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ELECTRIC, WITH AN EDGE
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ELECTRIC, WITH AN EDGE
Experts are increasingly emphasizing the disposal phase, whole lifecycle charging, and safety concerns of electrochemical energy storage power plants, rather than the gradual widespread application of lifecycle theory in civilian fields. Initially, it has been progressively applied in various engineering projects in terms of construction costs.
Energy storage power plants are facilities designed to store excess energy produced during times of low demand and release it during peak demand periods. They play a crucial role in ensuring grid stability and optimizing the use of renewable energy sources. Let’s delve deeper into the concept.
Pumped Hydroelectric Storage (PHS): This is the most common form of grid energy storage. It involves two water reservoirs placed at different elevations. During periods of low energy demand, excess electricity is used to pump water from the lower to the upper reservoir. When there’s a higher demand for electricity, water is released from the upper reservoir to the lower one, passing through turbines, generating electricity in the process.
Battery Energy Storage Systems (BESS): BESS uses chemical batteries, such as lithium-ion, to store and release electricity. They offer fast response times and are becoming increasingly popular due to the decreasing cost of batteries and their ability to be located closer to demand centers.
Compressed Air Energy Storage (CAES): In CAES systems, excess electricity is used to compress air, which is then stored in underground caverns. During peak demand, the compressed air is released, heated, and expanded in a turbine to generate electricity.
Thermal Energy Storage: This method involves storing energy in the form of heat or cold. For instance, molten salt can be heated and stored in insulated tanks, and then used to produce steam to drive turbines when electricity is needed.
Flywheel Energy Storage: Flywheels store energy in the form of rotational energy. Excess electricity speeds up a flywheel, and when electricity is needed, the kinetic energy from the spinning flywheel is converted back to electrical energy.
Support for Distributed Energy Systems: They can be paired with local renewable energy sources in microgrids to provide power to remote areas.
Reduction in Energy Costs: By storing energy during times of low demand and releasing it during high demand, these plants can help in price stabilization and can provide energy at a lower cost.
The global energy landscape is undergoing a significant shift. As renewable energy sources become more prevalent, the role of energy storage power plants in ensuring a stable power supply becomes pivotal. This article delves deep into the life cycle costs associated with these power plants, offering insights to stakeholders on how to navigate this complex domain.
Energy storage power plants, particularly those based on electrochemical solutions, have emerged as a promising solution to tackle the intermittent nature of renewable energy sources. They store excess energy during peak production times and release it during shortages, ensuring a consistent power supply.
Imagine a city heavily reliant on solar power. On sunny days, solar panels produce more energy than the city consumes. But, during cloudy days or nighttime, there’s a deficit. Here, energy storage power plants act as buffers, storing excess energy and providing it when solar panels can’t.
A recent study showed that cities transitioning to renewable energy sources without adequate energy storage faced 30% higher energy costs due to the need to buy power during shortages. However, cities with efficient energy storage power plants managed to reduce this extra cost by up to 70%.
The introduction of energy storage power plants can drastically reduce the costs associated with transitioning to renewable energy sources by ensuring a stable power supply regardless of the production capabilities of renewable sources.
To ensure the long-term viability of energy storage power plants, one must consider the entire life cycle costs, not just the initial investment. This includes design, construction, operation, maintenance, and disposal costs.
A coastal city is planning to build an energy storage power plant. Given the corrosive nature of saltwater, the design phase must consider materials that resist corrosion. While such materials might be expensive initially, they can reduce long-term maintenance costs.
Data from similar coastal installations revealed that using corrosion-resistant materials increased initial costs by 15%. However, maintenance costs over a 20-year period were reduced by 40%, resulting in significant long-term savings.
Incorporating forward-thinking designs, especially in challenging environments, can lead to higher initial costs but results in considerable savings over the life cycle of the energy storage power plant.
(Note: Due to the length of the content, the article will continue in subsequent dialog boxes.)
The construction and operation phases form the core of the life cycle of energy storage power plants. Costs incurred during these phases often represent the bulk of the entire life cycle expenditure.
Consider an energy storage power plant being built in a densely populated urban area. Construction challenges such as limited space, noise restrictions, and transportation of heavy materials in busy streets can inflate costs. Moreover, during its operation, the plant needs to meet stricter emission and safety standards due to its location.
Data from recent projects indicate that constructing energy storage power plants in urban areas can be 25% more expensive than in rural settings. Additionally, operational costs in cities, factoring in stricter regulations and more frequent inspections, can be 15% higher on an annual basis.
While urban settings offer proximity to major power consumption hubs, they come with their own set of challenges and costs. It’s vital to factor in these additional costs when planning for energy storage power plants in such environments.
