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The need for substantial electricity storage is often emphasized in the transition to renewable energy. However, focusing solely on electricity overlooks the broader energy system. This article advocates for an integrated cross-sector approach (System Integration) to identify the most efficient and cost-effective storage solutions for a renewable energy system.

It concludes that examining individual sub-sectors alone cannot determine optimal storage. Instead, integrating the electricity sector with other energy system components to create a Smart Energy System offers better alternatives for incorporating large, variable renewable energy inputs than relying solely on electricity storage. This does not negate the importance of electricity storage, which will still be crucial for other purposes in the future.

By Toke Kjær Christensen, Ph.D., Department of Sustainability and Planning, Aalborg University
– rewritten based on the original journal paper: “Energy Storage and Smart Energy Systems” by the authors Henrik Lund, Poul Østergaard, David Connolly, Iva Ridjan, Brian Mathiesen, Frede Hvelplund, Jakob Thellufsen, Peter Sorknæs

This article was published in Hot Cool, edition no. 5/2024 | ISSN 0904 9681 |

Introduction

Transitioning from a fossil fuel-based energy system to one based on renewable sources involves moving from stored energy to variable energy sources that require immediate use or storage. This transition often highlights the need for increased energy storage, particularly for electricity. Some argue that renewable energy’s viability depends on electricity storage. However, much of the literature focuses narrowly on fluctuating electricity and direct storage within a smart grid context, neglecting other types of grids like gas and thermal. While electricity storage is essential, converting electricity into other storable energy forms is key to achieving a 100% renewable energy supply. Therefore, identifying optimal solutions requires a holistic perspective beyond a single-sector smart grid approach.
 

Scope, Methodology, and Structure

This study examines efficient and cost-effective storage options using a Smart Energy Systems Approach, showing that optimal storage solutions arise from integrating sub-sectors of the energy system. It synthesizes the authors’ prior research, analyzing storage in different energy system segments, storage size, cost, and thermal storage’s role. The study also considers cooling, transportation, and biomass integration, demonstrating the benefits of a smart energy systems approach incorporating efficient storage utilization.
 

Electric, Thermal, Gas, and Liquid Energy Storage

There is a fundamental cost distinction between storing electricity and other forms of energy. Electricity storage is storage where inputs and outputs are primarily electricity, though it often involves converting electricity into other energy forms. This conversion process makes electricity storage more expensive than storing thermal energy, gas, or liquid fuels. For instance, thermal storage is approximately 100 times more economical than electricity storage, and gas and liquid fuel storage technologies have even lower investment requirements. These comparisons are based on technologies like underground natural gas caverns and oil tanks. Still, future renewable energy systems could also use methane or methanol from biomass and hydrogen from electrolysis.
 
Beyond investment costs, electricity storage also faces higher losses, especially in conversion. Gas caverns and oil tanks exhibit negligible losses, while thermal storage has about 5% losses, depending on size and retention time. Since electricity storage involves conversion to and from storage, these losses are more substantial.
 
Due to these high investment costs and losses, the economic viability of electricity storage technologies is highly dependent on electricity price variations, which typically occur daily. However, the intermittent nature of renewable electricity sources like wind power tends not to generate significant price variations, making investments in electricity storage economically unfeasible in high-wind power systems like Denmark. This is because the storage is not utilized frequently enough to justify the high initial investments.
 

Figure 1: Investment cost and cycle efficiency comparison of electricity, thermal, gas and liquid fuel storage technologies. See assumptions, details and references in Appendix 1.

Figure 2. Annualized investment cost per use-cycle vs annual numbers of use-cycles. In the diagram the cost is also benchmarked against the cost of producing renewable energy, here shown for a wide cost span by grey (extension along horizontal axis is for presentation only; there is no cyclic dependence for renewable energy production).

Annualized investment costs per use cycle for storing different forms of energy vary with the number of use cycles per year. Investments in electricity storage generally require 300-350 cycles annually to match the cost of producing renewable energy. Even at 400 cycles per year, where electricity storage investment costs fall below the upper range of renewable energy production costs, these include purchasing power to fill the storage, operation and maintenance—excluding storage or conversion losses.

 
Thus, even without losses, the high initial investment costs in electricity storage make stored power only economically competitive with renewable electricity production if used almost daily. On the other hand, investments in thermal, gas, and liquid fuel storage remain feasible with significantly fewer annual cycles. These storage options allow energy storage over weeks, months, and even years due to lower investment costs. Therefore, the feasibility of these alternative storage technologies is much better, especially when the energy system is restructured to connect renewable energy with thermal, gas, and/or liquid storage technologies.
 
