Relative Economic Merits of Storage and Combustion Turbines for Meeting Peak Capacity Requirements under Increased Penetration of Solar Photovoltaics

Batteries with several hours of capacity provide an alternative to combustion turbines for meeting peak capacity requirements. Even when compared to state-of-the-art highly flexible combustion turbines, batteries can provide a greater operational value, which is reflected in a lower system-wide production cost. By shifting load and providing operating reserves, batteries can reduce the cost of operating the power system to a traditional electric utility. This added value means that, depending on battery life, batteries can have a higher cost than a combustion turbine of equal capacity and still produce a system with equal or lower overall life-cycle cost. For a utility considering investing in new capacity, the cost premium for batteries is highly sensitive to a variety of factors, including lifetime, natural gas costs, PV penetration, and grid generation mix. In addition, as PV penetration increases, the net electricity demand profile changes, which may reduce the amount of battery energy capacity needed to reliably meet peak demand.