EASE CONGESTION AND SUPPORT THE GRID

Storage located in the grid can defer network expansion and power from batteries can be advantageous in provision of system services

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A market structure that allows storage facilities to meet multiple requirements raises the value of stored electricity to system operators, a value recognised in multiple streams of revenue. When a storage facility has the opportunity to multi-task, the “revenue stacking” that follows mitigates against the inherent economic disadvantage that storage labours under.

Employing a storage system to not only contribute to bulk power supply and help manage variability, but also to ease congestion to avoid network expansion, and to supply needed grid support services could increase its value sufficiently to make it a competitive player in the energy market.

Grouping such a variety of needs for a single storage facility, however, is unlikely to prove possible on many power systems for much of the time and not all types of storage can meet all needs (see table of types, capabilities and principle useshere). Pumped hydro, CAES and flow batteries are versatile enough to cover all applications, but are challenged geographically and technically. Most types of storage can help ease congestion, but thermal storage and power-to-gas cannot easily contribute to more than a narrow range of system services, albeit at a relatively high cost. Other battery types are limited to the supply of some system services only, though can help ease grid congestion and in some cases help manage variability.

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LIFE IN THE SLOW LANE
An electricity network becomes locally congested in areas where expansion of grid capacity has not kept up with expansion of generating capacity. As production outstrips local demand, bottlenecks on the grid form unless production is curtailed, or stored. Wind generation is particularly prone to getting caught in bottlenecks on the wires. Without storage, the system operator’s only choice is to cap generation on the production side of the bottleneck and find another source of supply on the demand side.

Compensation to curtailed generators for loss of revenue is usual. It is provided either on the basis of cost-reflective calculations or, more commonly, on the basis of bids by the owners of the generating capacity. Locating appropriate storage plant near such a bottleneck could in some circumstances defer the need to invest a larger sum in expanding the grid to solve the problem. As the UK’s Imperial College stated in its 2014 report on the viability of storage: “If addition of storage is more economically attractive than network reinforcements, this will lower the cost of transmission, distribution and local network investments.”

In other words, the storage on offer has to be cheaper than the cost of curtailment. Pockets of such opportunities for storage providers exist, but they are limited in number, constrained in size, and could be of short duration. Even so, power system operators recognise that if storage has the opportunity to earn its keep from meeting multiple requirements, the potential to defer grid expansion by easing congestion is one of the “revenue stacking” options.

Both in California and the UK, power system operators are giving battery storage the chance to prove its mettle for provision of system services. San Diego Gas & Electric has brought online the world’s largest battery storage bank using lithium-ion technology, one of three similar projects in the state, and is calling for five more. The purpose is not primarily to boost grid reliability, but to reduce reliance on gas following the chaos caused by a major pipeline leak.

UK Power Networks, after trialling a 6 MW/10 MWh lithium-ion battery installation to demonstrate how it could provide multiple flexibility services, is going ahead with a commercial tender and will select more such systems if the price is right. The trial proved the ability of the battery bank to shave peaks off demand in sufficient quantities to defer the network reinforcements needed to deliver more energy.

Australia has also declared its intention to employ a giant 100 MW/129 MWh battery from Tesla to support frequency stability on the South Australia grid network. Supporters believe it could also be a competitive option for shaving off high electricity prices at times of peak demand.

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SYSTEM SERVICES
In some circumstances, storage may make a useful and affordable contribution to the provision of one or more of the various grid support services that maintain quality of electricity supply. Electricity systems must be sufficiently flexible to rapidly respond to changing circumstances, with or without renewable energy as part of the mix.

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If storage has the opportunity to meet
multiple power system requirements,
revenue stacking can offer a route
to profitability

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The ability to continuously match supply and demand is essential for keeping voltage levels stable. Sudden power station or transmission system faults will cause rapid loss of supply. On the demand-side, unforeseen events, such as the arrival or disappearance of hot or cold weather bringing demand for cooling or heating, can trigger unexpected changes in electricity consumption.

System operators contract with generators to provide “ancillary services” to cope with these eventualities, which include frequency response and reserve power. Most of these services are paid for through an availability charge for being on standby, plus an energy charge for the electricity provided when needed.

