US grid-scale storage capacity could grow five-fold by 2050

With declining technology costs and increasing renewable deployment, energy storage is poised to be a valuable resource on future power grids, especially when the power system allows storage to simultaneously provide multiple grid services and when there is greater solar PV penetration.

This is according to the latest National Renewable Energy Laboratory report from the Storage Futures Study (SFS), which describes the significant market potential for utility-scale diurnal storage (up to 12 hours) in the US power system through 2050.

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The report, Economic Potential of Diurnal Storage in the U.S. Power Sector, has been written by NREL analysts Will Frazier, Wesley Cole, Paul Denholm, Scott Machen, and Nate Blair, and explores the total market potential for storage technologies, and the key drivers of cost-optimal deployment.

“We find significant market potential for diurnal energy storage across a variety of modelled scenarios, mostly occurring by 2030,” said Will Frazier, National Renewable Energy Laboratory (NREL) analyst and lead author of the report. “To realise cost-optimal storage deployment, the power system will need to allow storage to provide capacity and energy time-shifting grid services.”

For this work, researchers added new capabilities to NREL’s Regional Energy Deployment System (ReEDS) capacity expansion model to accurately represent the value of diurnal battery energy storage when it is allowed to provide grid services—an inherently complex modeling challenge. Because the value of storage depends greatly on timing, ReEDS simulated system operations every hour.

The researchers used ReEDS to model two sets of scenarios—one that allows storage to provide multiple grid services and one that restricts the services that storage can provide. All the scenarios use different cost and performance assumptions for storage, wind, solar PV, and natural gas to determine the key drivers of energy storage deployment.

Key findings:

  • Across all scenarios, utility-scale diurnal energy storage deployment grows significantly through 2050, totaling over 125GW of installed capacity in the modest cost and performance assumptions.
  • Initially, the new storage deployment is mostly shorter duration (up to 4 hours) and then progresses to longer durations (up to 12 hours) as deployment increases, mostly because longer-duration storage is currently more expensive.
  • In 2030, annual deployment of battery storage ranges from 1 to 30GW across the scenarios.
  • By 2050, annual deployment ranges from 7 to 77GW.
  • Not allowing storage to provide firm capacity impacts future deployment the most, although not allowing firm capacity or energy time-shifting services can also substantially decrease potential deployment.
  • Operating reserves do not drive the deployment of storage within the study because they find limited overall market potential for this service.
  • More PV generation makes peak demand periods shorter and decreases how much energy capacity is needed from storage—thereby increasing the value of storage capacity and effectively decreasing the cost of storage by allowing shorter-duration batteries to be a competitive source of peaking capacity.
  • Over time the value of energy storage in providing peaking capacity increases as load grows and existing generators retire.
  • More PV generation creates more volatile energy price profiles, increasing the potential of storage energy time-shifting. Like peaking capacity, the value of energy time-shifting grows over time with increased PV penetration.

Visit the Storage Futures Study page for more information about the broader study.

The SFS—led by NREL and supported by the U.S. Department of Energy’s (DOE’s) Energy Storage Grand Challenge—is a multiyear research project to explore how advancing energy storage technologies could impact the deployment of utility-scale storage and adoption of distributed storage, including impacts to future power system infrastructure investment and operations.