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ECONOMICS OF STORAGE LoCal Meeting - July 8, 2009. Presented by Mike He and Prabal Dutta. Lots of Storage Technologies. Pumped Water. LiSulphur. NiMH. SMES. Supercap. NiCad. Flywheel. EEStor. Li+. Thermal. Compressed Air. LiPoly. LiSulphur. Why Store Energy?. Peak-to-Average
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ECONOMICS OF STORAGELoCal Meeting - July 8, 2009 Presented by Mike He and Prabal Dutta
Lots of Storage Technologies Pumped Water LiSulphur NiMH SMES Supercap NiCad Flywheel EEStor Li+ Thermal Compressed Air LiPoly LiSulphur
Why Store Energy? • Peak-to-Average • Reduce electricity rate by shaving peak load • Match Supply and Demand • When supply/demand is inelastic or intermittent • Economic Arbitrage • When price of electricity varies substantially and • An efficient market exists to buy and sell real energy
Peak-to-Average • When electricity cost is set by peak power draw • Peak-shaving yields big dividends • Benefits accrue at all times, not just at peak load times • Load shift if possible • Generate electricity locally if feasible economically • LoCal • Buy electricity when local demand is low • Convert and store electricity for later use • Convert and use electricity when highest local demand
Match Supply and Demand When supply/demand is inelastic or intermittent Solar S/D well-matched for typical industrial loads; storage overkill S/D poor-match for early morning or evening residential loads Wind S/D matching is variable, TBD Statistical multiplexing plays a role in smoothing out LoCal Store when supply is high but demand is low Use when supply is low but demand is high
Economic Arbitrage When a sufficient wholesale price difference exists Buy electricity when price is low Convert and store electricity for later sale Convert and sell electricity when price is high
IESO: A Concrete Analysis http://www.iemo.com/imoweb/marketdata/marketToday.asp ($1 CAD = $.86 USD)
Ontario IESO (July 7, 2009) • Wholesale electricity price ($CAD/MWh) • Min: $3.52 • Avg: $20.99 • Max: $42.32 • Range: $38.80 • Average hourly demand • Min: 15,000 MW • Avg: 17,162 MW • Max: 19,570 MW • Range: 5,070 MW
Storage Economics • To be marginally viable, must satisfy: • CostPUE / PriceDeltaPUE < CycleLife • CostPUE / PriceDeltaPUE => cycles needed to profit • Where • CostPUE is Cost per unit of energy storage • Li+ (e.g. $300/kWh) • Pumped Hydro ($10-$45/kWh) • PriceDeltaPUE is max(price) - min(price) per unit energy • CycleLife is number of cycles of storage technology
Storage Economics • IESO Case Study on July 7, 2009 • PriceDeltaPUE = $38.80 • (CostPUE / PriceDeltaPUE / CycleLife) ?<? 1 • Tech CostPUE PDPUE CycleLife LHS • Li+ $300/kWh $.0388/kWh 1200 6.44 • Pump. Hydro $45/kWh $.0388/kWh Inf (need 1160) <1
Marginal revenue potential drops quickly and varies Mild Spring Weekend Day Warm Summer Weekday
Storage power density matters:Small window to buy cheap Mild Spring Weekend Day Warm Summer Weekday 1x Power Density 2x
Buy-low/sell-high cycle rateis limited: must hold for a while
Unexpected arbitrage cancreate opportunistic profits http://www.iemo.com/imoweb/marketdata/marketToday.asp ($1 CAD = $.86 USD)
Must disentangle residential, commercial, industrial, and night life/party loads Ontario Night Life
Limitations • Assumes Time-of-Use pricing • Assumes zero price-elasticity • For marginal profit potential analysis • Likely reality: price sensitivity high at peak load times • Garbage-in/Garbage-out • Wholesale prices and load profiles are average values • No distinction between $USD and $CAD • Only a marginal viability analysis • Average-case viability much lower
Takeaways • Storage still has a long way to go for economic viability in financial arbitrage • Peak to average case may be more economically viable • Cost, power density, efficiency, cycle life are important factors • Need a metric for: Capacity X CycleLife • 100W lightbulb for a day = Raising a car ~1km