October 27, 2015 Rebecca Ciez * , Jay Whitacre *†

1. Energy storage optimization A techno-economic analysis of battery chemistries in hybrid microgrids October 27, 2015 Rebecca Ciez*, Jay Whitacre*† *Engineering & Public Policy, †Materials Science & Engineering

2. Energy storage significant in microgrids • Significant component for both functionality and cost • How do the inherent characteristics of different storage technologies influence the overall cost of electricity from hybrid systems? • Which technologies are the most cost-effective, and what economic conditions are necessary for mass adoption? Maximize utilization Account for degradation Diesel Generator Solar PV Energy Storage Off-Grid Community (lighting, small electronics)1

3. Variety of factors influence storage performance • State of Charge (SOC swing) • Temperature • Operational timeframe

4. Battery cycles depend on SOC swing • Existing data for lead acid [Pesaran & Markel, 2007] and High power density li-ion [Peterson et al 2010] • Cycle testing for high energy density li-ion Thanks to W. Wu for SEM images

5. Operational Model Overview Operational Parameters Battery technology Renewable energy requirements Maximum SOC swing Operational lifetime (1, 2, 5, 10, 20 years) Load Solar PV Operational Model Diesel Generator Actual Cycling Behavior Storage Requirement Battery Storage Power Mix

6. Storage capacity required

7. Trends in storage capacity • Short timeframe: • Falling storage requirement as max SOC swing increases • Inflection point: • Deep cycling degradation occurs • Add capacity to extend lifetime • Very long timeframe: • Max. SOC swing reached decreases • Load constant, packs much larger • Never approach specified limit SOC swing

8. Economic Model Overview Cost Assumptions Replacement Assumptions Economic Parameters Fixed 20 year timeframe Number of battery replacements (every 1, 2, 5, 10, 20 years) Cost Assumptions Discount Rate Load Solar PV Operational Model Economic Model Diesel Generator Actual Cycling Behavior LCOE Storage Requirement Battery Storage Power Mix

9. Levelized cost of electricity tracks with storage capacity

10. More replacements offer lower costs for higher SOC swings

11. Comparing between technologies • Previous graphs show variation in: • Battery chemistry • Maximum SOC swing • Cost assumptions • Number of replacements Fixed: discount rate and renewable energy requirement • 5% discount rate • 75% min. renewable • energy requirement High energy density li-ion slightly cheaper than lead acid

12. What about other model parameters? • Renewable energy requirement: • Most optimal combinations exceed the minimum target • Max change was 4¢/kWh • Discount rate matters: • Low discount rate: lead acid best • Higher rates, high energy density li-ion • High power li-ion always most expensive

13. Price changes required increase with discount rate • Diesel prices required to induce a switch track with discount rate • Larger percentage price decreases on batteries for higher discount rates • High power li-ion still most expensive in absolute terms

14. Policy interventions track with discount rate • Carbon taxes would need to be much higher • Typically $10-30/ton • Highest: $168/ton (Sweden)5 Feed-in tariffs comparable to current rates at low discount rates4

15. Conclusions • Optimal number of battery replacements dependent on how deeply batteries are cycled • At assumed prices, diesel is still less expensive than hybrid systems • High performance of high-power li-ion doesn’t offset high capital cost • Discount rate is a significant factor in determining the lowest-cost storage option • Low discount rates: Lead-acid best • High discount rates: high energy density li-ion best • Diesel price changes and policy interventions required to induce a switch to hybrid system track with discount rate • Larger battery price changes required as discount rate increases

16. Acknowledgements Thanks to Inês Azevedo for her thoughtful comments and discussions, and to Wei Wu for his assistance with battery cycle testing & SEM imaging. • This material is based upon work supported by the National Science Foundation Graduate Research Fellowship under Grant No. DGE 1252522 . Any opinion, findings, and conclusions or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the views of the National Science Foundation. • This research was supported by: • National Science Foundation GRFP • Carnegie Mellon University • Bushnell Fellowship in Engineering • Aquion Energy

17. Questions? Rebecca Ciez rciez@andrew.cmu.edu

18. References • [1] E.M. Nfah, J.M. Ngundam, M. Vandenbergh, J. Schmid, Simulation of off-grid generation options for remote villages in Cameroon, Renewable Energy. 33 (2008) 1064–1072. doi:10.1016/j.renene.2007.05.045. • [2] Pesaran, A. & Markel, T., Battery Requirements and Cost-Benefit Analysis for Plug-In Hybrid Vehicles (Presentation), (2007) 1–22. • [3] S.B. Peterson, J. Apt, J.F. Whitacre, Lithium-ion battery cell degradation resulting from realistic vehicle and vehicle-to-grid utilization, Journal of Power Sources. 195 (2010) 2385–2392. doi:10.1016/j.jpowsour.2009.10.010. • [4] Feed-in Tariffs and similar programs, US Energy Information Administration. (2013) http://www.eia.gov/electricity/policies/provider_programs.cfm [accessed 27-3-2015]. • [5] The World Bank, Putting a Price on Carbon with a Tax, 1–4, http://www.worldbank.org/content/dam/Worldbank/document/Climate/background-note_carbon-tax.pdf [accessed 10-12-2014].

19. Storage Requirements Converge for different renewable energy requirements in the long-term

20. Frequency of Pack SOC swing as operating time increases

21. Model Specification

22. Discount rate has limited impact on diesel generation costs Value future electricity production less • Capital costs play a small role in LCOE of diesel-only generation • Discount both electricity produced & variable costs (fuel)

23. Model Overview Cost Assumptions Replacement Assumptions Operational Parameters Battery technology Renewable energy requirements Maximum SOC swing Operational lifetime (1, 5, 10, 20 years) Economic Parameters Fixed 20 year timeframe Number of battery replacements (every 1, 2, 5, 10 years) Cost Assumptions Discount Rate Load Solar PV Operational Model Economic Model Diesel Generator Cycling Behavior LCOE Storage Requirement Battery Storage Power Mix