It is not a large market. Power used for system support represents a single digit percentage of all the electricity churning through the wires. Within that confined sub-market, storage would need to elbow out other established providers of support services by offering greater value for money.

The expectation that increasing proportions of variable energy would require additional flexibility to cope with the fluctuations in output is not being proved in practice, as Germany, Texas and elsewhere are demonstrating. Better management of balancing markets, accurate forecasts of solar and wind generation, better coordination between control areas and more just-in-time adjustments thanks to advances in digital technology are outpacing increases in volatility. These advances are generally bringing down the cost of system management.

Three of the six defined types of storage (see table) can technically provide some system services: pumped hydro, CAES and batteries. Flywheels may be able to provide response, heat storage and power-to-gas cannot easily provide response, but may be able to provide reserve. Grid operators are unconcerned where the service comes from, provided the technology can fulfil the functional requirements.

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FREQUENCY RESPONSE FIRST
The first line of defence when power system frequency deviates from the network standard (50 Hz in Europe, 60 Hz in North America) is frequency response. As the most demanding of the system services it tends to be the most valuable and its higher market prices can help storage economics. Britain’s National Grid estimates that providers of frequency response are paid around €60/kW/year for making the required generating capacity available as needed.

Most thermal plants are able to respond automatically to frequency changes and will increase output when the frequency falls, and vice versa. Groups of wind turbines with appropriate technology can do the same. Typically, the total holding of frequency response is just under 2% of the peak demand on an electricity system.

Battery storage is looking well placed to get a good bite of this relatively small cake, given latest improvements in the technology. A recent auction by the UK’s system operator for a new ancillary service, dubbed “enhanced frequency response,” saw batteries successfully bid for the majority of the 200 MW that was called for. The birth of the new service was likely prompted by the ability of the new breeds of cheaper battery to provide or absorb power very quickly. The specification was for response within one second, with compensation for such fast response set correspondingly higher. The range of winning bids was €7.7/MWhto 13/MWh, an average of €10.3/MWh and an average price for the 200 MW of €100/kW/year.

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CALL IN THE RESERVES
The second line of defence, when the mismatch between supply and demand is likely to extend over more than a few minutes, is to call on reserve power, also referred to as spinning reserve. Generating facilities increase or decrease their output in response to system need, with notice periods from minutes to a few hours.

Reserves have mostly been provided by thermal plant, although wind power will offer the same facility as it increasingly replaces thermal generation. By operating at part load, generators can increase or decrease output as required, including wind generators. Part load operation is less efficient than operating at full load and bids to provide the service are set higher than for continuous supply, though are lower than those for response.

Storage, however, has no such efficiency penalty attached to it when supplying to the reserve market, which can give it a fighting chance among competitive bids, particularly if it can also “revenue stack” by supplying frequency response. Batteries may face technical barriers in supply of reserve. Specifications can demand provision of reserve power for periods of an hour or more, which would rule out several battery types.

The total holding of reserves on a power system is typically around 6% of its peak demand. The holding must increase as the volume of variable renewable energy increases. But instead of increasing reserves, system operators can call for a reduction in electricity use. Paying for “demand response” can serve the same purpose as reserve power, at less cost. The flexibility offered by demand response gives storage tough competition for most purposes. The cheapest bid among the flexibility options will decide which among them are the winners and losers for system services.

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Battery storage could be well
placed to get a good bite of this
relatively small cake

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BLACK START AND VOLTAGE SUPPORT
Other system services, such as providing black start capability and voltage support, represent smaller markets for storage. When power systems need to recover from shutdowns, batteries in stand-alone mode are ideal and they have long been used to enable some types of power stations to restart after a grid failure leaves a large area without electricity.

Voltage support is the ability to produce or absorb reactive power to maintain a specific voltage level and only a small percent of generators on any market are required to provide it. Early renewable energy technologies struggled to meet reactive power requirements but no longer is that the case. Where voltage support is needed in areas remote from power stations, the majority is met by batteries. But across the whole of the United States, opportunities for batteries to provide voltage support are limited to 150 applications. •

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TEXT Lyn Harrison & David Milborrow ILLUSTRATION Hvass & Hannibal

This article is part three of our five-part special report on grid-scale electricity storage. Find parts one-five linked below or get the key takeaways at a glance