Battery storage is 141 times more expensive than storing liquefied natural gas on site

Several Southern States experienced rolling blackouts during the week of Christmas as Winter Storm Elliot caused electricity demand in some areas, such as the Tennesee Valley Authority (TVA), to surge to new all-time highs.

Surging demand occurred when the grid was already short of juice due to frozen instrumentation at a coal plant in Tennesee, and pipeline issues deprived natural gas generators of the fuel they needed to keep the lights on during the cold snap.

The shortcomings of the natural gas delivery system during Winter Storm Elliot in 2022 and Winter Storm Uri in 2021 highlight how relying on just-in-time delivery of natural gas supplies exposes the electric grid to higher risks of blackouts suggesting we need to consider requiring natural gas facilities to have onsite fuel storage.

Running some numbers on the cost to store liquefied natural gas (LNG) on site, compared to building an equivalent amount of battery storage, shows it is 141 times cheaper to build LNG storage facilities than lithium-ion batteries.

The Math

Otter Tail Power Company (OTP) is an investor-owned utility with service territories in Minnesota, North Dakota, and South Dakota. The company recently built a natural gas power plant in Astoria, South Dakota, with a winter-rated capacity of 285 megawatts (MW) to provide reliable electricity when its wind fleet is not producing enough.

Now, OTP is seeking to build a facility to store LNG at the facility to ensure they have enough natural gas to keep the lights on in case of supply disruptions and to hedge against the kinds of massive natural gas price spikes seen in the Midwest during Winter Storm Uri.

According to OTP’s 2022 Earnings Conference Call, this LNG storage facility will cost between $70 and $90 million. For the sake of our calculations, we will use $80 million.

According to company filings with the Minnesota Public Utilities Commission (PUC), the facility will be able to fully power the 285 MW facility for five days, running 24 hours per day. This means that the facility will have 34,200-megawatt hours (MWh) of storage capacity at a cost of $2,339 per MWh, which amounts to $2.34 per kilowatt hour (kWh).

Battery cost data from the U.S. Energy Information Administration’s Assumptions to the Annual Energy Outlook shows a cost of $1,316 per kilowatt of four-hour battery storage. Dividing this value by four gives us a cost of $329 per kWh of storage capacity, which translates into $329,000 per MWh.

This means that battery storage is 141 times more expensive than the LNG storage facility at Astoria Station.

Proposals to reduce the risk of blackouts using wind turbines, solar panels, and battery storage are laughably unrealistic and cost prohibitive.

The most practical way to maintain the resiliency of the electric grid is to stop retiring existing coal and nuclear plants. After that, requiring natural gas power plants to have onsite fuel storage is the most common-sense way to maintain reliability at a relatively low cost.