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Comment by nordify | Hacker News Reader

Could somebody enlighten me on the economics of energy storage?

The local retail energy prices are approximately 10c/kWh year round, rain or shine. The price is fixed, unless you buy a contract based on the spot market.

All the energy storage products I've heard about cost more or about the same per kWh just to store the energy. So even if the energy to charge the energy storage was free, it still would not make economic sense to store energy if you have grid power.

Am I missing something or is consumer energy storage only for off-grid applications?

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Not all places are like this. Some places have variable time-of-use rates with high premiums at peak times and large discounts at times of extreme low demand. For example, rates with Southern California Edison can be as high as 45 cents/kWh and as low as 11 cents/kWh. If you can charge up a storage system at times of low demand and then use it at times of high demand, you could save a lot of money.

The bigger use is probably industrial applications, though. Commercial users can get hit with huge surcharges if they draw a lot of power, for example, so users which only draw huge amounts of power briefly could save a lot of money by using storage to smooth that out. The utilities themselves can end up paying extremely high rates for extra capacity at peak time, so if they can use storage to eliminate that need it can save them a lot of money.

> If you can charge up a storage system at times of low demand and then use it at times of high demand, you could save a lot of money.

In a sufficiently advanced energy market, you could actually make money.

> Not all places are like this.

Is there a reason why all places couldn't be like this? Wouldn't a well run and properly regulated power grid solve these problems?

Demand inherently varies at different times of day and different times of the year. Given variable demand, variable pricing is expected. Fixed prices are basically a leftover from when technology didn't support sophisticated metering for time-of-use pricing, and sticks around because people prefer simplicity in pricing.

For the sake of the argument, let's accept the premise that variable demand requires variable pricing.

Is there a technical reason price differentials have to be so large in California? In an efficient market, even with variable prices, would the differences be so extreme and would peak demand prices still exceed the cost of storage?

I'm pretty sure California is an example of a badly run system, and price differentials wouldn't be so big if it were run better.

In an efficient market, peak prices wouldn't exceed the cost of storage pretty much by definition, because the utility would use storage to even out demand as long as it's cost effective.

But I assume you mean whether it would happen without storage. That depends a lot on the underlying assumptions, I'd say. Does an efficient market mean one where you can build coal plants anywhere you feel like and pay only the cost of extraction, but not the cost of pollution? Or does it mean one where you pay the full cost of fossil fuels, rather than the weak and inconsistent controls we currently have?

I think you'll almost always benefit from some storage. You'll get diminishing returns as you increase generating capacity to match peak load, so storage would become the cheaper option at some point (assuming you're not shedding loads for extreme peaks).

Consider that no other industry operates on such a sharp just-in-time way, where supply and demand have to be matched on a second-by-second basis. Whether it's fruit or car parts or passenger airplanes, there's always some storage to allow slack in the system. The electrical grid historically hasn't been this way just because the technology wasn't there, but it's finally catching up.

A well-regulated and well-run utility does make consumer battery storage irrelevant.

Though, interestingly you could be taken as saying that flat rate electricity means well-regulated and well-run and often time-of-use rates lead to greater efficiency.

> The local retail energy prices are approximately 10c/kWh year round, rain or shine. The price is fixed, unless you buy a contract based on the spot market.

Chances are, you live close to the Bath County Pumped Storage Station.

https://en.wikipedia.org/wiki/Bath_County_Pumped_Storage_Sta...

Its because of these big infrastructure projects that your region has cheap energy all year (and all day) round. In areas like California, big infrastructure projects have been shuttered, and they have 41c / kWhr prices in the day, and 10c at night.

Other locations in the US have their own energy storage public-infrastructure projects that stabilize the grid. But some states (Hawaii or California) have... issues.

So energy storage is a technical solution to market failure?

Energy Storage allows energy arbitrage.

If a big utility company buys 10c "night time" energy and sells it at 20cs during the day, then they make money, and help fix the 40c daytime prices across California.

And unlike the decentralized "Powerwall" solutions, the poor will benefit from the big utility company performing energy arbitrage. (A poor family cannot afford a Tesla Powerwall to perform energy arbitrage for themselves. They rely on a larger, market actor to perform it on their behalf).

Basically, you don't notice it in your region because a big utility company is already doing this, which stabilizes prices for your region. The default state of the world however... is that electricity is cheap at night and expensive during the day. The various energy-storage projects in America exist to smooth out the day/night discrepancies.

I get the arbitration angle, but doesn't it purely depend on there being a market failure, i.e. failure to match production to demand and/or grid failure to transfer power between demand imbalance regions?

Wouldn't the better long term solution be to fix the market failure?

That's not how it works.

When a cloud covers up a solar panel, the region needs to grab energy from somewhere. When the wind stops blowing, the Wind Turbines require energy to keep them spinning (yes, during times of low-wind... wind power USES energy, not produces it).

