Handbook of Energy Storage for Transmission or ... - W2agz.com

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Cost and Benefit Comparison
The cost and benefit comparison using the net present value (NPV) method depends on
the specific application. The major benefit associated with grid stability includes VAR
control to maintain power flow and voltage stability of the T&D system. This is difficult
to quantify, however it may be possible to defer some other T&D upgrade investments
which will certainly show a clear financial value to the utility. The approach is to apply
usual practices or service standards as the criteria to say if an investment is required.
In the case of end-use load stabilization, or load fluctuation control, the major benefit to
the utility is similar to grid stabilization, and is to defer investments and operating cost of
the T&D. In some special cases, where the stabilizing equipment is near the end user
such as the DC railroad traction case described here, there may be other quantifiable
benefits for the end user. These are improved operations and energy efficiency of enduse
electrical equipment such as AC motors and reduced peak power demands at nearby
electrical substations.
Table 6 shows the NPV of the costs, the benefits and their combination for each major
application. The parameters used in the NPV calculation include:
1. Time period for calculation is 20 years
2. Escalation rate is 2%
3. Inflation rate is 2%
4. Discount rate adjusted for inflation is 5%
The benefit assumptions used for each application include:
1. For AC grid stabilization the assumption on benefits is based on substation
upgrade deferral. The value of deferral is assumed to be $840,000 for the first 10
years and $1.68 million for the second 10 years. The deferral savings must be
based on specific site conditions and estimated costs. The rationale for these
numbers is that they are in the range of substation upgrade costs.
2. The railroad traction load stabilization gives value to both the utility and to the
end user, such as city, municipal operator or transient authority.
a. Assumptions for value to the utility is in reducing the size or number of
substations required in a new installation or in deferring the upgrade of
existing substation in the case of increased train operations or new and
more demanding train loads. In this specific case of a small substation
supporting the subway operations deferral was valued at $340K for the
first ten years and $780K there after.
b. Value to the end user includes improved voltage regulation to maintain the
train operations and allow the use of new AC drive trains, with improved
overall energy efficiency. In addition, storing of energy flattens the peaks
and valleys of demand, which reduces the demand charges. Typical
benefits assumed in this case are an energy (kWh) savings of 15% of
flywheel rating, based on 6000 hours per year @ $.06/kWh. Also the
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