Photo by Elenia Verkko Oyj.
A pilot project was carried out to verify a distribution network and electricity market integrated battery energy storage system (BESS) concept based on shared ownership of the equipment, dual use of the system resources and a new service market model.

Battery Storage for Rural Networks

Nov. 18, 2022
In sparsely populated Finland, Elenia Verkko Oyj is studying how battery energy storage systems might serve in the utility’s rural distribution networks.

Renewable energy production that now is associated with the transition and the reduction of regulated energy production has resulted in a rapid increase in battery energy storage systems. Electricity storage systems are now considered as part of nationwide power balance management systems which can also be installed in distribution networks to improve the security of supply.

Elenia Verkko Oyj (Elenia) is the second largest distribution system operator (DSO) in Finland and is responsible for a network of nearly 74,000 km (46,000 miles) of which almost 30,000 km (18,600) miles, is a medium voltage 20 kV network. The majority Elenia’s network is in rural areas and they decided to organize a study to determine how many potential locations there were on their distribution network where is was feasible to acquire battery service from the market.

Elenia and the Nordic Energy Company, Fortum Oyj, have now developed a concept and market model for the utilisation of batteries in the distribution network that are compatible with current legislation.

Concept Development

The concept of the study is to use battery technology to improve the reliability of the DSO’s power supplies in rural areas. The energy company (Fortum) will provide the battery capacity as a service to DSO and offer battery storage to the market to be a part of nationwide power balance management system.

The idea of the model is to provide the battery storage to the transmission system operator’s reserve market in normal situations by energy company. In case of an unexpected failure in the supplying 20 kV network, the system automatically separates from the supplying grid and forms an independent island network. In this instance, the current battery charge shifts into DSO use. The system automatically synchronizes itself when the supplying network is restored. The DSO can also reserve the full charge of the battery on a separate notice for example, in the case of a storm warning.

Most network failures occur due to extreme weather conditions. This means that in many instances failures can be forecast. The system also includes of a circuit breaker, which can be used when a fault occurs in the 20 kV branch. The circuit breaker will separate the medium voltage branch from the rest of the network securing the power supply to the customers beyond the branch line.

Elenia will acquire a battery service from the market with a fixed annual fee and an hourly fee for reservation hours. The energy company will generate revenue from the battery service fees from the DSO, as well as by sales to the reserve market. and the DSO will benefit from regulatory outage costs (ROC) savings by minimizing the duration of customer interruptions. The DSO also charges the energy company a distribution tariff for the use of the electricity connection in accordance with the network service price list. In addition, the DSO’s power conversion system (PCS) is capable of reactive power compensation, which results in savings in the reactive power charges paid to the transmission system operator.

Identifying Network Locations

Elenia’s distribution network has some 7,000 20 kV branches. In the first stage of the study, Elenia grouped the branches according to their technical boundary conditions and future cabling projects.

One of the technical issues was to estimate the most appropriate battery capacity range for the application. Technically the most suitable battery capacity range is between 300 and 500 kW/kWh. The minimum appropriate battery unit size is 300 kW/kWh due to minimum requirement for grid protection to operate properly.

According to the information available during the study, the maximum battery unit size is 500 kW/kWh for the connection equipment to fit the standard secondary substation cabinet. The 500 kWh battery unit could provide an estimated ten hours supply, if the battery is fully charged. Higher capacity batteries would most probably require a customized cabinet which will lower the cost efficiency of the system. Besides, a higher capacity battery can negatively affect the voltage stiffness of the network in case of battery location remote from the primary substation.

To maintain economic feasibility at any service charge, the ROC savings should be higher than battery system maintenance expenses. The estimate of the annual battery ROC-savings is based on the actual fault data of Elenia’s battery system pilot site in Kuru (Finland). The fault data available helped to calculate how much of the ROC battery system would have been able to cut. The maintenance costs of the system consists of the secondary 20/0.4 kV substation and the connection equipment maintenance as well as software support expenses.  

The case study reviewed three different case types and identified the limitations connected to the cabling arrangements:

  • Case 1 considered branches with cabled supplying 20 kV feeders.
  • Case 2 included the branches with supplying 20 kV feeder to be cabled by the end on 2021.
  • Case 3 covered the branches with supplying 20 kV feeder planned to be cabled until the end of 2028.

