IEEE Power & Energy Magazine - November/December 2017 - 35

of this retiring peaking capacity. However, energy efficiency,
demand response, and a trend toward declining electricity use
for most industrialized countries will dampen the need for a
complete replacement of existing peaking capacity.
It will be difficult for storage to compete with traditional
peaking resources, such as combustion turbines, in terms of
capital costs alone. This is where it becomes important to capture and monetize the value of so-called stacked services. Even
ignoring the potential opportunities for any residual value in
ancillary service markets, combining capacity value with the
flexible dispatch and siting benefits of energy storage means
that storage can cost more than a new combustion turbine on
a capital cost basis but still provide lower costs over its lifetime. Dispatch flexibility, including the ability of energy storage to arbitrage price differentials, avoid thermal plant starts,
and provide long-duration operating reserves, are now being
introduced or proposed in several markets in the United States.

A further benefit is the potential siting flexibility of storage. This siting flexibility can defer investments in T&D
assets, and siting storage closer to load can avoid losses in
the T&D network (by charging during periods of low losses),
measurably improving its system-wide benefit. Figure 4 provides an illustration of such stacked services and multiple
value streams, highlighting services that can currently be
monetized in deregulated markets.

Increased Renewable Energy Will Change
the Economics for Battery Storage
The introduction of renewable energy may further accelerate storage deployment and create new market opportunities.
The role of storage in integrating renewables is both complex
and controversial. Renewable integration studies to date have
found no inherent economic or physical "need" for storage at
renewable energy penetrations of up to about 35% of annual

Energy and
Capacity

Ancillary
Services

Transmission
Services

Distribution
Services

End-Use
Applications

Energy
Time Shifting
(Arbitrage)

Fast
Frequency
Response

Transmission
Upgrade
Deferral

Distribution
Upgrade
Deferral

Power Quality

Firm
Capacity

Regulation

Transmission
Congestion
Relief

Distribution
Voltage
Support

Reliability and
Resiliency

Distribution
Loss Reduction

Demand Charge
Management

Ramping
Reserves

Contingency
Spinning
Reserves

Replacement
Nonspin
Reserves

Time of Use and
Real-Time Pricing

Legend
Service Currently Valued in Deregulated Markets
Proposed Service or Early Adoption in Some Deregulated Markets
Currently Not Valued in Most Deregulated Markets

Voltage
Support

Black-Start
Capability

figure 4. The multiple value streams of battery energy storage. (Sources: the International Renewable Energy Agency
(2016), the Electric Power Research Institute, and the U.S. Department of Energy, 2013.)
november/december 2017

ieee power & energy magazine

35



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