While electricity storage directly impacts the integration of fluctuating renewable electricity sources like wind power, a simple comparison based on investment costs, cycle efficiencies, and investment costs per cycle shows that electricity storage is insufficient for achieving system balance. The electricity system requires constant balance, but other storage types offer more favorable solutions. By restructuring the energy system to connect renewable energy with thermal, gas, and liquid storage technologies, it becomes more cost-effective and efficient to integrate fluctuating renewable electricity sources.
 
In conclusion, while electricity storage is important, its high costs and losses make it less feasible to integrate renewable energy compared to thermal, gas, and liquid fuel storage. A more holistic approach that includes these alternative storage technologies offers better system balance and flexibility at lower costs, facilitating the integration of renewable energy into the overall energy system.
 

Community vs. Individual Domestic Storage

Economies of scale significantly impact storage costs. Community-level storage, such as district heating systems, is much more cost-effective than individual domestic storage. Large-scale thermal storage, for instance, can reduce unit costs by a factor of five compared to smaller local systems. Although district heating systems incur heat losses, the overall efficiency improvements outweigh these losses. Similarly, economies of scale apply to electricity storage, though to a lesser extent. Designing renewable energy systems to avoid electricity storage and instead use thermal, gas, or liquid fuels at the community level facilitates the integration of fluctuating renewable electricity sources.
 

Smart Energy Systems

Smart Energy Systems integrate smart electricity, thermal, and gas grids to identify synergies and achieve optimal solutions. This approach involves new technologies and infrastructures that create flexibility in energy conversion. Smart Energy Systems compensate for renewable resources’ variability by linking electricity, thermal, and transport sectors. Heat pumps and electric vehicles play crucial roles in providing flexibility and storing renewable electricity. Electrofuels also connect the electricity and transport sectors, enabling renewable electricity storage as gas or liquid fuels. A smart energy systems approach is essential for designing cost-effective and efficient renewable energy systems.

Smart Heating and Cooling

While future heat demand will decrease, eliminating the need for space heating entirely is technically challenging. Therefore, a cost-effective solution involves balancing energy conservation with renewable energy supply, considering both individual and communal systems like district heating. Studies have shown that combining heat savings with district heating in urban areas and individual heat pumps in rural areas is the least-cost approach. District heating allows for waste heat from electricity production and industry, which can replace a significant share of natural gas and oil. Integrating wind and other fluctuating renewable electricity sources with large-scale heat pumps and thermal storage will be crucial. Power-to-heat technology provides virtual electricity storage, offering a cost-effective way to store renewable electricity as thermal energy, efficiently meeting heating and cooling needs.
 

Smart Biomass and Transportation

Electrifying the transport sector is practical for balancing electricity system production and demand, but not all transportation demands can be met by direct electricity use. Long-distance transport, marine, and aviation will rely on gaseous and liquid fuels from renewable resources. Electrofuels provide flexibility by storing renewable electricity as gas or liquid fuels, enabling the integration of fluctuating renewable resources. This approach allows for deferrable loads and addresses the dispatch issues associated with renewable energy storage.
 

The Overall System

Comprehensive analyses of regional, national, and European energy transitions using a smart energy systems approach have demonstrated the feasibility of 100% renewable energy systems. These systems balance renewable energy production and demand hourly through thermal, gaseous, and liquid fuel storage. A smart energy system enhances the economic viability of renewable energy by increasing the value of fluctuating power generation. Wind power, for instance, can drive down electricity spot market prices, but a smart energy system with deferrable loads across heating, cooling, and transportation can mitigate this effect.
 

Conclusion

Considering energy storage is essential for integrating renewable energy, both in the existing system and in a future 100% renewable supply. A narrow focus on electricity storage leads to adopting the most expensive storage form. Instead, leveraging thermal and fuel storage technologies offers a more cost-effective and efficient strategy for integrating renewable energy. A cross-sector smart energy systems approach identifies superior storage options and conversion technologies, minimizing reliance on electricity storage. Exploring alternative storage types for extensive renewable electricity integration provides better system balancing and flexibility at lower costs. While electricity storage remains necessary for other purposes, it should not be prioritized for reintegrating electricity back into the grid.

For further information, please contact: Toke Kjær Christensen, tkchr@plan.aau.dk

“Energy storage and smart Energy Systems” was published in Hot Cool, edition no. 5/2024. You can download the article here:

meet the author

Toke Kjær Christensen
Ph.D., Department of Sustainability and Planning, Aalborg University

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