The disposal phase of energy storage power plants, though often overlooked, is crucial. It involves costs related to decommissioning, recycling, or disposing of components, and it’s essential for ensuring environmental sustainability.
A city plans to decommission a 30-year-old energy storage power plant. This involves safely dismantling infrastructure, recycling reusable materials, and safely disposing of hazardous waste, like battery acids. The proximity to residential areas also means the disposal process must be non-disruptive.
A recent survey of similar decommissioning projects revealed that the disposal phase can account for up to 10% of the total life cycle costs of the plant. Moreover, failure to adhere to environmental standards during this phase can lead to penalties that further inflate costs.
While much attention is given to the design, construction, and operation phases, it’s equally important to plan for the end-of-life phase of energy storage power plants. By doing so, cities and businesses can avoid unexpected costs and ensure they adhere to environmental standards.
Concurrently, the full lifecycle cost theory began to be applied in the electricity industry. Some experts started exploring the power systems of cities or urban areas and subsequently conducted a full lifecycle cost study of key equipment or systems. At present, the full lifecycle cost theory has formed a relatively mature theoretical system and has been widely applied in sectors such as aviation, telecommunications, healthcare, manufacturing, and construction. Moreover, domestic experts have basically reached a consensus that applying the full lifecycle cost theory in the power industry can effectively ensure economic viability while ensuring safety.
The full lifecycle stages of an electrochemical energy storage power plant can be divided into design, construction, operation & maintenance, and disposal stages. Due to characteristics such as the gradual capacity decline during the power plant’s lifecycle, capacity degradation affecting energy storage efficiency, and energy losses during the conversion process, the operation and maintenance phase’s costs include not just maintenance but also replacement and energy loss costs. Since the energy storage power plant may cause environmental pollution at the end of its life and require dismantling, the possibility of recycling precious metal resources for reuse makes the disposal stage and its associated costs a significant part of its lifecycle.
The first phase in the full lifecycle of an electrochemical energy storage power plant is the design phase. It typically comes after site selection research and includes feasibility studies and detailed design tasks. Thus, design costs can be divided into feasibility study costs and specific design costs.
[C = C{ky} + G{jsD}]
Where:
C = Total design costs
C{ky} = Feasibility study costs
G{jsD} = Specific design costs
The construction phase is the second in the lifecycle, and what companies typically refer to as initial investment costs include both design and construction costs. This phase primarily involves the acquisition or leasing of land, the construction of various infrastructures including buildings and installations, the procurement of hardware equipment, software acquisitions, system commissioning, hiring supervision and auditing firms, and taxation. As business models vary in practice, costs are typically divided into infrastructure and IT hardware & software. Given that energy storage power plants usually have an operational period of 25 years and require relatively small land areas compared to other energy storage technologies, land is usually leased based on the construction and operational periods. Costs associated with hiring supervisory and auditing firms are relatively low and can be grouped into other business activities. Therefore, these costs can be simply merged into categories such as leasing land, infrastructure construction, hardware & software procurement, hardware & software installation, taxation, and others.
[Cz = C{ta} + Cic{ss} + C{gz} + C{az} +T{js} + C{gtjs}]
Where:
Cz = Total construction costs
…and so on for the other variables.
To be specific, leasing land is foundational for constructing energy storage power plants, and land costs often fluctuate with market conditions. With increasing future land demand and dwindling available areas, land costs may potentially rise. The leasing cost for land can vary significantly depending on the location of the energy storage power plant. Costs for land are determined by the leased area and unit leasing price.
[C{td} = S{td} \times P_{td}]
Where:
S{td} = Leased area
P{td} = Unit leasing price
Construction of infrastructure, procurement, and installation of hardware & software is central to cost management for energy storage power plants. They also make up a significant portion of construction costs. Typically, costs for infrastructure, procurement, and installation are determined by quantity and purchase price.
The third stage of the whole life cycle of the electrochemical energy storage plant is the operation and maintenance stage, which is also the longest stage in the whole life cycle, also known as the operation period, usually about 25 years.
Operation and maintenance stage business activities of the most types of projects, the most complex activities of the main object contains infrastructure, hardware and software equipment, people, power grids and so on. In this stage to infrastructure as the object of business activities occur mainly for infrastructure repair: hardware and software equipment as the object of business activities occur mainly for hardware and software equipment repair, replacement of batteries, prevention of accidents, etc.; people as the object of business activities occurring in the hiring of staff daily operation and management: grid as the object of business activities occurring in the depreciation of electricity for charging, discharging, according to the instructions of the power dispatching agency to provide Other business activities include payment of taxes and fees, repayment of loans, and so on.
