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added to a building, not in conjunction with a renewable energy system but as part of a DSM program, to reduce the electric heating (or cooling) peak demand in an all-electric house. Storage may enhance the value of intermittent renewable energy technologies for electricity generation suchasphotovoltaicsorwindbecausetheymaybeconsideredmoredispatchable. Ontheotherhand, significant storage within a utility system may reduce the peak supply required, and consequently, reduce the value of a technology like photovoltaics, whose time of availability will fiequently match the time of thepeakutilityloadinasummer-peakingutility. Thus,tofullyevaluatetheeconomiesofstorageforan electricity-generating technology, storage must be examined within the utility system as a whole, not simply as a component of the generating system. Simpler comparisons among different storage technologies must consider a number of the attributes of storagetechnologies. TheLCOEoftheelectricitystoredanddischargedisprobablythemoreimportant measure, but other factors such as charge/discharge rate and the capacity or amount of energy that can be stored in any single charge may be equally important. Operation and Maintenance There is no absolute standard as to which costs are included in O&M costs. Costs that are normally included i n O&M are frequentlyrecurring labor and materials costs required to keep a system in operation. Infrequentmajorrepairandreplacementusuallyshouldbeconsideredseparately. However,asmentioned in the Major Repairs and Replacements subsection in Section 5, these major replacement costs can be annualized and included with O&M costs. This occurs more frequently in the analyses of systems for which energy is a minor cost component. Regardless of which costs are included in O&M, they can be broken into the following categories: those costs that occur only when the system is operating, variable O&M costs, and those fixed costs that do not vary with the output of the system but rather are required to keep the system in an operable state. Energy costs are typically variable O&M costs, whereas labor costs are frequently fixed O&M costs. For mature technologies, estimation of future O&M costs is generally based on historical performance. For mature conventional fossil fuel systems, it is often assumed that annual O&M costs (excluding fossil fuel costs) will equal about 1%to 2%of the system's initial capital cost. However, for conservation and renewableenergysystemsthataretypicallyintheearlystagesoftechnicalandmarketdevelopment,O&M costs are more difficult to estimate. For these new technologies, widespread use over an extended period of time has not generally occurred. This is especially true when reliability problems have increased past O&M costs because the unreliable systems usudtllly are quickly replaced by manufacturers with more reliable systems. Sometimes the improved, more reliable systems are also more expensive, making the simplistic rule that annual O&M equals 2%of capital costs even more fallacious. Whatever the O&M costs are for the first year of operation of a system, they will most likely increase (in nominal dollars) with inflationary pressures and as the system gets older and more maintenance is required. Here again, it is difficult to estimate how rapid the increase over time will be. The typical assumption that O&M costs will increase at the same rate as inflation is reasonable in the absence of any data to the contrary. 76PDF Image | A Manual for the Economic Evaluation of Energy Efficiency and Renewable Energy Technologies
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