Electricity storage plays a crucial role in the world’s transition to sustainable energy systems based on renewable sources. However, electricity markets often fail to account properly for the system value of storage. The International Renewable Energy Agency (IRENA)’s Electricity Storage Valuation Framework (ESVF) aims to guide storage deployment for the effective integration of solar and wind power. This report proposes a five-phase method to assess the value of storage and create viable investment conditions.
The three-part report examines storage valuation from different angles.
Part 1 outlines the ESVF process for decision makers, regulators and grid operators.
Part 2 describes the ESVF methodology in greater detail for experts and modellers.
Part 3 presents real-world cases, including examples of cost-effective storage use and maximised service revenues.
The report indicates that electricity storage helps to address key technical and economic challenges related to variable renewable energy (VRE) integration. Additionally, by providing multiple services simultaneously, electricity storage permits revenue stacking for greater profitability. Electricity storage could accelerate off-grid electrification, enable far higher shares of VRE, and indirectly help to decarbonise the transport sector. Finally, poor accounting for storage value results in so-called “missing money”, with market revenues too low to entice investors.
The report shows that IRENA’s ESVF modelling methodology can be used to overcome the valuation challenge, and properly assess the value of electricity storage to the power system.