Current and Future Costs of Storage for Electricity in a Decarbonized Electricity System

Abstract

As power systems globally are transitioning from fossil fuels to renewable sources, integrating energy storage becomes imperative to balance variable renewable electricity generation. The core objective of this paper is to conduct a comprehensive cost assessment of selected energy storage technologies from 2023 to 2050, focusing on the Austrian electricity market. Our method combines techno-economic assessment with the technological learning method to integrate various storage technologies into a renewable electricity system, using scenarios that account for decarbonization goals. Results indicate that pumped storage hydro exhibits none or negative learning effects, while lithium-ion batteries demonstrate significant investment cost decreases. Despite investment cost reductions, underground hydrogen storage continues to incur high total costs per kWh discharged due to low roundtrip efficiency, suggesting its future outlook depends on seasonal storage needs in fossil-free power systems. An important finding of this analysis underscores the importance of optimizing the ratio of electricity demand, renewable generation expansion and storage deployment for cost-effectiveness. Excessive storage deployment leads to lower utilization and higher costs, emphasizing the necessity of at least 1500 full-load hours for profitable operation across all storage systems. Strategic planning for optimal storage deployment is emphasized to optimize utilization and minimize costs.