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Limiting the public cost of stationary battery deployment by combining applications

Nature Energy volume 1, Article number: 16079 (2016) Cite this article

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Abstract

Batteries could be central to low-carbon energy systems with high shares of intermittent renewable energy sources. However, the investment attractiveness of batteries is still perceived as low, eliciting calls for policy to support deployment. Here we show how the cost of battery deployment can potentially be minimized by introducing an aspect that has been largely overlooked in policy debates and underlying analyses: the fact that a single battery can serve multiple applications. Batteries thereby can not only tap into different value streams, but also combine different risk exposures. To address this gap, we develop a techno-economic model and apply it to the case of lithium-ion batteries serving multiple stationary applications in Germany. Our results show that batteries could be attractive for investors even now if non-market barriers impeding the combination of applications were removed. The current policy debate should therefore be refocused so as to encompass the removal of such barriers.

Batteries may be a key component for coping with the intermittent nature of new renewable-energy (RE) technologies, and could therefore be central to low-carbon energy systems with high proportions of RE1. However, because their costs are high at present, stationary batteries are still perceived as unattractive for investors2. This, together with the high cost reduction potential of batteries3, elicits calls for battery-specific deployment policies to push the technology along its learning curve1,2,4.

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Figure 1: Investment attractiveness of battery systems in single applications.
Figure 2: Increase in investment attractiveness due to combined applications of battery systems.
Figure 3: Breakdown of the secondary application’s return and risk contributions to the combined NPV per € invested.
Figure 4: General framework of investment attractiveness when combining a primary with a secondary application.

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Acknowledgements

We gratefully acknowledge the financial support provided by EnergieSchweiz (project ID 131916726). We also would like to thank V. Hoffmann, J. Kölbel and P. Thömmes for their support for and valuable inputs to this study.

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Authors and Affiliations

  1. Department of Management, Swiss Federal Institute of Technology Zurich (ETH Zurich), Technology, and Economics, Group for Sustainability and Technology, Weinbergstrasse 56/58, 8092 Zurich, Switzerland

    A. Stephan, B. Battke, M. D. Beuse & J. H. Clausdeinken

  2. Department of Humanities, Swiss Federal Institute of Technology Zurich (ETH Zurich), Social and Political Sciences, Energy Politics Group, Haldeneggsteig 4, 8092 Zurich, Switzerland

    T. S. Schmidt

Authors
  1. A. Stephan
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  2. B. Battke
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  3. M. D. Beuse
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  4. J. H. Clausdeinken
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Contributions

T.S.S., A.S. and B.B. designed the research, A.S., M.D.B. and J.H.C. developed the model and carried out the data search, A.S. and T.S.S. carried out the analyses, A.S. and T.S.S. wrote the paper.

Corresponding author

Correspondence to T. S. Schmidt.

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The authors declare no competing financial interests.

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Supplementary Information

Supplementary Figures 1–4, Supplementary Tables 1–4, Supplementary Notes 1–4, Supplementary References. (PDF 604 kb)

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Stephan, A., Battke, B., Beuse, M. et al. Limiting the public cost of stationary battery deployment by combining applications. Nat Energy 1, 16079 (2016). https://doi.org/10.1038/nenergy.2016.79

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