Michael’s paper, A Financial Algorithm for Computing the Levelized Cost (US$/MWh; €/MWh) of the Bulk Storage of Wind Electricity (LCOS), was presented at the WindEurope 2018 Conference, 25-28 September, Hamburg, Germany. If you stopped by his poster, he thanks you. Michael’s WindEurope 2018 Conference Presenter Biography is @
Abstract—this paper discusses the financial and technical principles underlying the levelized cost (LC) method of computing the cost (US$/MWh; €/MWh) of storing wind electricity (LCOS) in bulk. The paper presents a CL algorithm. The algorithm equations are presented. The algorithm uses nine recognized energy storage system (ESS) specifications (specs) to compute the levelized cost of the stored wind electricity.
Published spec values for the Eos Aurora® ESS and for the Cabin Creek Pumped Hydro Storage Plant are used in case studies to demonstrate the algorithm. Other examples are provided. An addendum case study for the proposed San Vincent Pumped Storage Plant is also presented.
For rapid computation, an Excel worksheet of the LC algorithm is presented. The goal of this paper is to present a standard computational algorithm for financial analysts to use. A financial analyst can do a LC computation based on the paper’s LCOS algorithm and on the algorithm’s nine ESS specs. The paper’s LCOS algorithm gives the analyst who has the nine ESS spec values, a quick “back of the envelope” verification of a developer’s value for the levelized cost of bulk stored wind electricity. A complication arises in using this paper’s LC algorithm. The complication is that “published ESS spec values” are limited and that internal spec values must be confirmed.
The New York Times reported ( 07/24/18) https://tinyurl.com/y7uxqrdc on a proposed US$3 billion bulk pumped storage plant using Hoover Dam.
Michael’s WindEurope Conference 2018 paper has a case study of the US$1 billion proposed San Vincent Pumped Storage Plant. His algorithm can also handle the proposed Hoover Dam bulk storage plant.
GULP! Michael’s LCOS values for bulk storage are different then the LCOS values for pumped storage developed by Lazard, a major financial advisory firm.
This NYT article reported the Lazard LCOS values. The Lazard website is at https://www.lazard.com/
Michael’s found that the NYT article’s cost of storing renewable energy requires a little more precision. First, the article reported that Lazard estimated that the LCOS for utility scale lithium ion batteries is 26 cents per kWh compared to 15 cents for pumped storage. The article then reported that the typical (California, he assumes) household pays 12.5 cents per kWh for electricity. The NYT article would be more precise if it specified if the 15 cent Lazard estimate included the 12.5 cent cost of the electricity to be stored or only the added cost of storing the electricity. In the former case, the cost of storage is 2.5 cents while in the latter case the typical household would pay 27.5 cents for the stored electricity. In the former case the cost is too low to recover the estimated 3 billion dollar cost of the Hoover storage plant while in the latter case, it is too high for the typical California household.
Michael’s LCOS values for the proposed San Vincent plant are in my WindEurope 2018 Conference Paper. So are some LCOS values for the “Proposed” Hoover Dam Pumped Storage Plant.
Michael visited the Hamburg Harbor to see a local wind turbine.