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Measuring the True Costs and Benefits of Energy Storage – Part One

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Part One: A quick guide to calculating cost & safety

A variety of new energy storage systems have emerged as business and government leaders rush to make advances in renewables and energy savings. Those systems include different chemical compositions, form factors (cylindrical cell, pouch, prismatic, flow), and battery management systems (BMS). That can make choosing a battery system challenging, even confusing. However, checking a few simple performance metrics can help calculate the true costs and benefits of competing systems. And it can help distinguish between what might look like a good price up front from what’s actually a better buy in the long run.

When comparing battery options, be it lead acid, lithium ion, zinc bromide, flow, or others, it is imperative to understand the true cost of energy over time. That’s called the Levelized Cost of Energy (LCOE), and calculating it means doing some simple math. The most basic way to check is to divide the cost of a battery system by the number of kilowatt hours (kWh) generated over its anticipated life. A more precise measurement is achieved by including such factors as the number of cycles the batteries are guaranteed to handle, the percentage a battery can be discharged while retaining full power, and ancillary costs which can be significant depending on the system. Following the formula in the accompanying sidebar will give a fairly objective estimate of cost over time.

How to Calculate the Levelized Cost of Energy (LCOE)
To calculate the Cost of Electricity in Kilowatt Hours (kWh) over time:

Step One: Gather the Facts

  • Size of Battery in Rated Amp Hours – Ah
  • Voltage of Battery – V
  • Depth of Discharge – %
  • Number of Batteries – Qty
  • The battery rating is based on the manufacturer’s stated capacity in watt hours at specific discharge rates.

Step Two: Calculate Watt Hours (Wh)

  • Wh = Qty x Ah x V x %

Step Three: Calculate Lifetime Watt Hours (LW)

  • LW = Wh x Cycle Life
  • Cycle Life is the number of full (not partial) charge and discharge cycles expected over a battery’s lifetime while it has at least 80% of its original published capacity. It is based on manufacturer’s estimate using specific depth and rates of discharge and operating temperatures.

Step Four: Factor in Costs

  • Price (per battery)
  • Calculate Total Battery Cost (Qty x Price)
  • Add Ancillary Costs including Cabling, Racking, Containment, Venting, Cooling, Installation, Transportation, Maintenance, etc…
  • Calculate Actual System Cost = Total Battery Cost + Ancillary Costs

Step Five: Calculate Cost per Wh

  • Cost per Wh = System Cost / LW

Step Six: Calculate LCOE in kWh

  • LCOE = LW x 1000

Keep in mind there are also costs and benefits beyond the immediate price point per kilowatt hour (kWh). Depending on the system, it’s necessary to factor in costs for:

  1. Maintenance
  2. HVAC to cool or ventilate
  3. Extra space for larger systems
  4. Construction to support larger systems
  5. Replacement of less durable systems

Also consider:

  • Safety
  • Potential limitations on usages, operation locations or transport methods because of temperature issues or thermal runaway risks
  • Toxicity, environmental impact and disposal costs

Buyers often focus on the up-front price point without factoring in parameters like these, which greatly impact a system’s true cost.

Different chemistries play a role in these costs. In this-two part article, two categories of Lithium-ion batteries will be compared: those with cobalt oxide and those without it.

Battery chemistries with cobalt include:

  • Lithium Cobalt Oxide (LiCoO2 or LCO)
  • Lithium Nickel Manganese Cobalt Oxide (LiNiMnCoO2 or NMC)
  • Lithium Nickel Cobalt Aluminum Oxide (LiNiCoAlO2 or NCA)

Chemistries without cobalt oxide include:

  • Lithium Ferrous Phosphate, also known as Lithium Iron Phosphate (LiFePO4 or LFP)
  • Lithium Titanate (Li4Ti5O12 or LTO), although LTO is rarely used in large format energy storage.

Safety First
The Lithium Ferrous Phosphate, also known as Lithium Iron Phosphate (LFP), storage chemistry has a somewhat lower power density than LI chemistries containing cobalt, but this can be overcome with proper system architecture and battery management. Because it lacks cobalt, LF is intrinsically safe, efficient, and environmentally benign. Rather than cobalt oxides, LFP uses inert ferrous (or iron) phosphates.

Importantly, LFP does not pose a risk of the chemical fire known as “thermal runaway” caused by cobalt oxide. There is no known flame retardant that can extinguish these fires, so they must be contained and allowed to burn out.

The temperature at which LFP and LTO could reach thermal runaway is significantly higher than that for other LI chemistries. Even if it did reach those temperatures, the lack of oxides to fuel a fire mean that it would just peter out. As a result, there have been no reported incidents of thermal runaway with LFP, in contrast to the fires and recalls that have impacted other LI chemistries.

Another key distinction of LFP is that it throws off no heat, again, unlike most other LI batteries. That makes LFP batteries by definition more efficient and durable than other Lithium Ion batteries.

All lithium-ion batteries are listed as Class 9 hazardous materials for transport because of the risk posed by cobalt, even though LFP and LTO do not contain cobalt. It is hoped in the future, government agencies will distinguish between chemistry types and remove unnecessary restrictions on LI batteries not containing cobalt.

Mitigating the heat buildup and potential for thermal runaway in LI batteries which do contain cobalt requires extra space for ventilation, internal cooling equipment, special manufacturing materials, such as liquid polymers and tubing, and balancing of hardware and software, adding significantly to the actual cost, size, and weight. It can also require additional precautionary equipment and installation and maintenance guidelines to safeguard against heat or fire.

Some, but not all, LFP manufacturers must ventilate and cool their batteries for optimum performance because their proprietary BMS, circuitry, and/or internal architecture need cooling and may create increased impedance or inefficiencies. Other batteries do not throw off heat, and do not require any ventilation or cooling.

In sum, the power electronics (BMS), and internal architecture of a battery can have as much to do with the overall performance, LCOE, and safety as the fundamental chemistry itself. But, a part of calculating the true costs and benefits of any battery system is calculating its LCOE as well as the other costs involved in installation, operation, and replacement over time.

In part two of this topic, in the March/April issue of North American Clean Energy, the impact of cycle life and environmental factors on LCOE will be discussed.

ts-es-simpliphi-power-author-photoCatherine Von Burg has been the CEO of SimpliPhi Power since 2010. Before her work in energy storage, she spearheaded national program, policy and business-driven initiatives with organizations such as Pew Charitable Trusts, Rockefeller Institute, Columbia University, NY March of Dimes Foundation, John’s Hopkins School of Biomedical Engineering, Wilderness Education Association and First 5 Commission of California. She graduated from Columbia University in New York and holds a Master’s degree from University of Pennsylvania, School of Social Policy.

Volume: January/February 2016

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