Energy storage is an essential enabler of the transition to low-carbon energy systems by securing a stable and reliable power supply. With an evolving technology horizon, the value of different storage technologies remains unclear, as do suitable market and policy frameworks to promote their efficient deployment. Therefore, the Technical University of Munich (TUM) Center for Energy Markets (CEM) and the Massachusetts Institute of Technology (MIT) Center for Energy and Environmental Policy Research (CEEPR) convened an expert group of researchers, policy makers and industry leaders for a full-day symposium on the role of energy storage and its technology, policy and business implications at MIT in Cambridge, USA on October 21, 2016.
David Wozabal, Professor at TUM CEM, lead the session on the economics of energy storage by presenting his recent research on the volatility of energy prices and vehicle-to-grid applications. With the increasing share of intermittent renewables, which depend on a varying wind and sun availability, one would expect the variance in electricity prices to increase, but it actually decreased in the last years, showing less and less price fluctuations. Since certain business models for energy storage are based on price arbitrage of shifting energy from times of low prices to times of higher prices, fluctuation is a key driver of profitability. Further, David Wozabal clarified the economics of vehicle-to-grid applications such as using the battery capacity of parked electric vehicles to offer grid services, for example, negative secondary reserve energy. However, such applications provide only limited business opportunities today because required additional investments can just be covered by uncertain revenues that depend on driving patterns.
Further speakers at the symposium were Yet-Ming Chiang, Professor of materials science and engineering at MIT, Marcus Müller, Project Manager of TUM EEBatt and Ph.D. Candidate at TUM, Michael Aziz, Professor of materials and energy technologies at Harvard University, and Stefan Andreas Meyer from Kreisel Electric concerning the technology. Current research focus lies on reducing the amount of non-energy-storing materials to reduce the cost of lithium-ion cells below 100$/kWh, simplifying the design of packing battery cells to operating systems, and ways of virtually stacking storage applications in one physical battery system to increase the economic value. Continuing with a business roundtable, Archan Padmanabhan from Tesla, Kristin Brief from Ambri, and Sandeep Dudhwewela from National Grid discussed the current challenges of finding profitable business models. The economics session was completed by Jesse Jenkins, Ph.D. Candidate at MIT, Thomas Greve of the University of Cambridge and Ted Loch-Temzelides, Professor of Economics at Rice University. Providing frequency control is currently the most profitable application for battery storage but the market is quickly saturated. The avoidance of grid investments means another quick potential but is again limited in market size. Substituting short-term gas turbines with batteries to provide peak power, seems the largest market but is unprofitable so far. While the focus was on short-term energy storage, seasonal storage is becoming increasingly vital with high shares of intermittent renewable power and, therefore, low shares of conventional base load power. After Commissioner Judith F. Judson reported on Massachusetts’s current political projects and strategies regarding clean energy and energy storage systems, the symposium finished with a policy roundtable on the market design for energy storage and hybrid systems. Jason Burwen from the Energy Storage Association, Helena Teschner from the Bundesverband Energiespeicher e.V., Christopher Parent from ISO New England and Stephen Pike from Massachusetts Clean Energy discussed key issues like grid fees, subsidies, and storage mandates. How the presidential election impacts the switch to clean energy, remains to be seen.
The symposium provided the invited experts a fantastic platform to connect and discuss ideas. Especially, the transatlantic exchange of perspectives was greatly appreciated. The lively discussion highlighted the amount of remaining potential and unsolved challenges. The symposium was organized by Gunther Glenk, Ph.D. Candidate at the Chair of Management Accounting and TUM CEM researching on the value of energy storage and its market design, and Michael Mehling, Executive Director of MIT CEEPR. It was sponsored by the Transatlantic Climate Bridge, an initiative by the German Federal Foreign Office.
By Maximilian Blaschke and Gunther Glenk, 21.11.2016 Munich
In August 2016, the Annual Meeting of the American Accounting Association (AAA) took place in New York under the theme “Celebration of the Century“. The AAA (founded in 1916) is the largest community of accountants in academia and well-known for its leading-edge research and publications. Its annual event, the AAA meeting, is a platform for researchers to introduce and discuss their current studies. Ph.D. candidate Cornelia Hojer qualified for the meeting in a peer-review process and presented her paper “Determinants of Top Management Team Compensation: The (Non) Existence of Pay for Performance in the Two-Tier Board System”, which was well appreciated.