DSOs in Finland invested significant investments amounts during the period 2013 to 2021 to meet the security of supply demands set in the Electricity Market Act (EMA) in 2013. According to the EMA, fault outages caused by extreme weather conditions (e.g. storms) shall not exceed six hours in urban areas and 36 hours in rural areas after the transition period that ends in 2028. The EMA was amended in 2021 and the transition period was extended to the end of 2036 and the role of cost-effective alternative security of supply solutions (e.g. battery storage systems) was underlined.

In addition, DSOs are obligated to evaluate the use of alternative solutions as part of the mandatory network development plan delivered to the Finnish Energy Authority. The feasibility calculation showed that all three cases were unprofitable. Out of 7,122 locations examined, after elimination, only 230 were identified as potential locations suitable for further feasibility investigation.

Project Potential

Elenia developed a calculation model to assess the potential of battery usage understanding that the lifespan of the battery system was a key component in the determination in the overall economic analysis. The expenses for the DSO include the investment required to install the battery system, on-going maintenance costs and the service fee charged by the battery service provider. The major benefits are the ROC and reactive power compensation savings, plus the connection and service charges imposed by DSO on the service provider.

The investment calculations were based on a ten-year period this being the battery manufacturers’ guarantee period and the expenses and benefits (income) formed the input data for the calculations. Sensitivity analysis evaluated the battery usage potential at different levels of service charge in increasing values ranging from zero to 37.5 € /kWh/annum. As the market in this area is not yet established the level of service charge is quite open so there was a need to determine the level of service charge which would be profitable to the DSO to help formulate the preconditions.

The analysis also included an overview of the dependence on the changes in ROC valuation and the number of potential battery locations. By definition, the ROC is the cost of an electricity supply interruption to the end user that also takes into consideration the frequency and duration of interruptions and the unit costs of outages determined by the Finnish Energy Authority. As society becomes increasingly dependent on electricity, security of supply has become an important issue so it is therefore reasonable to assume that the valuation of the ROC will not decrease in the future.

The change in the valuation of the regulatory outage costs (ROC) has an influence on the number of potential battery locations, but the service charge has a larger impact. The study results were listed in ranking order the branches acceptable for battery locations according to their potential.

Future Prospective

According to the study, the service charge for batteries and the reduction of the ROC are the most significant factors affecting the usage potential of the battery system supporting rural distribution networks. However, there are some uncertainties and generalizations in the input data for the utility potential calculation model, which can influence the reliability of the results. In addition, legislative changes related to batteries at both European Union (EU) and national levels can have a significant impact on the potential of batteries in the distribution networks.

According to the Electricity Market Directive of the EU’s Clean Energy Package, DSOs are encouraged to implement energy storage solutions and flexibility services on market terms. Acquisition of battery capacity from the market should therefore become one of the tools for a DSO, so that the battery utilisation model can become an alternative investment option for power distribution quality and reliability improvements for customers residing in rural areas.

Elenia’s study has confirmed that electric storage batteries do not appear to be overly positive in the current situation however, techno-economically sensible locations for battery systems on rural electricity networks can be identified if provided service charges are at an appropriate level.

Currently, Elenia are collaborating with Fortum Oyj and Merus Power Oyj continuing the development project in preparation for the introduction of some 20 battery system during the next few years.

Maria Kainulainen ([email protected]) received her BSc. Degree in Electrical Engineering from TAMK University of Applied Sciences, Tampere, Finland in 2015 and her MSc. Degree in Electrical Engineering from Tampere University, Tampere, Finland in 2020. Maria who has over eight years’ experience in power grid design and protection is currently working as a Protection Specialist at Elenia Verkko Oyj.

Tomi Hakala ([email protected]) received the MSc. Degree in Electrical Engineering from Tampere University of Technology, Tampere, Finland in 2014. Tomi now has more than ten years’ experience in power grid design, forecasting models for the distribution network business and asset management, and smart grid development projects. At present he is the Project Manager at Elenia Verkko Oyj (DSO).

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