Based on the analysis of the above business activities, the cost of operation and maintenance stage can be divided into replacement cost, energy loss cost, operation and maintenance cost. Among them, O&M costs are divided into repair costs, labor costs, finance costs, taxes, management costs, and other O&M costs. The depreciation cost in the financial accounting has been reflected in the acquisition and installation cost of fixed assets in the construction stage, and will not be repeated in the operation and maintenance stage.
G;= Gth + (sh + Cu + Crg + Cau +Tyu + Cg. + Cgtyw)x Nyy
(7 where C, denotes the operation and maintenance cost; C, denotes the replacement cost; C, denotes the cost of energy loss per year; C, denotes the cost of repairs per year; C, denotes the cost of replacement cost; C, denotes the cost of energy loss per year; C, denotes the cost of repair per year; C, denotes the cost of repair per year; and C, denotes the cost of replacement cost. ; C, denotes annual labor cost; C denotes annual finance cost; T denotes annual tax; C. denotes annual management cost; Cn denotes other O&M cost per year; and N denotes the operation cycle of electrochemical energy storage plant.
1.Replacement cost. Replacement cost refers to the core component of electrochemical energy storage power plant battery, due to life reasons, the need to install a specified interval or specified number of cycles to be replaced when reached, and its replacement of the battery generated by the purchase of batteries, removal of batteries, installation of batteries, and other all costs. In electrochemical energy storage, due to the performance characteristics of the battery caused by the use of the process will gradually decline, when the decline to a certain extent need to be replaced. The life of a battery is usually measured by two indicators, namely, age and number of cycles. Reaching a certain age or capacity decay to a certain percentage of the energy provided by the battery and the conversion efficiency will be reduced or can not be used, in order to protect the electrochemical energy storage power plant safe, stable and efficient operation, usually need to be replaced. The number of cycles is a unique technical indicator for electrochemical energy storage, i.e., a full charge and a discharge are considered as one cycle. Although electrochemical energy storage does not operate at full charge and discharge every time, it can be similarly converted according to the degree of operation. When the number of cycles reaches the life limit, the positive and negative electrode materials are used up and can no longer be used. The number of cycles when the capacity decreases to a certain percentage is the total number of cycles of the battery in an electrochemical energy storage plant, and this percentage varies among different technology routes. The number of years and the number of cycles together determine the specific time of cell replacement in an electrochemical energy storage plant, but the number of years is usually much longer than the number of years calculated by the number of cycles, so the number of cycles is chosen to represent the index. Battery replacement is when all the batteries are repurchased for installation.
Ntn = Nyy/Nsy (8)
Nsy = Nth/ Nmtxh/365 (9)
Cth = NtnPtn Q (10)
Where, N. denotes the number of replacements; N denotes the operation cycle of the electrochemical energy storage power station; N denotes the battery usage cycle; N. denotes the total number of cycles; Nm denotes the number of cycles per day; P denotes the purchase price of the unit capacity of the battery cell (including the purchase, installation, dismantling, etc.); and 0 denotes the installed capacity.
Csh = Qcd Ped-(1- Ry) (11)
D where 0. denotes the charging power; P denotes the charging tariff; and R. denotes the energy conversion efficiency of the electrochemical energy storage plant.
Cwx = FA-Rwx (13)
Ca = . Va (14)
Cbx = FA- Rbx (15)
where C denotes maintenance cost; C, denotes material cost; C denotes insurance cost; FA denotes original value of fixed assets; R. denotes maintenance rate; 0 denotes installed capacity; U, denotes material cost flat rate; and R denotes insurance rate.
Where N denotes the number of staff of the electrochemical storage plant; S. denotes the annual staff salary quota; R, denotes the welfare labor insurance rate.
Ccw = Adk- Rak
Where, A. indicates the loan amount; R. indicates the loan interest rate.
6.Taxes. Taxes and fees are all the taxes and fees to be paid for the whole life cycle of the electrochemical energy storage power plant. The specific calculation is carried out in accordance with the national tax rate regulations.
The last stage in the whole life cycle of the electrochemical energy storage power plant is the disposal stage, and in the disposal stage of the electrochemical energy storage power plant, it is usually necessary to dispose of the relevant equipment and buildings, such as dismantling and recycling. Among them, the disposal cost refers to the cost incurred by the electrochemical energy storage power station at the end of its useful life due to the disposal of related equipment and buildings and other business activities but a certain amount of revenue will also be generated in the recycling process of the related equipment and buildings, i.e. recycling revenue, which mainly refers to the carp resources, vanadium resources and other rare metal resources contained in the electrochemical energy storage power station, due to the restricted natural resource endowment in China, while the electrochemical energy storage industry is undergoing Due to the limited endowment of natural resources in China and the rapid development of the electrochemical energy storage industry, coupled with the fact that a number of foreign countries are strictly controlling the export volume of such resources, the price of potassium resources, vanadium resources and other rare metal resources has increased significantly in recent years, and the future income generated from recycling of rare metal resources in the electrochemical energy storage power plants will be very substantial. Therefore, the cost of disposal stage is the difference between disposal cost and recycling income.
