Effects of Deep Reductions in Energy Storage Costs on Highly Reliable Wind and Solar Electricity Systems

We use 36 years (1980–2015) of hourly weather data over the contiguous United States (CONUS) to assess the impact of low-cost energy storage on highly reliable electricity systems that use only variable renewable energy (VRE; wind and solar photovoltaics). Even assuming perfect transmission of wind and solar generation aggregated over CONUS, energy storage costs would need to decrease several hundred-fold from current costs (to ∼$1/kWh) in fully VRE electricity systems to yield highly reliable electricity without extensive curtailment of VRE generation. The role of energy storage changes from high-cost storage competing with curtailment to fill short-term gaps between VRE generation and hourly demand to near-free storage serving as seasonal storage for VRE resources. Energy storage faces “double penalties” in VRE/storage systems: with increasing capacity, (1) the additional storage is used less frequently and (2) hourly electricity costs would become less volatile, thus reducing price arbitrage opportunities for the additional storage.