Which markets are best suited for battery storage and storage hybrids? Which regulations and incentives support or impede the implementation of standalone storage and battery hybrids? HOMER Energy’s John Glassmire, Steffi Klawiter, and Dhiwaakar Rajasekaran — along with the Joint Institute for Strategic Energy Analysis (JISEA) — answer these questions and provide key storage hybrid market insights in a groundbreaking new white paper just published by JISEA and titled Hybrid Storage Market Assessment. JISEA is operated by the Alliance for Sustainable Energy, LLC, on behalf of the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) and several leading universities. HOMER Energy, developer of HOMER® Pro microgrid modeling software, conducted this research under contract with client GE.
HOMER Energy studied the effect of storage price on battery installation to determine the threshold level at which economic installation size can expand. Although the threshold varies across markets, for specific applications, battery storage is already cost competitive with alternatives. In the next six years, battery and system cost declines will increase U.S.storage hybrid system capacity by an incredible 22 times its current numbers.
Many benefits to creating diversity of storage hybrid systems
The paper also finds that battery storage hybrid systems can synergistically increase the system’s value:
- Constructing a single hybrid unit, instead of two separate units, reduces hardware and installation costs and increases battery charging efficiency.
- Combining PV and storage provides value streams that neither component alone can provide.
- When paired with utility-scale wind or solar, storage reduces energy curtailment and generation variability and may increase capacity payments.
- When paired with a natural gas peaking plant, storage increases the effective start-up time of the plant.
- Storage allows generators to offer black-start capabilities.
- A battery-renewable-diesel combination provides efficient, cleaner energy for off-grid locations.
- Battery-solar-diesel hybrids enable additional renewable sources and improve the operational efficiency of the diesel generator.
- When paired with distributed solar, storage reduces demand charges and provides backup generation when needed.
On islands and in the developing world, clear economic benefits to hybrid storage systems
A HOMER analysis of island and developing-country markets found that the most economic system configurations likely include generator plus storage as well as other hybrid technologies. Because system features and economic factors offer many opportunities for these hybrids, isolated grids and remote locations create a short-term opportunity for utility-scale batteries and hybrids. In the U.S., California currently offers the best market for battery storage. The state has storage mandates, high renewable penetration, and a conducive regulatory framework.
The global battery storage market will grow rapidly, but several obstacles still exist. High battery costs, regulatory issues and uncertainty, and other market factors create obstacles for these projects. Using hybrid storage systems may qualify projects for more incentives such as grid reliability and security grants among others.
The complete report, Hybrid Storage Market Assessment: A JISEA White Paper, can be viewed on the NREL website.