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Calculation of levelized costs of electricity for various electrical energy storage systems

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  • Obi, Manasseh
  • Jensen, S.M.
  • Ferris, Jennifer B.
  • Bass, Robert B.

Abstract

Installed capacity of renewable energy resources has increased dramatically in recent years, particularly for wind and photovoltaic solar. Concurrently, the costs of utility-scale electrical energy storage options have been decreasing, making inevitable a crossing point at which it will become economically viable to couple renewable energy generation with utility-scale storage systems. This paper proposes a methodology for calculating Levelized Cost of Electricity (LCOE) for utility-scale storage systems, with the intent of providing engineers, financiers and policy makers the means by which to evaluate disparate storage systems using a common economic metric. We discuss the variables influencing LCOE in detail, particularly those pertinent to electrical energy storage systems. We present results of LCOE calculations for various storage systems, specifically pumped hydro, compressed air, and chemical batteries, which we then compare with a more traditional arbitrage option, the simple-cycle combustion turbine. Federal and State government electrical energy storage tax incentives are considered as well. We also analyze the sensitivities of LCOE to several key variables using Monte Carlo analysis. Considering the downward-sloping cost trends of storage systems and the increased penetration levels of stochastic and non-dispatchable renewable resources, large-scale storage is becoming a significant issue for utilities, thus justifying the development of a levelized costing algorithm.

Suggested Citation

  • Obi, Manasseh & Jensen, S.M. & Ferris, Jennifer B. & Bass, Robert B., 2017. "Calculation of levelized costs of electricity for various electrical energy storage systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 67(C), pages 908-920.
  • Handle: RePEc:eee:rensus:v:67:y:2017:i:c:p:908-920
    DOI: 10.1016/j.rser.2016.09.043
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    References listed on IDEAS

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    Cited by:

    1. Tervo, Eric & Agbim, Kenechi & DeAngelis, Freddy & Hernandez, Jeffrey & Kim, Hye Kyung & Odukomaiya, Adewale, 2018. "An economic analysis of residential photovoltaic systems with lithium ion battery storage in the United States," Renewable and Sustainable Energy Reviews, Elsevier, vol. 94(C), pages 1057-1066.
    2. Georgiou, Solomos & Shah, Nilay & Markides, Christos N., 2018. "A thermo-economic analysis and comparison of pumped-thermal and liquid-air electricity storage systems," Applied Energy, Elsevier, vol. 226(C), pages 1119-1133.
    3. Cirés, E. & Marcos, J. & de la Parra, I. & García, M. & Marroyo, L., 2019. "The potential of forecasting in reducing the LCOE in PV plants under ramp-rate restrictions," Energy, Elsevier, vol. 188(C).
    4. Lai, Chun Sing & McCulloch, Malcolm D., 2017. "Levelized cost of electricity for solar photovoltaic and electrical energy storage," Applied Energy, Elsevier, vol. 190(C), pages 191-203.
    5. Lai, Chun Sing & Locatelli, Giorgio & Pimm, Andrew & Tao, Yingshan & Li, Xuecong & Lai, Loi Lei, 2019. "A financial model for lithium-ion storage in a photovoltaic and biogas energy system," Applied Energy, Elsevier, vol. 251(C), pages 1-1.
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    7. Luerssen, Christoph & Gandhi, Oktoviano & Reindl, Thomas & Sekhar, Chandra & Cheong, David, 2019. "Levelised Cost of Storage (LCOS) for solar-PV-powered cooling in the tropics," Applied Energy, Elsevier, vol. 242(C), pages 640-654.
    8. Koirala, Binod Prasad & van Oost, Ellen & van der Windt, Henny, 2018. "Community energy storage: A responsible innovation towards a sustainable energy system?," Applied Energy, Elsevier, vol. 231(C), pages 570-585.
    9. O'Shaughnessy, Eric & Cutler, Dylan & Ardani, Kristen & Margolis, Robert, 2018. "Solar plus: A review of the end-user economics of solar PV integration with storage and load control in residential buildings," Applied Energy, Elsevier, vol. 228(C), pages 2165-2175.
    10. Jarnut, Marcin & Wermiński, Szymon & Waśkowicz, Bartosz, 2017. "Comparative analysis of selected energy storage technologies for prosumer-owned microgrids," Renewable and Sustainable Energy Reviews, Elsevier, vol. 74(C), pages 925-937.
    11. Mendoza-Vizcaino, Javier & Raza, Muhammad & Sumper, Andreas & Díaz-González, Francisco & Galceran-Arellano, Samuel, 2019. "Integral approach to energy planning and electric grid assessment in a renewable energy technology integration for a 50/50 target applied to a small island," Applied Energy, Elsevier, vol. 233, pages 524-543.
    12. Federica Cucchiella & Idiano D’Adamo & Massimo Gastaldi, 2017. "Economic Analysis of a Photovoltaic System: A Resource for Residential Households," Energies, MDPI, Open Access Journal, vol. 10(6), pages 1-15, June.
    13. Pérez Odeh, Rodrigo & Watts, David & Flores, Yarela, 2018. "Planning in a changing environment: Applications of portfolio optimisation to deal with risk in the electricity sector," Renewable and Sustainable Energy Reviews, Elsevier, vol. 82(P3), pages 3808-3823.
    14. Xin-gang, Zhao & Yi-min, Xie, 2019. "The economic performance of industrial and commercial rooftop photovoltaic in China," Energy, Elsevier, vol. 187(C).
    15. Ali, Babkir, 2018. "Comparative assessment of the feasibility for solar irrigation pumps in Sudan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P1), pages 413-420.

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    Keywords

    LCOE; Energy Storage; Monte Carlo;

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