Cost-Efficient Demand-Pull Policies for Multi-Purpose Technologies – The Case of Stationary Electricity Storage

Stationary electricity storage technologies (SES) allow to increase the shares of intermittent renewable energy technologies in electricity networks. As SES currently exhibit high costs, policy makers have started introducing demand-pull policies in order to foster their diffusion and drive these technologies further down the learning curve. However, as observed in the case of renewable energy technologies, demand-pull policies for technologies can come at high costs in cases where the profitability gap that needs to be covered by the policy support is large. Yet, SES can create value in multiple distinct applications in the power system – making it a “multi-purpose technology”. We argue that policy makers can make use of the multi-purpose character of SES to limit costs of demand-pull policies. We propose a policy strategy which grants support based on the profitability gap in the different applications, thereby moving down the learning curve efficiently. To support our argumentation, we firstly conduct a comprehensive literature review of SES applications exemplifying the multi-purpose character of these technologies. Second, we assess the profitability of one SES technology (vanadium redox flow battery) in five SES applications, highlighting a strong variation of the profitability gap across these applications.