It is very rare to find a stable source of energy. Nuclear and Coal are extremely stable, but the politics of those energy sources are poison to many communities.

------------

Note that the US uses twice as much energy during noon than it does at midnight. The only way this discrepency is solved right now is:

1. Energy storage -- store the energy generated at night to help out during the day. Nuclear and Coal power plants make just as much energy at night as they do during the day, so "storing" the excess from night will help out.

2. "Peaker" energy plants (Natural Gas can start and stop very quickly). But obviously, this is inefficient and wasteful.

Solar Panels sorta help from this regards, because they generate more electricity during the day rather than at night. But all Solar Panels will do in the long-term is shift the problem to 4:00pm when the Sun begins to set but electricity usage remains very high.

This isn't the case of "Kentucky is using more energy right now, pull from some Tennessee". This is the entire freaking US, simultaneously, uses double the electricity at one point in time, and then stops using it at another point in time. (A valid "load balancing" solution is to have night-shifts at factories btw. Not everything needs to be solved through technical innovations)

Finally, we have the issue of over-powering the grid. If the grid has too much power applied to it, it damages equipment. Energy storage can eat-up excess capacity on the grid safely and efficiently (and then sell it back at another time).

Energy storage is going on constantly under the modern grid. The US just needs more of it... we need more of it cheaper and in bigger amounts than ever before. Especially if we're going to start using unreliable sources of energy like Wind or Solar.

Given that it's never noon/midnight across the entire country, do you mean that at each point independently, usage is double at local noon vs. local midnight, or do you mean that there exists a single point in time where usage is double another point across the whole country?

If the former, if we had a better CONUS-wide grid, that could distribute power East/West more efficiently, how much would that help?

Each point independently, although the ratio can be as low as 1.5x during winter (summer air conditioning is a big problem).

East / West power distribution won't help too much, because there's only a 4-hour difference. The specific load curves of New England (which is only 1.5x load peak vs bottom at the moment... more typical of winter conditions) can be found here: http://www.iso-ne.com/

So, even in a prefect world, it all comes down to whether it's cheaper/better to overgenerate and store or to run peaker plants?

It seems storage has a long way to go as long as gas peaker plants are around 7c/kWh.

Energy storage is beating peaker plants today... under specific situations.

Note that gas peaker plants only run 10% of the time on the average (basically, they only work in the summer when our grid needs the most power, and then they don't make any money for the rest of the year).

From an economics / business point of view, having your power plants sit around only working 10% of the time is completely uneconomical. You need to be compensated severely to make it worth your while.

Or to put it another way: my energy storage company that gets 1c off energy arbitrage for all 12-months 100% of the year will make more money than your peaker plant that only gets 7c for 10% of the year.

And good luck convincing California to build a peaker plant. It is more politically sound to push for green-energy batteries. You'll get more approval in more locations in the US than gas (even if Natural gas is all-American and burns cleanly, its still a fossil fuel which is increasingly becoming a poison word in politics)

Your storage system must be able to store enough energy to cover the cumulative output of the peaker plant in order for it to be able to replace the peaker plant.

That's a lot of storage. And you need to have enough overgeneration to be able to reliable fill it up daily. This sounds very expensive. Could it really work from an economic perspective?

It already does work.

https://www.dom.com/corporate/what-we-do/electricity/generat...

This worked in 1970. Why wouldn't it work today? Energy storage solutions are deployed around the nation, and world, for this very reason.

The main advantage is that energy storage today is more efficient, with new technologies coming out.

> The main advantage is that energy storage today is more efficient, with new technologies coming out.

But not cheaper or anywhere close to the scale of pumped hydro?

Hydro requires favorable geography and/or rebuilding the grid to cope with the extremely large flows required to keep up with storage.

So, energy storage works, but is not economically feasible other than as research projects outside of hydro?

Looks like peaker plants are here to stay for a very long time.

Solar/wind are inconsistent, and their output doesn't map to consumption patterns. So a totally solar/wind grid would require massive overbuilding in order to provide sufficient power for peaks. By caching the surplus generated when supply exceeds demand, we can significantly reduce the overall supply footprint, by using the generated supply much more efficiently.

But why bother storing the solar/wind excess, if storage costs exceed traditional generation costs?

For a purely economical perspective, it does not make sense.

Because in the long run, storage costs will go down, and traditional generation costs will go up. At some point, there's a crossing where storage becomes cheaper. Much of that has to do with economies of scale and driving technological improvement with demand.

Beyond that, there are externalized costs to continuing a system that depends on fossil fuels and complex/expensive nuclear plants. In a macro world, governments and public utilities should be taking the externalized costs into account.

So the answer to my question is that the economics of energy storage do not work, but may at some point of the future?

I get both the technical and ecological argument, my point is that the economics to drive the change aren't here (yet).

We already do large scale grid storage.

https://en.wikipedia.org/wiki/Pumped-storage_hydroelectricit...

