Properties of Deeply Decarbonized Electric Power Systems with Storage
Cristian Junge, Cathy Wang, Dharik S. Mallapragada, Howard K. Gruenspecht, Hannes Pfeifenberger, Paul L. Joskow, and Richard Schmalensee
The final version of this paper will appear as Chapter 6 in the forthcoming MIT Energy Initiative study, The Future of Storage. Chapters referred to in this paper will be included in that study when it is published. In order to illuminate the role of energy storage in future decarbonized electric power systems, we construct detailed models, calibrated to mid-century, of optimal assets and hourly operation of power systems under a range of assumptions about generation and storage technologies’ availability and cost. We model three US regions: The Northeast, the Southeast, and Texas. These regions differ in many dimensions, notably in the quality of their variable renewable energy (VRE, wind and solar) resource and load profiles. We find that nearly complete decarbonization of all three systems using only VRE generation and (very little) natural gas, along with Lithium-ion storage, can be achieved without reduced reliability or very large increases in system average electricity cost. The incremental cost of going to complete decarbonization of the electric power system without any offsets from other sectors is very high, however, comparable or higher than estimated costs of negative emissions technologies. If technologies more suitable for long-duration storage are available, they optimally substitute for dispatchable natural gas capacity and, under plausible assumptions, produce only moderate reductions in system average electricity cost. Substantial industrial demand for hydrogen would make its use for storage in the electric power system more attractive. In decarbonized power systems, the distribution of the hourly marginal value of energy (MVE), which corresponds roughly to the wholesale spot price, will be drastically different from the distributions of spot prices in current systems: there will be more hours of high MVEs and many more hours of very low MVEs. In order to encourage efficient economy-wide decarbonization, wholesale markets and retail rate structures will need to be significantly modified. In addition, research in the design, operation, and regulation of decarbonized systems should be a high priority.