US Grid-Scale Storage Capacity Could Grow Over 125 GW by 2050 NREL

In a recent report published by National Renewable Energy Laboratory (NREL) under the Storage Futures Study (SFS), analysts found significant market potential for utility-scale diurnal storage (up to 12 hours) in the United States power system by 2050, predicting over 125 GW growth for grid-scale storage capacity in the United States.

Called the ‘Economic Potential of Diurnal Storage in the U.S. Power Sector‘, the multi-layered research project led by NREL and supported by the U.S. Department of Energy’s (DOE) Energy Storage Grand Challenge explores how storage adds the most value to the grid and deployment increases when the power system allows storage to simultaneously provide multiple grid services and there is greater solar photovoltaic (PV) penetration. It also looks into how the findings would impact future power system infrastructure investment and operations.

This report models the evolution of diurnal storage (<12 hours) within the U.S. electricity sector from 2020 through 2050 using a least-cost optimization framework across multiple cost scenarios based upon existing policies. The study finds that diurnal storage is extremely competitive on an economic basis.

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

While storage can provide many services to the grid, the report points out that economic storage deployment is driven primarily by the combination of capacity value and energy arbitrage (or time-shifting) value, and that the combination of these value streams is needed for optimal storage deployment to be realized. The NREL analysis establishes a strong correlation between PV penetration and storage market potential. More generation from PV leads to narrow net-load peaks in the evenings, increasing the market potential of storage capacity value. More generation from PV also creates more volatile energy price profiles, which increases the market potential of storage energy time-shifting value.

Adding new capabilities to model storage

For the current analysis, 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. Cost and performance metrics focus on lithium-ion batteries because the technology has more market maturity than other emerging technologies, researchers explained. Because the value of storage depends greatly on timing, ReEDS simulated system operations every hour.

NREL 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 used different cost and performance assumptions for storage, wind, solar PV, and natural gas to determine the key drivers of energy storage deployment.

Five-fold capacity increase potential by 2050

Across all scenarios in the study, utility-scale diurnal energy storage deployment grows significantly through 2050, totaling over 125 GW of installed capacity in the modest cost and performance assumptions — a more than five-fold increase from today’s total. Depending on cost and other variables, deployment could total as much as 680 GW by 2050, the report said.

Installed Storage Capacity Could Increase Five-Fold by 2050

The study noted that initially, the new storage deployment is mostly for a 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, the annual deployment of battery storage will range from 1 to 30 GW across the scenarios. By 2050, annual deployment will range from 7 to 77 GW.

System flexibility is key

To understand what could drive future grid-scale storage deployment, NREL modeled the techno-economic potential of storage when it is allowed to independently provide three grid services: capacity, energy time-shifting, and operating reserves. To explore the drivers of storage deployment, the researchers considered the techno-economic potential of storage services, the value of those services, and the costs of storage. The experts feel that the potentials are techno-economic because they depend on both technical factors (e.g., storage efficiency, load shape) and economic factors (e.g., amount of PV deployed, which generator is on the margin).

NREL found that 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. On the other hand, operating reserves do not drive the deployment of storage within the study because they find limited overall market potential for this service. The current study reinforces the symbiotic nature of solar and storage, which was pointed out by multiple earlier NREL studies. 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. NREL found that the value of energy storage in providing peaking capacity increases over time as load grows and existing generators retire.

Solar PV generation also has a strong relationship with time-shifting services, the report emphasizes. 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.

Transmission and storage show limited interaction in the modeled scenarios, with the most significant correlation being between transmission and wind. Both transmission and storage provide flexibility to the power grid, one by shifting energy in space and the other shifting it in time. Modeling results demonstrate that wind benefits more from spatial flexibility, while PV benefits more from temporal flexibility. Transmission is positively correlated with wind capacity, but the additional wind does not incentivize additional storage, as wind frequently does not change the net load shape in a way that increases storage peaking capacity potential.

While large amounts of wind and PV are deployed across model scenarios as part of the least-cost solution, the diurnal generation profile from PV enables further storage deployment, the report established. Under scenarios of high wind deployment, the wind reaches high penetrations without significant storage deployment.

This analysis demonstrates that energy storage has the potential to become a significant contributor to system capacity, with new installations reaching 132 GW by 2050 even with conservative storage assumptions by the researchers, noted the study. While cost and performance metrics in this study focus on Li-ion batteries because the technology has greater market maturity today than other emerging technologies, results from this study can be generalized to other storage technologies that meet the cost and performance projections assumed. Storage deployment in this study is driven by a combination of capacity and energy value. Optimal storage deployment is sensitive to the relationship between these value streams and the cost of storage.

In a recent report, NREL had called for an adaptable approach to decarbonization solutions and highlighted the challenges and means to achieve a 100% renewable electric grid in the U.S.

NREL’s earlier research achievements include discovering new materials for super-efficient solar cells of the future and developing a solar cell with an efficiency exceeding 47%.

The latest report added that future work on the topic would examine the relationship between diurnal storage (which is the focus of this work) and longer-duration storage resources, especially under highly decarbonized grid conditions outside the scope of this work, such as those approaching 100% renewable or clean energy. The report additionally suggested that more work is needed to understand the relationship between storage and demand-side flexibility at a national scale.