The private and social economics of bulk electricity storage

The ability to store excess intermittent renewable electricity is increasingly being seen as a key option for integrating large quantities of renewable capacity. However, intermittent energy sources currently account for very small amounts of total generation. Despite this fact, policymakers have begun implementing requirements that will dramatically increase the amount of bulk storage capacity. This paper examines the social benefits provided by bulk storage in the Texas electricity market, which has a large amount of renewable capacity relative to other states, but still quite limited renewable penetration. We focus on the impact of arbitraging electricity across time—a major service of bulk storage. Using current storage technologies, we demonstrate that electricity arbitrage will increase daily CO2 emissions by an average of 0.19 tons for each MWh stored. In addition, daily SO2 emissions will increase by an average of 1.89 pounds/MWh while NOX emissions will fall by an average of 0.15 pounds/MWh.