Energy storage is gaining traction as an essential component for maintaining load-generation balance in the modern electricity market. Viewed as a promising solution to a widespread challenge, long-duration energy storage (LDES) may be the key to counteracting the pitfalls of variable renewable power generation, especially as we look toward the industry’s aspiration of a zero-emission world. However, these technologies are enduring their own challenges to mass adoption compared to some of the more traditional lithium-ion storage technologies. These include a lack of a revenue-generating framework to drive capital deployment, an undefined long-duration reserve framework forcing competition with short-duration project markets and a lack of commercial-scale development on which to lean to prove successful implementation.
If dependent on a pure energy arbitrage business model, the major needle movers on a project’s balance sheet become capital cost, average spread per cycle and the yearly cycle frequency. Assuming a $72,000/MWh capital cost for a 10 MW/1,000 MWh iron-air project, Enverus Intelligence® | Research (EIR) can derive the required breakeven arbitrage spread required for a 10% return on equity (at various cycle counts per year) and the maximum spread achievable in each market over the past five years. Figure 1 reveals that even with low capital costs, the energy arbitrage model fails to produce a financially promising project across all ISOs, irrespective of cycle count. Thus, EIR looks to a significant widening of seasonal location market pricing spreads or the addition of alternate revenue streams to justify confident investment in these 100+ hour LDES projects.
Click here to read more about how concrete could be used to store energy.
Highlights from Energy Transition Research
- Green hydrogen – Pathways to paradise – This report explores the key drivers behind green hydrogen production costs and demonstrates how inputs impact project returns when paired with U.S. incentives.
- CCUS project tracker – Make it (CO2) go away – The Energy Transition Research team illustrates the use cases of project trackers in following CCUS activity around the world.
- Advancing Canada’s green future – Emissions reductions, CCUS and DLE – This slide deck explores the three frontiers particularly relevant to Canada’s energy transition: the current state of GHG emissions, CCUS and direct lithium extraction.
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About Enverus Intelligence®| Research
Enverus Intelligence® | Research, Inc. (EIR) is a subsidiary of Enverus that publishes energy-sector research focused on the oil, natural gas, power and renewable industries. EIR publishes reports including asset and company valuations, resource assessments, technical evaluations, and macro-economic forecasts and helps make intelligent connections for energy industry participants, service companies, and capital providers worldwide. Click here to learn more.
