Our last topic, Microgrids, elicited tremendous response. Now I would like to turn our attention to another energy technology that is generating a massive amount of buzz in the industry: Energy Storage.
According to Shayle Kann, senior vice president at GTM Research, “Energy storage is vital for the future of the grid, and we believe the market is on the cusp of a dramatic acceleration.” (http://www.greentechmedia.com/articles/read/energy-storage-association-and-gtm-research-partner-on-u.s.-energy-storage)
On the surface, evidence seems to support Kann’s statement. California is pursuing a mandated 1.3 GW energy storage goal by 2020. While in Texas, Oncor is pushing a controversial $5.2 billion grid battery plan designed to benefit the grid and the wholesale energy market. (http://www.greentechmedia.com/articles/read/in-texas-a-conflict-over-grid-batteries)
Recently, at its Texas Energy Storage Summit, the Energy Storage Association cited a forecast by market research firm IHS that predicted energy storage would “explode” to 6 GW by 2017 and to more than 40 GW by 2022.
While the electric grid could clearly benefit from an economic deployment of energy storage, the question is: Will the Current Zeal for Energy Storage Help or Hurt Utilities?
These market studies show a very positive outlook for energy storage, but I want to stress the importance of a good business case. Most of the existing energy storage projects are cost-shared by the DOE and could not stand on their own without this cost-share. The importance of the “Stacked Value Streams” concept is crucial to make a viable business case. This means we have to use several revenue streams to get a good ROI. Typically, we have to include three or more of the following: frequency, spin and voltage regulation; T&D deferral options; capacity and peak pricing markets; and curtailment of renewable energy resources to build a solid business case. This implies that mainly the aggressive ISO markets with ancillary service markets are interesting for energy storage options at this stage. Currently, most large investor-owned utilities are trying out energy storage on their distribution systems.
Energy Storage Service Provider (ESSP) and Distribution Service Provider (DSP) business models are interesting options to track for future energy storage development. They are some of the new companies getting into this space.
When nuclear was thought to be king (and "too cheap to meter") before March 1979, hydro pumped storage facilities were seen as the solution to the base-load nuclear dispatch issue of too much energy at night with too little demand. Many storage facilities were built. Problem solved. Today, we have micro-things, duck curves, smart grid, intermittent energy, just-in-a-nick-of-time gas and dwindling portfolios of bigger things (i.e., coal and nuclear). It is time for game-changing technology and business models.
Energy storage can mean many things, but let me focus on batteries. Battery technology is moving in the right direction, mainly driven by the automotive sector. Certainly, encouraging subsidies can help get the technology to critical commercial mass, but it is hoped that the economics can work without subsidies in the long run.
From a macro-grid sense, batteries can help mitigate the intermittent energy issues from wind and solar energy. They can also defer the need for certain T&D facilities. In established markets, do these batteries that defer T&D assets get regulated recovery? Certainly, if used as energy sources in established markets, they should play as energy assets. At the source, such as a wind farm, the nascent capacity issue can be firmed better with batteries.
From a micro-grid sense, batteries can help the economics and performance of roof-top solar panels. You may not need the full nameplate of solar arrays if batteries are connected. When the clouds come or nightfall prevails, the batteries can help supplement.
If I am John Q. Homeowner, what do I do? I probably would not place solar panels on my roof unless subsidies make them attractive and my energy prices are high enough to matter. However, to Mr. Homeowner, batteries are what I use in flashlights, so I may miss that technology in my ordinary life. The opportunity lies with utilities (if allowed) and third parties to connect the dots with solar panels once battery technology advances. Help Mr. Homeowner with a lease arrangement that makes sense (including maintenance), allow aggregation (via robust transmission and markets) to reach these assets and use the law of large numbers to manage a vast array of (solar) arrays with the firmness of batteries (and perhaps the switching on and off at imperceptible intervals the already available HUGE storage devices called electric hot water heaters).
Battery technology will advance in the utility space because there are other industries spending money on R&D for this technology, and utilities and their third-party friends will adopt and adapt quickly. I mention this piggy-back effect because utilities spend a very small fraction of one percent of revenues on R&D because of their low risk regulated business model, which may be the subject of another story.
