Cost of battery energy storage systems (ESS) has reduced significantly in recent years resulting in a marked increase in its use for power grid applications. Regulations by grid operators and state policies, such as energy storage mandates, have further accelerated their deployment in place of conventional generators for range of grid services. Majority of such policies and regulations are designed to compensate ESS based on their classification as a generator, transmission, or distribution assets. What is less acknowledged, and in many cases not accounted for, are the environmental benefits that ESS may provide when deployed for the grid services. Recognizing the environmental value of energy storage through policy measures can increase their relative attractiveness. This research presents a comprehensive analytical framework to evaluate the emissions abatement by ESS while providing resource adequacy service by shifting the peak load. Using a constrained optimization for ESS dispatch and least-cost economic principle, the marginal generation mix, and emissions rate were identified. The emissions mitigation potential is determined for shifting the peak load generation from inefficient natural gas based peaker units to the marginal generators during non-peak hours. Model determined the net avoided CO2 emissions, capacity value, energy arbitrage gains, and net cost of ownership for ESS in order to estimate the cost of CO2 abatement from the grid. We examined three grid regions (ERCOT, CAISO, and ISO-NE), selected for their high share of natural gas generation. Across all the grid regions, the first 100 MW of storage capacity on the grid provides the maximum emissions reduction and benefits from subsequent capacity additions diminish. The combustion emissions abatement potential across all the grid regions and technologies is between 30-42 tonCO2/MWh of storage capacity. On life-cycle basis, net emissions avoided over emissions invested (EAOI) is higher for longer duration of storage capacity due to lower energy dependent production burdens for the storage system. The study also presents a framework to assess the capacity value of ESS on the grid for different storage duration. The energy arbitrage and capacity value streams identified with load shifting application are not enough to repay the capital and operation costs for the ESS. Hence, the total cost of avoided emissions with such application is considerably high: between $750–3,200/ton-CO2. The approach used to determine the CO2 emissions benefits in this study can also be applied to other emissions to inform the environmental value of ESS to policymakers, grid operators and utilities.
CSS Publication Number:
December 29, 2017
Neema, Bhuvan. (2017) “Emissions Mitigation Potential of Grid Scale Energy Storage Systems for Peak Load Shifting.” Master’s Thesis, University of Michigan: Ann Arbor: 1-30.