Private and External Costs and Benefits of Replacing High-Emitting Peaker Plants with Batteries

Abstract

Falling costs of lithium-ion (Li-ion) batteries have made them attractive for grid-scale energy storage applications. Energy storage will become increasingly important as intermittent renewable generation and more frequent extreme weather events put stress on the electricity grid. Environmental groups across the United States are advocating for the replacement of the highest-emitting power plants, which run only at times of peak demand, with Li-ion battery systems. We analyze the life-cycle cost, climate, and human health impacts of replacing the 19 highest-emitting peaker plants in California with Li-ion battery energy storage systems (BESS). Our results show that designing Li-ion BESS to replace peaker plants puts them at an economic disadvantage, even if facilities are only sized to meet 95% of the original plants’ load events and are free to engage in arbitrage. However, five of 19 potential replacements do achieve a positive net present value after including monetized climate and human health impacts. These BESS cycle far less than typical front-of-the-meter batteries and rely on the frequency regulation market for most of their revenue. All projects offer net air pollution benefits but increase net greenhouse gas emissions due to electricity demand during charging and upstream emissions from battery manufacturing.

Corridor-Level Impacts of Battery-Electric Heavy-Duty Trucks and the Effects of Policy in the United States

“…One of the greatest challenges in quantifying the health and climate impacts of vehicle electrification is predicting future power plant emissions and locations, particularly several decades into the future. While regression-based approaches can offer arguably better predictions of marginal emissions in response to changes in load, these models are suited only for short-term scenarios and marginal changes of total load. − For longer-term scenarios, a combination of capacity expansion and dispatch modeling is required to predict future generation mixes and emissions with and without vehicle charging loads. To accomplish this, we leverage the NREL Standard Scenarios, which are a set of projections for how the U.S. energy system will evolve over time under multiple pathways and future scenarios .…”