Determining the profitability of energy storage over its life cycle using levelized cost of storage

Levelized cost of storage (LCOS) can be a simple, intuitive, and useful metric for determining whether a new energy storage plant would be profitable over its life cycle and to compare the cost of different energy storage technologies. However, researchers and industry decision makers still use conflicting definitions of LCOS. For example, some include charging cost, while others only include round trip efficiency (RTE) losses. Additionally, inputs to the existing formulations are not specific enough to generate repeatable results across studies, which reduces trust in the metric. To push for standardization in economic assessment of batteries and other energy storage devices, the authors review existing definitions of LCOS and identify the desired characteristics for a standard. They then propose a new definition and demonstrate that it fits these characteristics very well relative to other prominent options. Unit analysis is applied to this proposed definition to provide a deeper understanding of the equations and to demonstrate its effectiveness. Finally, the sensitivity of LCOS to different input parameters is investigated to help users understand how to compare analyses from literature to their own. The authors also provide a spreadsheet and a Python script to streamline adoption of the proposed definition.