Finding carbon breakeven : induced emissions from economic operation of energy storage in renewables-heavy electricity systems

Energy storage systems (ESS) have the potential to reconfigure how the electricity system is used, operated, and expanded. Most research on grid-connected ESS is focused on applications related to renewables integration and system reliability; much less is written on the current economic uses (e.g., peak shaving and energy arbitrage). While these latter applications may be profitable, current literature suggests they tend to increase grid emissions. This need not be the case. In this paper, I explore varying system resource mixes and ESS operational modes that enable carbon-neutral, or carbon-reducing, usage. Specifically, I model the carbon emissions induced by energy storage operated in three ways – energy arbitrage (EA), demand charge management (DCM), and carbon minimization (MinCO₂) – in 16 simulated electricity systems where wind and solar assets generate 17% to 81% of annual energy. Dispatch of a 1MW/4MWh battery is simulated for each operational mode and in each resource scenario (for a total of 64 combinations). I find that energy storage is carbon-neutral, or carbon-reducing, in systems generating 17% to 40% of annual energy from renewables, depending on operational mode. That said, carbon emissions vary significantly between operational modes and resource scenarios. In general, (1) DCM with a time-of-use energy rate increases emissions; (2) EA generally reduces emissions; and, (3) MinCO₂ and DCM with real-time energy pricing always reduce emissions. Moreover, economic dispatch of ESS attains only a portion of the maximum achievable environmental benefits, with MinCO₂ reducing system emissions by an average of 494lbs/MWh-stored more than the next-lowest operational mode. In addition, I find that greater exposure to wholesale energy prices generally reduces induced emissions, and that retail rate designs encouraging price exposure can reduce the carbon footprint of ESS without eroding the benefits offered by storage. These results indicate that the emissions induced by ESS should alleviate themselves in the coming years, as regulators encourage more efficient energy consumption and as more renewables are added to the grid.