Do we really need energy storage?

Energy storage has been called the “killer app” for wind and solar power, as many storage technologies can be used to flatten out the intermittencies of both resources either instantaneously or over longer periods of time.  Robert Fares, a graduate student in the Webber Energy Group, has a great post on Scientific American explaining the value of using short term energy storage to “back up” renewables.  Even small amounts of battery backup can be installed to smooth out the variations in output from wind and solar power, using automated communications to integrate the storage and renewable energy systems into more of a ‘baseload’ or at least ‘intermediate’ style power plant.

But energy storage is expensive.  The use of storage at a power plant adds substantial upfront capital costs, as well as real operating costs in the form of lost energy output if nothing else.  According to a recent study from Australia storage costs may fall to $550/kW within the next decade, about $100 cheaper than a modern combustion turbine according to the Energy Information Administration.  Currently storage is around $800/kW according to the study meaning that on a $/kW basis the cost of storage is likely to be equivalent to the cost of building a new power plant for the foreseeable future.

Storage has a la distinct advantage though – when automated through the use of sophisticated hardware & software storage can respond far more quickly than a conventional power plant to stabilize the grid or renewable energy output.  My question is whether this is actually needed from storage right now, for two reasons: 1. while wind and solar are intermittent, geographic dispersion of wind energy reduces intra-hourly intermittence by 95% according to this paper from CMU 2. demand response can provide many, if not all of the same services as energy storage at a dramatically lower cost.

Automated Demand Response (ADR) has many of the operational characteristics that make energy storage so appealing in managing grid reliability: quick response, ease of monitoring, and the ability to scale response to grid needs.  At the same time capital costs are much lower (currently $125-$400/kW) and in many cases some of those costs (such as the cost for smart meters) are shared among multiple benefits.  Finally, many of the capabilities required by demand response – rigorous monitoring and verification, instant communications and automated control – are required by energy storage as well.  Certainly demand response is less precise than storage since there is some measure of unpredictability of customer behavior, but firms in the ADR space have developed methods to account for that unpredictability in their market bidding strategies.

None of this is to say that we truly don’t need storage – if fulfills a variety of needs – but I think we may need to reconsider the value of storage relative to the value of other options including geographic dispersion and demand response.

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