When advances in technology make storage more economic sans subsidies, utilities will benefit because they will have access to sound alternatives for managing power supply and distribution. Most of the storage projects today, however, serve more as demonstrations and tests of the concept with wide-scale applications still off into the future.
Recent announcements of large-scale storage projects are encouraging, but with the possible reduction or discontinuance of government financial support they could evaporate. In addition, those projects purported to stand alone based on economics likewise could disappear with reality setting in once the cheer leaders go away and the big bucks have to be put on the table.
In the meantime, hopefully we can learn from the isolated storage projects underway or in operation, while the technology catches up so that the storage of electricity becomes a real economic option for utilities. Without success in fully developing the storage concept, the full promise of renewables and distributed energy will never be achieved.
Energy storage in one form or another has been around almost as long as there has been commercially produced electricity. Far too often today, energy storage has been equated to batteries, probably the most expensive way possible to store energy.
Energy storage comes in many forms and that is important because the uses for energy storage are also many. If you look at wind energy and were to take the absurd position that all electric generation was done by wind in an annual net-zero situation, we found that it would take 620 terawatt hours of storage (Lake Michigan twice, behind a 200-foot-high dam) to deal with the seasonal differences nationally of load vs. supply. We document this in an IEEE peer reviewed paper for ISGT 2014. Seasonal mismatch also exists for solar. The other end of the storage application spectrum deals with changes in frequency and voltage resulting from things like cloud transients impacting solar PV arrays. In one case, the storage might only be exercised one time per year, and in another, it might be exercised several times a minute.
One size does not fit all. Pumped storage (hydro), flywheels, batteries and other returnable storage (where the energy is returned to the grid as electricity) will be needed to deal with a wide range of supply-load imbalances that may range from as small an area as a single building to as large an area as the Eastern Interconnect, as we change the overall generation mix. In many cases, non-returnable storage may be cheaper, easier to install and offer smaller sets of losses. By non-returnable, I mean storage that never returns the energy to the grid as electricity, but rather stores it in a form that it will be used in. Heat, cold, high-pressure air and other useful products that have a “shelf life” may be the way to store excess supply for use at a later time. Non-returnable storage also tends to be easier to site in neighborhoods and typically is a mature technology. While returnable storage requires conversion back to electricity and then to the final use, non-returnable storage only requires one conversion with only one set of loses.
Is energy storage something that will help or hurt the utility industry and/or its customers? The answer is not simple. There are situations where great business cases can be written without any trouble to add some form of energy storage. In other cases, no amount of work will produce a positive business case. Banking energy in some form is going to be important, and the business case for banking depends not only on the pure economics but also the regulatory framework that the energy is being stored in. Power quality will become more and more of an issue and that is a separate business case. Again, a separate business case is absorbing the excess supply when there is one. As indicated above, there are a wide range of uses for storage.
Can utilities make money with storage? Use the specific business case for the specific use, failing to do this, will typically result in a negative result. Most importantly, match the characteristics of the storage and the storage control system with the needs of the situation in question. Far too often either the storage or the control system are not optimized for the specific situation they are installed in, lowering the value of the storage system and reducing the life of the solution.
Storage has been with the industry for more than 100 years and will still be with the industry in 100 years from now. Today it is a small but important component of the grid, but how big a component it will be in 100 more years depends on many factors. In the next decade, regulation will probably drive more of the installation of storage.
Energy storage is that disruptive technology that many of us power system engineers have been waiting for our entire professional lives. It is disruptive in the same nature of PCs, Internet and so on.
Why would I state something like this?
Energy storage can come in many different forms with electro-chemical being one of the most common forms. The one key characteristic that causes it to become the ultimate disruptor is in its ability to be both a consumer and a generator.
It is a consumer when it takes on electricity to load up on the charge
It is a generator when it discharges electricity back into the grid.
There is no other device with a capability such as this in the power system arena. Every other device in the grid is a consumer, a generator or a conductor. The ability to disrupt comes from being able to consume when there is either excess energy in the grid and deliver energy back to the grid when there is a need.