Flywheels are also used for short term demand spikes. https://en.wikipedia.org/wiki/Flywheel_energy_storage

PS: This is one of those problems that seems a lot more important than it actually is. The current state of the art is fairly cheap and reasonably efficient. Going from 90% to 99% efficiency really does not change much and is a far harder problem.

Part of the problem is that natural gas and diesel peaking plants have historically been cheap enough that there hasn't been a demand for alternatives.

Hydro only works if you have geography on your side. Flywheels don't have the capacity to do utility scale demand shifting.

So, excluding hydro, am I right in that the economics of energy storage do not work (yet)?

You can shift electricity 1,000 miles each way before losses stack up. So, geography is not really an issue.

ED: Currently, ~4,300 mi is about the limit on economical power transmission. But, that's a long trip.

So, can we build enough hydro to make a difference and how much will it cost to beef up the grid to handle all the power going into and out of pumped hydro?

Depends on what you want to do, but overall not much. Standard lines hung on towers run from $1 million to $4 million a mile, depending on terrain and other factors.

Though, we already have an electric grid and you can do a lot by simply shifting where each area's supply is coming from. AKA town A get's power from town B's power plant town B, get's power from town C's power plant etc.

Also, a lot of this infrastructure is a ~20+ year problem. So, a 50 billion dollar bill spread over 20 years spread over the entire US is ~8.50$ per year per person.

I want to replace peaker plants with storage. Somehow I don't think the economics work out. Do you disagree?

Even if we rebuild the whole continental US power grid (that's a lot more than $50 billion) to cope with the demands of using storage, it is unclear to me if we can build enough hydro to replace peaker plants. Apparently all other storage technologies other than hydro are cost-ineffective and/or do not have enough scale to solve the problem. Do you know if there is enough geography to go around for all the hydro we need or if there really are any cost-efficient alternatives?

You don't need to replace the grid, just add more capacity.

The economics for ~100% up-time only work out when utility's are regulated to act that way. That means spare capacity and backups for your backups. As such I feel a few Peaker plants are actually a good idea. They should not be turned on every day and should be able to pick up the stack when unexpected things happen.

In terms of hydro, we can build them to store ~12 hours worth of US electricity demand. Past that the geography still works just fine, but excess production becomes cheaper than excess storage.

PS: Don't forget we already use pumped hydro. It's just a maximization problem where cost of excess capacity vs. extra storage.

Batteries are becoming cost-competitive as well.

And as I said earlier, the economics don't need to work now in order to justify pilot programs and research, due to the long timelines involved in radically changing how the grid works. The assumption that the economics will work in the foreseeable future is enough.

> Batteries are becoming cost-competitive as well.

Can you quantify that?

As far as I can tell the Powerwall is about as cost-competitive as battery storage gets and that's still far more expensive than just using grid power.

Consider the time frame for this, as well. Radical alteration of the power grid will take at least a decade, probably multiple decades. Weaning it off coal, gas, and diesel is an enormous undertaking, even if it's technically feasible. Pilot programs now, even if they aren't immediately cost-effective, greatly reduce the risks of future change, when the cost equation is different. They'll shorten the timeline, reducing the long-term costs.

In addition to the comments above about solar/wind inconsistency, it is also a lot cheaper to run baseload power plants constantly rather than to ramp peaker plants up and down. So, if they can store the baseload power and then tap it later the total cost of electricity will come down. Plus, storage makes it easier to level the grid to make output match demand.

Is storing power cheaper than using peaker plants? That is, is storing power at scales required to replace peaker plants economically viable?

> All the energy storage products I've heard about cost more or about the same per kWh just to store the energy. So even if the energy to charge the energy storage was free, it still would not make economic sense to store energy if you have grid power.

1) They are re-usable. Power generation [e.g. Solar Panels] to refill them is frequently inconsistent enough that you will need to go 12+ hours without power. Cycle through enough time and paying a multiple of grid power for energy storage that lasts years is worth it.

2) If I lose grid power [happens a couple times a year] I need backup power.

EDIT:

Iirc, I'm pretty sure Powerwall and such is ~$.30/kwh with generation included and I know I eat ~$.30/kwh for a certain level of usage.

https://www.sce.com/wps/portal/home/residential/rates/Standa...

http://www.forbes.com/sites/christopherhelman/2015/05/01/why...

$.15/kwh during the day and $.30/kwh at night is actually comparable depending on usage.

If you don't want to do generation, you can arbitage rates at $.15/kwh storage + $.14/kwh charge from grid:

https://www.sce.com/wps/portal/home/residential/rates/Time-O...

No energy storage solution is infinitely re-usable. Thus there is a price per kWh per cycle.

Consumer energy storage solutions have a higher kWh price than traditional energy generation.

So why store energy as a consumer?

EDIT:

So energy storage only makes sense in a market where power is very expensive (~0.30c/kWh) and even then you might never recoup the investment required to store the energy.

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