This article from today’s Wall Street Journal, by Russell Gold, discusses the use of batteries to store power and release it during peak demand periods:
”Giant batteries charged by renewable energy are beginning to nibble away at a large market: The power plants that generate extra surges of electricity during peak hours.
Known as peakers, the natural-gas-fired plants are expensive to run, and typically called into service only when demand rises and regular supplies are insufficient. That makes them vulnerable to disruption from lithium-ion batteries, which have fallen in price in recent years, and are emerging as a competitive alternative for providing extra jolts of electricity.”
But battery costs are still high:
”Overall, it still generally costs 35% more today to provide extra power via a battery compared with a conventional peaker plant, according to energy analysts at SSR LLC. But they estimate that batteries will be less expensive by 2024. Batteries, they add, are better suited to replace peaker plants in warmer areas than in colder climates, where winter peaks can last for longer than four hours.”
Me: The amount of optionality embedded in power markets is amazingly high but also very constrained… Batteries can be valued like oil storage facilities or like pipelines, but don’t seem to be…