Successfully leverage this versatile asset by applying a framework that evaluates potential applications.
Earlier this year, when U.S. Department of Energy Secretary Rick Perry commissioned a report on grid resilience, plenty of players in the solar and wind industries thought the final document would be an homage-filled anthem to coal. The report turned out to be more of a look back at baseload plant retirements, but it still sparked debate.
That’s because the report gave a thumbs-up to adding more baseload generation. Looking at the many power plants that have gone offline in recent years, the report writers concluded that “States and regions are accepting increased risks that could affect the future reliability and resilience of electricity delivery for consumers in their regions. Hydropower, nuclear, coal and natural gas power plants provide essential reliability services and fuel assurance critical to system resilience.”
To this, many in the power sector responded, “Do we really need more baseload generation for the stability of the grid? No, what we actually need is more flexibility,” notes Andrew Marshall, Landis+Gyr’s director of distributed energy resource management.
Marshall says that large-scale solar and wind generation now come in at parity with traditional baseload resources from a pricing standpoint. “But, they’re intermittent. They’re not dispatchable,” he adds. That’s where storage comes in.
What’s in storage for you?
Part of the flexibility of storage is inherent in this characteristic: It can act as both generation or load, explains Marshall. “There are a couple ways it can look like a generator. It can dispatch energy on call if it’s charged up. Or, if it’s charging from the grid, it can reduce the amount that it’s charging.” That is, through load control dispatch signals, the storage resource can free up capacity.
With both load control and dispatch, storage can respond in milliseconds – zero to output, or vice versa – almost instantly. In comparison, a simple-cycle combustion turbine takes minutes to hours to ramp up, while a combined-cycle combustion turbine could take hours to get up to speed, according to Seth Blumsack, assistant professor of energy policy at Pennsylvania State University.
Given these ramp rates, storage can stand in for pricey peaker plants, which often have utilization as little as 5 percent to 7 percent of their capacity, according to a recent report from Navigant Research and the Energy Storage Association. This represents huge inefficiency and wasted dollars. As a case in point, the Massachusetts Office of Energy and Environmental Affairs found that just 10 percent of hours per year – peak hours – accounted for some 40 percent of the Bay State’s electricity costs.
Another benefit of storage: It could help utilities get more for the generation resources they already have online.
“Gas generators run most efficiently at high output,” Marshall explains. “If you want to add flexibility to the system, one way to do that is run your gas generator all out. When you want to make a change, let the battery either decrease the effective generation of the plant by charging or increase the effective generation of the plant by discharging.” Marshall sees more co-siting of storage and generation resources, and so does Navigant Research, where analysts foresee hybrid energy storage systems that pair storage with generation will grow from 78.6 megawatts in 2017 to 2.1 gigawatts in 2026. Along with boosting efficiency of generation resources, such an arrangement also prolongs asset life due to optimized operation.
And speaking of making the most of generation resources, that’s not just an issue for gas-fueled power plants. Navigant sees solar-plus-storage installations growing to 27.4 gigawatts and $49.1 billion by 2026.
Already, renewables are being curtailed due to overgeneration that could overload power lines and substations. Earlier this year, the Los Angeles Times noted that Arizona got something even better than free power on several days in January, February and March. California paid Arizona to take excess solar production while fossil-fuel-based plants continued to operate. “The number of days that California dumped its unused solar electricity would have been even higher if the state hadn’t ordered some solar plants to reduce production,” wrote Times reporter Ivan Penn.
Making dollars and sense of storage
Along with benefits of storage, a main driver for its growth is falling prices. McKinsey & Company forecasts that storage costs will reach $200 per kilowatt-hour in 2020, down from $230 per kilowatt-hour in 2016 and almost $1,000 per kilowatt-hour in 2010. Storage prices could sink as low as $160 per kilowatt-hour or less in 2025.
Despite the relative affordability, Marshall still thinks the business case for storage will involve multiple value streams. Frequency regulation is already online in some areas, including PJM, which was the first retinal transmission organization in the U.S. to create a market for energy storage based on its fast response capabilities for regulation services. California also now has a market suited to storage with its flexible ramping product, which compensates energy resources for being able to ramp up or down quickly in response to rapidly changing conditions.
In 2013, the U.S. Department of Energy produced a report titled Grid Energy Storage that noted, “The flexibility of storage can be leveraged to provide multiple or stacked services, or use cases, with a single storage system that captures several revenue streams to achieve economic viability.”
Among the uses the DOE identified for storage, you’ll find:
- Electric energy time-shift (arbitrage): This involves buying electricity when costs are low, storing it and selling it when costs are high.
- Spinning, non-spinning and supplemental reserves: Spinning reserves can respond within 10 seconds, non-spinning assets can ramp within 10 minutes and supplemental reserves can support the grid within an hour. Storage can respond in all those time frames.
- Load following for renewables: That means the resource can respond to grid changes within five to 10 minutes.
- System upgrade deferral: Since most transformer replacements are sized for anticipated load as much as 20 years down the road, the DOE researchers felt storage could defer such upgrades by using a storage system to support extreme peaks.
- Voltage support: As the DOE team notes, real power from a storage system can effectively address localized voltage excursions.
Given these benefits, plus the rapidly falling costs of energy storage systems, it’s surprising the DOE researchers who wrote the recent baseload study didn’t voice more confidence in the role storage could play in grid reliability.
But the DOE researchers who wrote that 2013 paper on storage were quite supportive of it as a grid-stability tool. In their view, “Storage technology can help contribute to overall system reliability as large quantities of wind, solar and other renewable energy sources continue to be added to the nation’s generation assets.”