Electric grid energy storage is essential to improving the reliability and affordability of California’s electric power system. Large-scale energy storage technology is a way to hold or store electricity when production exceeds consumption. Energy storage has the potential to transform and enhance electric utility planning and operations with more reliability and affordability, particularly when integrated with high amounts of renewable resources. Current software tools that calculate the value of energy storage planning and operation are limited, are proprietary, and/or have not been validated by the stakeholders who require them. A transparent and accessible public model that demonstrates and quantifies the current and future benefits of energy storage will provide substantial value.
The Storage Value Estimation Tool (StorageVET™) is a publicly accessible and customizable model for energy storage benefit-cost analysis. Users can assess a range of energy storage costs and benefits across multiple storage technologies, such as batteries, flywheels, control systems and power electronics) and includes a detailed financial model which can incorporate state or federal financial incentives. These evaluated benefits include day-ahead and real-time wholesale market revenues, avoided retail energy and demand charges, and avoided costs of alternative infrastructure investments. StorageVET™ can also analyze multiple-use applications, such as considering scheduling obligations incurred when the project is a Resource Adequacy capacity resource (utilities purchasing more than their peak load requirements to secure actual, physical commitments of electricity), or when providing transmission and distribution deferral, and distribution operational services. While the model is organized around the California power system and markets, it can easily be adapted to assessment of other regions. Hypothetically, if using StorageVET™ improves decision making by enhancing the combination of cost reductions and increased benefits by 1 percent on average across the energy storage fleet in California; then the minimum baseline value of StorageVET™ is estimated at $36.5 million.
