Power system decarbonization: Impacts of energy storage duration and interannual renewables variability

Decarbonization of the electricity sector is one of the major measures in slowing down the pace of climate change. In this paper, we analyze the impacts of energy storage systems (ESS) and year-to-year variability and uncertainty in the hourly profiles of variable renewable energy (VRE) on power system decarbonization in 2050. We perform this analysis through capacity expansion optimization based on technology cost projections and CO2 emission restrictions based on 11 years of wind, solar, and load data variations in Italy’s power system, with a particular focus on how ESS changes the optimal generation portfolio and system performance. We also explore the impact of ESS duration on the renewables’ adoption and system costs. To quantify the impact of VRE variability in different years, we present a comparative analysis of capacity expansion optimization based on multiple-year and single-year data. Our results indicate a high RES penetration even in the absence of decarbonization policies, due to expected declines in future technology costs. In the transition to a zero-carbon electricity system, carbon capture and storage (CCS) with less than 100% carbon capture efficiency will play a role only in intermediate low-emission scenarios unless future technology advancements improve its capture efficiency. ESS investments contribute to lower total system costs by replacing more expensive flexibility resources. However, the value of ESS changes by its duration, with longer ESS durations having lower marginal value per added kWh storage capacity. Variability in VRE profiles leads to substantial variation in the system’s configuration and energy cost, depending on what year is used in the optimization. Decision making based on single-year data can therefore lead to substantial increases in the systems’ operational costs in other years due to increased probability of capacity shortages and load curtailments. In contrast, optimizing over multiple VRE and load years provides a more robust and cost-effective generation expansion strategy.