In a previous blog, I introduced the concept of the ‘beak to belly ratio‘ in the context of working out a short run marginal cost (SRMC) for a gas turbine supplied with green hydrogen that is produced off peak from low cost renewable power.
To recap, the ‘beak to belly ratio‘ is the ratio of evening peak prices, which are governed by the cost of supplying peak power after sundown; against daytime prices, which are governed by a surplus of solar generation. This characteristic is relevant for power markets with significant levels of solar penetration such as Queensland.
Essentially, the SRMC of a storage facility is the ‘belly price’ divided by its round trip efficiency. Therefore for a storage facility to have an SRMC of less than evening peak prices, the inverse of the round trip efficiency must be less than the day’s ‘beak to belly ratio‘.
In this blog I would like to look at how other technologies compare on SRMC and the minimum ‘beak to belly ratio‘ required for evening peak prices to exceed SRMC.
As a warning before you read further, this blog contains a number of assumptions and forecasts. These assumptions and forecasts are subject to changes that will affect the outcomes discussed. Please read on and feel free to contribute to the discussion, but please do not rely on the content of this blog.
We worked out that the SRMC of a hydrogen storage gas turbine system is about five to six times the power price when power is purchased (the belly price). Gas turbines are limited by Brayton Cycle efficiency. In the context of a green hydrogen storage system this means that the bulk of the energy stored in the hydrogen goes up the stack as heat (both sensible and latent), so even if the conversion from power to hydrogen is extremely efficient (I have assumed a conversion efficiency of 46 percent), the overall round trip efficiency is limited by the Brayton Cycle.
If we replace the gas turbine with a fuel cell at 60 percent thermal efficiency you get an SRMC of 3.5-4.0 x ‘belly price‘. If performance of the fuel cell is enhanced to 80 percent, then the SRMC improves to 2.5 to 3.0 x ‘belly price‘. Still limited by the conversion efficiency of the electrolysis plant.
A flow battery will have a round trip efficiency of around 70 percent and no electricity to hydrogen conversion losses. This means that SRMC is going to be about 1.4 x ‘belly price‘.
If we then move to lithium-ion and a round trip efficiency of 90 percent, then we improve to 1.1 x ‘belly price‘.
Does that mean that lithium-ion is the clear winner in terms of being able to convert low cost surplus renewable power into dispatchable peak power?
Yes and no. Yes, lithium-ion wins on SRMC; however, SRMC is only one factor that impacts a storage projects value. The two big issues to be overcome in my NPVs on stand-alone storage facilities are capital recovery, depth of discharge and degradation.
Lithium-ion seems to be kicking goals in the short-term grid stability and frequency control market and will probably do well when five-minute settlements come to Australia. Time will reveal the true economic impacts of degradation and loss of depth of discharge.
Flow Batteries offer the responsiveness of batteries without the degradation of lithium-ion. Expansion of storage capacity is also capital efficient (larger tanks and more electrolyte).
Hydrogen storage and gas turbines make better use of existing gas turbines and pipelines and can be less capital intense. It also offers gas turbine owners a transition path from peaking in isolation to storage of green energy.
As a final note, the pace of technological change is rapid and I can see that the numbers presented above are likely to improve for all technologies as time goes on.
Please feel free to contact me if I can help assess, select or develop an energy storage system for your business, or join the conversation below.
Disclaimer: The estimates above are for discussion only and should not be relied upon by any person for any purpose. Arche Energy and the author disclaims all liability to all persons for the use of these estimates.
