Economics of electricity storage

This chapter lays out the issues involved in understanding what role grid-scale electrical energy storage can play in the transition to a variable renewable electricity (VRE) dominant, or even a fully VRE, electricity system (the so-called Energy Transition). The intent is to investigate the economic aspects of this technological development whose rise, in the form of Advanced Battery Electric Storage (ABES), has been extremely rapid over the past decade. Storage is placed in the context of the Energy Transition and existing electricity markets, to see what factors affect capacity, the wholesale price of electricity, and how these relate to climate-related policies, including renewable energy promotion and mandates/subsidies for storage. The focus is on highlighting the intricacies involved in understanding the conditions under which batteries will emerge purely in a market, and if, and when, policies specifically to encourage storage capacity are needed.