Gas peakers need to be replaced with something cleaner. Like grid batteries. But the question is “when”, says Maximilian Auffhammer at the Energy Institute at Haas. Summarising his co-authored paper, he explains that a review of 19 gas peakers in the U.S., replaced with Li-ion grid-scale batteries, reveals only 5 make economic and climate sense (i.e. a positive net present value after including monetised climate and human health impacts). Remember, those batteries are being charged from a power mix that’s not yet green. And battery manufacturing has upstream emissions. As batteries get cheaper and the grids cleaner, those numbers will look better. But Auffhammer’s conclusion is that timing matters, and that Li-ion batteries should not be seen as the only alternative to replacing gas peakers.
I realise that on this blog [Energy Institute at Haas] we often pour cold water on what at first glance seem like obviously good ideas. But such is the role of science sometimes. The simplest answers often are not correct when one takes a step back and thinks about all possible intended and unintended consequences of an action or policy.
Readers of this blog know that many power plants “fallow” except for during the hottest, “peakiest” days of the year. During those times so called peaker plants, which are mostly gas powered, often highly inefficient, expensive and dirty turbines come online to make sure our lights stay on. When they run, they emit lots of NOx, particulates and other nasty stuff which ends up in people’s lungs. Further, these plants are often located near major load centers (translate – people cooling homes) and hence have been at the top of the list of “machinae non gratae” of environmental and especially environmental justice groups.
In New York State and here in California there is a major push to replace these pollution cannons with Lithium-Ion batteries. This seems like a great idea on the surface. Clean & quiet batteries versus a noisy airplane engine spewing NOx. I thought so too, but wanted to understand whether this intuition was right and hence joined forces with the awesome Corinne Scown – who is an expert in life cycle analysis – to study the whole enchi”li-on”ada.
Measuring the life-cycle cost, climate, and human health impacts
In a peer-reviewed paper published this week in the fine journal Environmental Science and Technology we, together with Jason Porzio and EI alum Derek Wolfson, report what we learned over the past two years. We analyse 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). And we mean soup to nuts.
Figure 1: A visual representation of modelling the replacement of peaker plants with Lithium-Ion Batteries.
The figure above shows what we did visually (in reality this is hundreds and hundreds of pages of computer code). We start with the impacts of the assembly of the battery including the material impacts of the ingredients required to make and assemble the battery. We also include the impacts of maintaining and disposing/recycling the battery at the end of its life. All of this was done by consulting the literature and conducting many hours of interviews with experts in the battery industry (thanks for taking our calls!).
We then move on to model grid behaviour of the battery once it is installed. We allow it to do things that gas powered peakers don’t really do, which is participating in arbitrage between low and high price periods and frequency regulation to generate revenue. We use an optimisation model which simulates current-day replacement of these peaker plants, letting these batteries charge smartly (meaning when it’s cheap to the operator). We of course also hold these batteries accountable for the emissions they cause. If our model predicts that natural gas is on the margin when the battery charges, we account for the pollution from that electricity.
If Li-ion BESS replace peaker plants?
Our results show that designing Li-ion BESS to replace peaker plants puts them at an economic disadvantage, even if battery facilities are only sized to meet 95% of the original plants’ load events and are free to engage in arbitrage. Let’s dive into that for a moment for a specific plant – a peaker in Long Beach.
Figure 2: Costs and benefits of peaker replacement.
Blue bars indicate dollah dollah bills, meaning actual expenditures on the battery and its operation or revenues. Red bars mean unpriced pollution impacts (both local and global priced at the current -$51 – and proposed -$185 – social cost of carbon). The beige bar indicates the net present value of putting all of it together.
We see that batteries are expensive to make and install. Operation and maintenance are a relatively small cost. On the benefits side, the gains from offsetting peaker mortality damages are not very big. And neither are revenues from arbitrage. Most of the modelled revenues come from participating in frequency regulation markets. The net present value is centred around zero, with significant uncertainty.
19 peaker plants modelled
So did Max just pick a plant that looks like this? No. Here’s all 19 we modelled. The left panel shows you the net present value, the right panel focuses in on the global warming potential.
Figure 3: Net cost and emissions of peaker replacements.
Five of the 19 potential replacements do achieve a positive net present value after including monetised climate and human health impacts, 14 do not – which depends on the size and location of the peaker. We also show that these battery systems cycle far less than typical batteries on the grid and rely massively on the limited frequency regulation market for most of their revenue. All projects offer net benefits in local air pollution, but increase net greenhouse gas emissions due to electricity demand during charging and upstream emissions from battery manufacturing.
Batteries must get cheaper, grids cleaner
So what’s the takeaway? This is a snapshot of what things look like today. If batteries get cheaper and the grids cleaner – both of which seems likely – batteries will look better. But we should be keeping an eye on the value of frequency regulation going forward, as that is where most of the revenue comes from. If we install lots of battery storage on the grid, that revenue is likely not going to be there for later installations.
So just to be clear one more time (before my inbox overfloweth)- the analysis in our paper is for the *current* state of technology and the market, that will surely change. What we are showing here is that we should maybe not take it as a slamdunk that batteries are the right way to transition away from natural gas in all cases.
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Maximilian Auffhammer is the George Pardee Professor of International Sustainable Development at the Energy Institute at Haas, part of the University of California, Berkeley.
This article is published with permission
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