“Power grids need extra generating capacity to work properly. For example, about 20 percent of New York State’s generation fleet runs less than 250 hours a year. Because they don’t run much, “peaker plants” are by design the cheapest and least efficient fossil generators.”
>”[…] As has happened with solar PV, the costs for multi-hour energy storage are about to undergo a steep decline over the next 2 to 3 years. This cost trend will disrupt the economic rationale for gas-fired simple cycle combustion turbines (CTs) in favor of flexible zero emissions energy storage. This will be especially true for storage assets owned and operated by vertical utilities and distributed near utility substations.
Simple cycle gas-fired CTs have been a workhorse utility asset for adding new peaker capacity for decades. But times and technologies change, and the power grid’s long love affair with gas-fired CTs is about to be challenged by multi-hour energy storage. Flow batteries that utilize a liquid electrolyte are especially cost-effective because the energy they store can be easily and inexpensively increased just by adding more electrolyte.
CTs cost from $670 per installed kilowatt to more than twice that much for CT’s located in urban areas. But the economics of peaking capacity must also reflect the benefits side of the cost/benefit equation. Distributed storage assets can deliver both regional (transmission) and local (distribution) level energy balancing services using the same storage asset. This means the locational value and capacity use factor for distributed storage can be significantly higher compared to CTs operated on a central station basis.
The disruptive potential of energy storage as a substitute for simple cycle CTs has been recognized. For example, Arizona Public Service (APS) and the Residential Utility Consumer Office (RUCO) recently filed a proposed settlement which, if approved, would require that at least 10% of any new peaker capacity now being planned as simple cycle combustion turbines would instead need to be energy storage — as long as the storage meets the cost effectiveness and reliability criteria of any CTs being proposed.
Lower cost solar PV and its rising penetration in all market segments will have a profoundly disruptive effect on utility operations and the utility cost-of-service business model. This has already started to happen. Storage offers a way for utilities to replace lost revenues premised on margins from kilowatt-hour energy sales by placing energy storage into the rate based and earning low-risk regulated returns.”<