation to reduce ramp rates in the case of sudden changes in resource levels,” the report says. “In comparison to other options, batteries remain in a competitive range out to about three hours of storage.”
Pumped hydro – charged by solar PV, wind and grid VRE – is particularly competitive beyond six hours of storage, and while it is a mature technology that does not offer much in the way of future cost reductions, the cost of the whole package will fall because the cost of wind and solar will fall.
- Concentrating solar systems, such as the solar tower with molten salt storage proposed for Port Augusta, and the world’s biggest such installation which Lovegrove visited recently in Morocco, are also competitive from about six hours of installed storage and upwards, and hold the prospect for more cost reductions over time.
- In the longer term, when the storage needs are discussed in terms of days or weeks, hydrogen based systems offer the cheapest form of storage, apart from biomass, which may have problems for other reasons such as the limited availability of feed-stocks.
- Even this, however, gives the prospect of delivering electricity during times of extended wind and solar droughts at less than $200/MWh, without factoring in future falls in the cost of both wind and solar, and the hydrogen storage technologies. Coal is usually thought of as much cheaper, but it invariably needs to be backed up by more expensive gas.
- And there are smarter demand-side options that could further lower the overall cost – such as demand-response measures, routine load shifting and even curtailment of PV and wind to ensure “firm” output.”If electricity consumers are exposed directly to time-of-use price signals there will be some level of routine load shifting that would result in almost zero cost,” the report notes.”Going beyond this the ARENA-AEMO initiative to procure emergency demand response capacity suggests that for anything up to 10 four-hour events per year, this is cheaper than a dispatchable renewable generator only installed for such a purpose.”
“Given that this study finds the LCOE of dispatchable renewable generation is 1.5 to 2 times that of PV or wind generation on its own, it could be an economically rational approach to achieve a level of dispatchability by holding some wind or PV at up to 50 per cent curtailment to allow up and down dispatchability for specified critical time periods.
“This would be comparable or complementary to adding short duration battery systems to PV or wind plants for firming, but it clearly cannot deliver strategically dispatchable generation.
“There are multiple options that can deliver a mix of firm and fully flexible electricity in a general least cost band between $90/MWh and $130/MWh at every timescale, with some niche options below $50/MWh,” the report says.
“This overall least cost band corresponds to a ratio of between 1.5 to 2 times the cost of around $65/MWh that has been determined for VRE using these cost and nancial parameters.” (It should be noted that the cost band for wind and solar is probably lower than that already and will fall further)..
“The overall message from this is that the various options for dispatchable renewable electricity each have times at which they are most cost effective, and these times overlap to a considerable degree.
“Given the uncertainties and range of variation with site and project, it would be generally incorrect to identify one technology as ‘best’ for a given timescale. Indeed, it can be said that in regard to dispatchable renewable electricity generation, Australia is ‘spoilt for choice’.
“The most important thing is to plan now – even though most parts of the grid are not yet at the penetration of wind and solar is needed – it’s good to get ahead of the game, and a ‘readily achievable’ growth rate of around 25 per cent per year in dispatchable renewables could keep pace with coal retirements and enable an orderly transition to a large share of renewable energy.”