A study by Brattle economists prepared for the Public Utilities Commission of Nevada (PUCN) and the Nevada Governor’s Office of Energy (GOE) finds that energy storage can be a cost-effective component of Nevada’s energy resource mix.
A new study released today by Brattle economists and prepared for the Public Utilities Commission of Nevada (PUCN) and the Nevada Governor’s Office of Energy (GOE) finds that energy storage can be a cost-effective component of Nevada’s energy resource mix.
The Brattle study found that, for the Nevada system with a peak demand of roughly 8,500 MW, up to 175 MW of utility-scale battery storage (with 4-hour storage capacity) could be deployed cost effectively by 2020. By 2030, declines in storage costs and changing market conditions could increase cost-effective deployment levels to a range from 700 MW to more than 1,000 MW. The study also notes that behind-the-meter storage adoption by commercial and industrial customers could further increase this value by up to 70 MW by 2030.
“We have applied a new approach to determine how the simultaneous capture of multiple value streams impacts cost-effective storage deployment levels,” noted Ryan Hledik, a Brattle principal and co-author of the study. “Our findings have implications that extend beyond the state borders of Nevada.”
A number of the study’s findings are relevant for other systems that are exploring the value of storage:
- A 30% decline in storage costs (e.g., from $300/kWh to $210/kWh) would increase cost-effective deployment levels by 200% to 500%.
- The economically optimal level of energy storage deployment increases as system conditions evolve and flexibility needs increase over time. At a given cost of energy storage, optimal deployment levels are more than twice as high in 2030 as in 2020.
- The ability to use battery systems to mitigate distribution system outages potentially accounts for 20% to 40% of the total benefits, which can significantly increase the economically optimal level of storage deployment.
- High-value opportunities can decline quickly. For instance, most of the identified opportunities for geographically-targeted transmission and distribution investment deferrals in Nevada were captured with only about 200 MW of energy storage. Other value streams, such as resource adequacy value, are less sensitive to deployment levels.
The Brattle study’s findings are largely consistent with those of similar recent studies in Massachusetts, New York, and Texas, when comparing the optimal storage deployment levels relative to system size.
Based on the findings of the study, Nevada policymakers will consider establishing a statewide energy storage procurement target. Recognizing uncertainty in future storage costs, the Brattle authors recommend defining future storage procurement goals as a function of costs.
“Optimal storage procurement targets increase as storage costs decline,” said Roger Lueken, a Brattle associate and co-author of the study. “A flexible approach to procurement would allow larger quantities of storage to be deployed if storage costs decline quickly.”
The study, “The Economic Potential for Energy Storage in Nevada,” is authored by Ryan Hledik, Judy Chang, Roger Lueken, Johannes Pfeifenberger, John Imon Pedtke, and Jeremy Vollen. It has been filed with the PUCN under Docket No. 17-07014.