Why is this important?
Consumption of electricity follows a profile during the day with a couple of peaks and valleys. This type of consumption pattern forces utilities across the world to commit their generating units based on a cost/location profile. As a result, there are always some generators that deliver power for only a few hours a day (also known as peaking plants), week or month leading to a very inefficient use of their capacity. As a result, the overall cost of power supply goes up to cover the fixed and operating costs of these peaking plants which are also some of the more inefficient plants in the system.
Over the last few years, Demand Response was considered as the ultimate response to this issue – however, for Demand Response to deliver results, consumers need to curtail their load either voluntarily or remotely under external control. This has not yet proven to be very successful mainly because customers have not yet agreed to change their consumption behavior especially during utility peak periods or congestion times.
Where is the value in energy storage?
Energy storage can deliver value in several different ways:
• Consume energy (charge up) when prices are low and the deliver energy (discharge) when prices are high or there is congestion in the grid.
• Capable of being placed in locations close to consumption to avoid congestion and also capable of supporting needs either at transmission and/or distribution level.
From a location perspective and from a permitting perspective, it is generally considered far easier to install storage at any location on the grid based on need instead of based on specific locations only where it was possible to get permitting to install generators.
The value, as a result, comes from the ability of the storage device to smooth out the load profile, thereby allowing (1) better use of the full capacity from all forms of generators and (2) being able to make a fuller use of supply from renewable sources of energy by allowing them to deliver generation when they are capable.
What is holding us back?
The main aspect holding us back from going all out with energy storage is cost. As costs come down, it is reasonable to expect that storage will play a major role in utility grid design and also allow the utility grid to accept more supply from renewable sources.
(Continue reading "Storage: The Solution to What Problem?")
Sidebar: Storage: The Solution to What Problem?"
Energy storage is the latest “holy grail” for the utility industry and its key stakeholders. In truth, energy storage has been with us since before electricity. We already have energy storage reservoirs in place that we make only marginal use of. If we look at the kilowatt-hours of energy stored in electric tanked water heaters on a daily basis in the U.S., we would see that it exceeds the total energy stored in all the pumped hydro storage combined. Clearly, we have some experience with storage.
If one reads the latest discussions in industry and stakeholder press, the challenges for the industry appear to be about how to make energy storage an affordable or economic solution for the grid. There is modest discussion about the long-term viability of the various technologies and even less discussion about the regulatory barriers to effective use of storage in the grid.
Beyond water heating, storage is common place throughout the world. In developing nations and developed countries where the economy is growing faster than the infrastructure, storage is a necessity. It is common in places like India, Brazil, much of Southeast Asia and islands in the Pacific and the Caribbean for businesses and individuals to have localized storage. This is driven by their reliability needs more than by a desire to make best use of conventional and intermittent resources.
If we focus on the developed world where the infrastructure and the economy are largely in synch, then the question of storage is more about achieving social objectives and optimization of resources. In some cases, it is being explored in response to the impacts on the grid from the diligent execution of policy objectives with regard to renewables. It is clear that in many jurisdictions energy storage offers some of the best technical solutions to the impacts of high levels of intermittent resources on the grid. The modular and fast-acting nature of many of the storage technologies make it a natural technical solution that is quick to deploy and highly predictable in the results that it can and will produce.
In order to make meaningful progress on integrating storage into the grid, we need to focus on two primary questions:
1. What problems(s) are we trying to solve?
2. What are the regulatory barriers in the way of the solutions?
With respect to the “problem,” it appears that we already have technologies available that can provide effective and reliable storage to support the needs of the grid. Recent work in PJM, the Maritime Provinces in Canada and Hawaii have demonstrated that grid-controlled water heaters can provide an extremely cost-effective solution to renewable integration. This new generation of water heaters are three element heaters that have one element (and roughly one-third of the tank capacity) controlled by the grid. Unlike conventional water heaters, this new generation can be tasked with absorbing energy on demand. The grid controls can also shed the one or all of the elements on command. Using two-way communications, these water heaters are capable of being dispatched to follow specific generators, moving the load up and down in synch with the generation, thus removing the variability of the intermittent resources. The communications also provide the dispatchers with a real time assessment of the amount of load and energy that can added or removed from the system at any time. These water heaters also have localized intelligence and can be tasked with frequency response based on what they are seeing. The cost of these water heaters is comparable to conventional water heaters. They have better round-trip efficiency than any other storage technology. While they are a customer-side resource, they are simple to install and largely transparent to the customer. The real-life testing of these devices in different applications shows that we have a straightforward solution that is based largely on technology that is familiar to both the customer and the utility. Water heaters are not the complete answer to the storage problem, but they certainly could play a large role in solving the problem and do so in an extremely cost-effective way.
