Beyond cost reduction: Improving the value of energy storage in electricity systems

An energy storage technology is valuable if it makes energy systems cheaper. Traditional ways to improve storage technologies are to reduce theircosts; however, the cheapest energy storage is not always the most valuable in energy systems. Modern techno-economical evaluation methods try to address thecostand value situation but do not judge the competitiveness of multiple technologies simultaneously. This paper introduces the market potential method as a new complementary valuation method guiding innovation of multiple energy storage. The market potential method derives the value of technologies by examining common deployment signals from energy system model outputs in a structured way. We apply and compare this method tocostevaluation approaches in a renewables-based European power system model, covering diverse energy storage technologies. We find that characteristics of high-costhydrogen storage can be more valuable than low-costhydrogen storage. Additionally, we show that modifying the freedom of storage sizing and component interactions can make the energy system 10% cheaper and impact the value of technologies. The results suggest looking beyond the purecostreductionparadigm and focus on developing technologies with suitable value approaches that can lead to cheaper electricity systems in future.

Explain how the information is relevant To

1. Cost Reduction?
2. Product Differentiation:
3. Reduction in Competitive Intensity