C4 = Ccz -Ins (18)
Ihs = ljzw + ljszy + Isb (19)
Where, C, denotes the cost of disposal; C denotes the cost of disposal; I denotes recycling income; I denotes the income from recycling buildings; I denotes the income from recycling rare metal resources; l denotes the income from recycling equipment.
Through the study of the whole life cycle cost management of electrochemical energy storage power plant, it is concluded that the cost can be adequately predicted by dividing the whole life cycle of electrochemical energy storage power plant into 4 stages: design stage, construction stage, operation and maintenance stage, and disposal stage and combining with the relevant formulas. The study found that the replacement cost. Energy loss cost and disposal cost is an indispensable and important part of the whole life cycle cost of electrochemical energy storage plant, and should raise the degree of attention, from the cost, resources, environmental protection and other perspectives of the development of the problem, to guide the enterprise healthy competition, sustainable development of the industry. The design stage has a greater impact on the cost of all stages of the life cycle, cost management in the design stage will lock the majority of the cost of the whole life cycle enterprises should be in the design stage of the whole life cycle for the overall consideration.
At present, the importance of replacement cost, energy loss cost and disposal cost in the industry needs to be strengthened. First of all, the importance of replacement costs should be fully emphasized in the selection of batteries on the technical and economic aspects of the whole life cycle costs, rather than the lowest cost of investment, to guide the healthy competition among enterprises. Secondly, pay attention to the cost of energy loss, that is, in the choice of electrochemical energy storage technology routes to pay attention to the energy conversion efficiency, the cost of the high price of electricity in the region may have a significant impact on the whole life cycle cost. Finally, emphasizing the disposal cost is to consider the impact of the cost on investment returns from the perspective of resource constraints and environmental protection. Since there are almost no electrochemical energy storage plants in China in the mid- to late-operating or disposal period, and the awareness of recycling and reuse of used batteries and environmental protection still needs to be improved, coupled with the fact that only oil and gas extraction is explicitly mentioned as a disposal cost in the accounting standard regulations, the disposal cost of electrochemical energy storage plants is generally not considered enough in the investment decision-making process. Potassium iron phosphate technology route, for example, as the development of electrochemical energy storage in the largest technology route, the future is facing a shortage of carp resources and high prices, strengthen the iron phosphate batteries in the recovery and reuse of rare metal resources, not only can reduce the cost of the whole industry, protect the environment, reduce the risk of explosion of the battery stacking, but also has to reduce the practical significance of the dependence on resource imports.
At present, in the face of the industry’s lack of long-term planning in the design stage, inaccurate cost prediction in the operation and maintenance stage, and improper consideration of the cost of the disposal stage, enterprises should consider the whole life cycle cost of the electrochemical energy storage power plant when making investment decisions, and seek to minimize the whole life cycle cost. It is suggested that enterprises should attach great importance to cost management in the design stage when making investment decisions, and should consider the whole life cycle costs at the early stage of investment decisions, and the costing of electrochemical energy storage plants should be considered from the perspective of the whole life cycle.
The cost management of electrochemical energy storage plant needs to consider the whole life cycle cost in the design stage, follow the intelligent and scale cost reduction in the operation and maintenance stage, and effectively improve the resource recovery rate in the disposal stage to reduce the cost. Specifically, the planning and design should strictly control the equipment selection, focusing on technology, safety and economy; sign a priority recycling agreement with the battery supplier to protect the later recovery income; improve equipment automation, intelligence level, design unattended electrochemical energy storage station to reduce maintenance costs; follow the principle of scale, establish regional repair team in the geographical area, and form a long-term agreement with the supplier at the time. The relevant leading enterprises can continue to promote the construction of rare metal recycling and reuse system and the battery’s ladder utilization mechanism. At the same time, the enterprise should improve its whole life cycle cost management program in daily practice, in order to improve the cost advantage of the enterprise in the competition.
The journey of energy storage power plants, from conception to decommissioning, is a complex one laden with various costs. By understanding and planning for these costs across the entire life cycle, stakeholders can ensure the viability and sustainability of these crucial assets in our energy landscape.
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