With respect to the need for storage to supply electric energy back to the grid, there are number of technologies that have proven themselves reliable. The difficulty is in the apparently poor economics of those solutions. The economics of electric energy storage are driven as much by regulatory requirements as they are by technology. Which brings us to the second question.
There are a number of regulatory barriers to the wide-scale deployment of cost-effective storage. Again, we need to take this in two parts:
1. Electric Energy Storage. In much of the country, we have moved to regulatory frameworks that cause us to look at electricity storage as having to be either a transmission asset, a distribution asset or an energy supply asset. In most cases, we are not allowed to look at the overall picture from the view of the end use customer rates (societal view). Ignoring regulation for a minute and focusing purely on optimizing the economics of the investment, one would look at distribution connected storage and first ask what value could be delivered to the distribution system. These benefits could be feeder or substation loading relief, capital deferral, reactive power support, or back up supply to critical loads such as hospital or first responders. (It is generally accepted that electrical storage is more dependable than standby generation for these types of facilities, at least in the first 10 to 60 minutes of an interruption).
After determining the benefit to the distribution system, one would look to the benefit that it could bring to the transmission system. This might include loading relief, capital deferral, flow control, frequency regulation and reactive power support.
Finally, one would take a look at the energy arbitrage benefits for the storage. Presumably, these would also include the GHG or other climate benefits that the use of the storage delivers.
In many, not all, cases when we are able to aggregate the value streams, the storage is cost-effective. The difficulty comes in that the regulatory constructs limit or prohibit the aggregation of these benefits. So in the end the customer and society lose out due to the limiting effects of the regulatory construct. Clearly, this was not the intention of the framers of the construct, and yet we must find ways to unravel this aspect of the frameworks if we wish to begin moving forward now with greater deployments of electricity storage.
2. Thermal Storage. Unfortunately we have similar impediments in the use of thermal storage. In many jurisdictions, regulators have begun to limit the continued use of tanked water heaters in favor of tankless, on demand water heaters. This is done in the name of energy efficiency as tankless water heaters don’t appear to suffer the same parasitic losses that are inherent with conventional tanked water heaters. While this has helped energy-efficiency efforts it has had a negative impact on demand management. On-demand water heaters do not lend themselves to time shifting of load, nor do they lend themselves to on grid-controlled energy absorption. Beyond state regulations, federal regulations have begun to place limits on the tank sizes for water heaters deployed in the U.S.
Looking at the latest generation of grid-enabled water heaters, they have superior insulation to their conventional counterparts with extremely low parasitic losses. The round-trip efficiency of this generation of water heaters is far superior to any of their electric, mechanical, or hydro counterparts, all of which are otherwise encouraged by the same regulators that have sought to limit the use of tanked water heaters.
If we were able to take a step back and look first at what problems we are trying to solve and then at what technologies are available to solve the problems, in ways that benefit the customers and society, we would like find that the technologies are already available. While we may not have the full and complete solution at hand, we should be in a position to make significant progress with what we have. As technologies develop further and costs continue to improve, we can deploy more and make greater progress. In the meantime, the only barriers appear to be manmade. One potential path forward could be:
- Identify the problem. Clear articulation of what we are trying to solve, for the sake of what and for the sake of whom.
- Make objective assessments of the solutions that make economic (and technical) sense for the customer and society.
- Refine policy and regulatory barriers that are in conflict with the intent. Compromise in the interest of the customer and society is probably going to be required.
If you would like to recommend a topic for discussion, please email John Baker at [email protected].