Limiting the public cost of stationary battery deployment by combining applications

Batteries could be central to low-carbon energy systems with high shares of intermittent renewable energy sources. However, the investment attractiveness of batteries is still perceived as low, eliciting calls for policy to support deployment. Here we show how the cost of battery deployment can potentially be minimized by introducing an aspect that has been largely overlooked in policy debates and underlying analyses: the fact that a single battery can serve multiple applications. Batteries thereby can not only tap into different value streams, but also combine different risk exposures. To address this gap, we develop a techno-economic model and apply it to the case of lithium-ion batteries serving multiple stationary applications in Germany. Our results show that batteries could be attractive for investors even now if non-market barriers impeding the combination of applications were removed. The current policy debate should therefore be refocused so as to encompass the removal of such barriers.