The True Cost of Storage

Posted on August 04, 2015

AES’ energy storage projects have saved customers in PJM $20 million and customers in Chile an estimated $37 million. And that is in just one year. Energy storage is in a period of rapid adoption and it is time that the reality replaces the rumors when it comes to understanding the true cost of energy storage.

Leading power markets, utilities and regulators are benefitting from commercially operating storage or have made commitments to implement the technology.  More customers are considering storage to solve their grid needs and skipping expensive demonstration projects. 

Though the benefits of advanced energy storage have never been disputed, its viability as a cost-effective resource was called into question in the early years of storage deployments. Some have called storage too expensive, despite the continued completion of successful, unsubsidized grid-scale projects. In order to unlock the potential of energy storage and build a better, smarter and greener grid, this misconception must change.

When compared to a peaking power plant, energy storage costs less and does more. Battery-based storage is unique in that it has the ability to act as both generation and load, providing twice the flexibility on the same interconnection. This gives customers twice the value at the same cost.

For example, in PJM, advanced storage is competitively procured every day and is providing faster, more responsive reliability reserves, improving the performance of the power system as a whole, while reducing the cost for customers and lowering system-wide emissions. In just one year, AES’ 100 MWs of resource in the market have saved more than $20 million for PJM customers.

Additionally, recent evaluations for storage have proven it as an economic capacity resource. Take for example Southern California Edison (SCE) selection of more than 250 MWs of energy storage in its competitive solicitation for capacity last year. The SCE selection marked the first time energy storage was specifically allowed to compete alongside peaking and other capacity alternatives.

This is a huge win for SCE customers because storage was less expensive than traditional peaking power plants and will deliver a number of other benefits, such as enhanced reliability. With the added capability to perform multiple grid-level jobs at this competitive price point, storage proves it absolutely delivers value as a smart alternative to traditional generation.

As utilities, planners, and power system operators prepare for the retirement of the current generation fleet, due to factors like age, cost, or emissions, advanced storage resources need to be looked at as a cost-effective choice compared to low-utilization power plants.  Energy storage can provide the same capacity benefits as a peaking plant, but in addition, it also improves the efficiency of existing generating sources, lowering customer costs and emissions.

AES has been operating energy storage facilities commercially for over eight years. Our experience operating the world’s largest fleet of energy storage projects has proven that storage is commercially successful today, and the number of economic applications of energy storage will only increase going forward.  Proven battery-based energy storage is available today and can be utilized for the most important jobs on the grid.

I continue to be encouraged by the rapid acceptance of storage around the globe and its potential to provide a smarter, more secure and more sustainable grid. Leading power markets, utilities and regulators are already benefiting from cost-effective energy storage. Join us as we continue our work to transform the electric grid - #ChooseStorage.

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