Capacity deferral is the primary source of storage value

Big batteries derive most their value from replacing gas peaker plants and averting the installation of excessive amounts of transmission and generation infrastructure. However, batteries cannot replace all gas plants, MIT researchers found. From a holistic economics perspective, there is a certain share of storage that is considered cost-efficient. With battery costs declining, that share is constantly increasing.

The more variable renewable energy there is in the grid, the higher the value of utility-scale storage systems. Researchers from the Massachusetts Institute of Technology (MIT) have used a high temporal resolution capacity expansion model called GenX to determine the least-cost approach to deploying large-scale storage into a low-carbon power system.

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