Publications

Grid energy storage can help to balance supply and demand, but its financial viability and operational carbon emissions impact is poorly understood because of the complexity of grid constraints and market outcomes. We analyse the impact of several technologies (Li-ion and flow batteries, pumped hydro, hydrogen) on Great Britain balancing mechanism, the main market for supply-demand balancing and congestion management. We find that, for many locations and technologies, financially optimal operation of storage for balancing can result in higher carbon emissions. For example, the extra emissions associated with a 1 MW 2-hour duration Li-ion battery in winter vary between +230 to -71 kgCO2/h. Although storage enable higher usage of renewables, it can also unlock additional demand leading to greater use of gas. In addition, balancing services alone are presently insufficient for financial viability of storage projects. This work highlights the need for market reform aligning financial incentives with environmental impacts.

Dispatch of a grid energy storage system for arbitrage is typically formulated into a rolling-horizon optimization problem that includes a battery aging model within the cost function. Quantifying degradation as a depreciation cost in the objective can increase overall profits by extending lifetime. However, depreciation is just a proxy metric for battery aging; it is used because simulating the entire system life is challenging due to computational complexity and the absence of decades of future data. In cases where the depreciation cost does not match the loss of possible future revenue, different optimal usage profiles result and this reduces overall profit significantly compared to the best case (e.g., by 30–50%). Representing battery degradation perfectly within the rollinghorizon optimization does not resolve this—in addition, the economic cost of degradation throughout life should be carefully considered. For energy arbitrage, optimal economic dispatch requires a trade-off between overuse, leading to high return rate but short lifetime, vs. underuse, leading to a long but not profitable life. We reveal the intuition behind selecting representative costs for the objective function, and propose a simple moving average filter method to estimate degradation cost. Results show that this better captures peak revenue, assuming reliable price forecasts are available.

Grid-scale electricity storage will play a crucial role in the transition of power systems towards zero carbon. During the transition, investments need to be channeled towards technologies and locations that enable zero carbon operation in the long term, while also delivering security of supply and value for money. We discuss metrics and market signals that are needed to guide this transition towards clean, secure and affordable solutions. Paradoxically, carbon metrics play an important role, but become less effective as a decision tool once the system approaches zero carbon. We critically assess the role of marginal and average emission and question the allocation of marginal emissions in systems where combinations of renewables and storage deliver flexibility. We conclude that, for strategic investments, short-term market signals may not always deliver sufficiently fast or far-sighted outcomes and operational decisions need to consider the merit order of demand as well as supply.