Levelized Cost of Energy Calculation for Energy Storage Systems
It addresses the need for a standardized LCOE calculation method for energy storage systems, which is currently limited in the literature.
The paper proposes a method for calculating the levelized cost of energy (LCOE) for energy storage systems and provides sensitivity analysis on capacity, electricity prices, and efficiency. No concrete numerical results are presented.
The levelized cost of energy (LCOE) presents the energy-normalized cost of a generation asset by considering all associated costs (investment and operation) and total generated energy over its life cycle. As LCOE is a levelized value, it provides a quick and easy measure to compare different energy resource technologies with different characteristics. The LCOE calculation for large-scale power plants and distributed generations (DGs) is extensively studied and can be found in the literature. The discussions on the LCOE calculation for energy storage systems, however, is limited. Although still relatively expensive compared to generation technologies, energy storage is gaining significant attention and has been deployed extensively during the past few years, conceivably due to its many benefits such as load shifting, energy arbitrage, and renewable coordination. Therefore, LCOE calculation of energy storage systems plays an important role in economic evaluation of power systems. This paper proposes a method for calculating the LCOE of energy storage, and further provides the sensitivity analysis with respect to changes in capacity, electricity market prices, and efficiency.