Ele lectricity Storage for the Provision of Fle lexibility in in Power Systems Owen R. R. Z Zinaman, , Clean Energy Transition Partners Institute of Energy and Environment of the University of Sao Paulo Wednesday, July 24 2019
Power system fle lexib ibil ilit ity has become a glo lobal l prio iority The ability of a power system to reliably and cost-effectively manage the variability and uncertainty of demand and supply across all relevant timescales, from ensuring instantaneous stability of the power system to supporting long-term security of supply. Source: 21 st Century Power Partnership and International Energy Agency. (2018). Status of Power System Transformation 2018: Advanced Power Plant Flexibility. 2
Power system fle lexib ibil ilit ity requir irements are prim imaril ily driv iven by variable le renewable le energy ( (VRE) deplo loyment Different levels of VRE penetration require an evolving approach to providing power system flexibility 60% % VRE of annual electricity generation 50% 40% 30% 20% 10% 0% Phase 1 - No relevant impact on system Phase 2 - Minor to moderate impact on system operation Phase 3 - VRE determines the operation pattern of the system Phase 4 - VRE makes up almost all generation in some periods Source: 21 st Century Power Partnership and International Energy Agency. (2019). Status of Power System Transformation 2019. 3
Flexibility is primarily considered to help meet “residual load” Figure source: NREL Report No. FS-6A20-63039 4
All ll power system assets can provide fle lexib ibil ility servic ices if if enable led by proper poli licy, market and regulatory ry frameworks Source: IEA-RETD. (2016). RE-TRANSITION. 5
The Broader Storage Ecosystem Source: Zinaman et al. (Forthcoming). An Overview of Behind-the-meter Storage-plus-DPV Regulatory Issues. NREL Technical Report. 6
Lit ithiu ium-io ion battery ry deplo loyment domin inates the ele lectrochemic ical l energy storage market in in the U.S. Annual utility-scale electrochemical storage deployments in the U.S., by chemistry Source: U.S. Energy Information Administration, Form EIA-860, Annual Electric Generator Report
Lit ithiu ium-io ion Batterie ies: Why all ll the hype? Lithium-ion battery price survey, 2010-18 ($/kWh) Projected Cumulative Global Storage Deployment 2016-30 (GW) Source: Bloomberg New Energy Finance (March 2019) Source: Bloomberg New Energy Finance (November 2017) 85% cost reduction since 2010 due to Similar trajectory to PV deployment in technology improvements, economies early 2000s of scale, manufacturing competition 8
Glo lobal l manufacturin ing capacity is is expected to more than double le in in the near-term Source: Cairn ERA. 9
Battery ry energy storage appli licatio ions and valu lue streams • Many possible Type of Timescale mS S Min Hr Day Service business cases Energy Energy and Capacity Firm Capacity • Valu Inertial Response lue stackin ing can Fast Frequency Response Primary Frequency Response be an important Frequency Regulation Ramping reserves Ancillary strategy Services Contingency Spinning Reserves Replacement Nonspin Reserves • Services must be Voltage Support Black-Start Capability monetizable Transmission Upgade Deferral Transmission Services Transmission Congestion Relief • Market/regulatory Distribution Upgade Deferral Distribution barriers tend to Distribution Voltage Support Services Distribution Loss Reduction constrain use cases Power Quality End-Use Reliability and Resiliency Applications Demand Charge Services currently valued Management in some markets Time of Use and Real-Time Pricing Proposed or early adoption services mS S Min Hr Day Currently not valued services Source: Denholm, P. (2019). Utility-Scale Battery Storage: When, Where, Why and How Much? Greening the Grid Webinar. 10
Locatio ion matters! Source: Rocky Mountain Institute. 11
COMMON STORAGE USES CASES FOR THE PROVIS ISION OF FLEXIB IBILITY 12
Storage is increasingly cost-competitive for: • individual retail customer bill reductions • short-duration ancillary services • longer duration applications that include a combination of capacity, energy and transmission services – Key Concept: “Value Stacking” 13
Use Case: Behin ind-the-Meter Storage Source: Sun Valley Solar 14
U.S. Behin ind-the-Meter Storage Deplo loyment Source: Wood Mackenzie U.S. Storage Monitor. (2019). 15
Are behin ind-the-meter batterie ies provid idin ing fle lexib ibil ilit ity servic ices? • Today: Activating flexibility from BTM batteries requires smart retail tariff design – Use of Tim ime-of of-Use Rates or Demand Charges introduces economic signal to shift load • Rates must be well-designed to reflect real-time conditions (advanced metering infrastructure and billing required) • Tension between a desir ire for tarif iff sim implicit ity and tarif iff cost- reflectiv ivity (i. i.e., comple lexit ity) • Tomorrow: Aggregation schemes hold promise but are still being piloted (more later) 16
Net Energy Metering Revie iew Source: Zinaman et al. (2018). Grid-connected Compensation Mechanism Basics. NREL Technical Report. 17
The Economic ics of Storage-plu lus-DPV under NEM • NEM with typical time-invariant rates: – grid id is is effectiv ively a free-to to-access fin inancia ial l battery ry – minimal economic benefit for storage-plus-DPV – some reliability benefit, if valued • NEM with Time-of-Use or Demand-based charges – may be sig ignific icant in incentiv ive to install storage by exporting / avoiding consumption during peak periods – This is is is valu luable to power system to provid ide fle lexibili lity if if retail l rates are sufficiently granula lar 18
More cost-refle lectiv ive retail il tarif iffs can promote equity and in innovatio ion – but how much is is too much? ? Cost- Simplicity Reflectivity Needs: AMI Complex Billing Less Price Volatility and Risk More Price Volatility and Risk Amended from: Status of Power System Transformation 2017. 21 st Century Power Partnership and International Energy Agency. 19
“Net Metering Integrity” and Grid Interactivity • For behind-the-meter storage-plus-DPV systems, regulators in leading U.S. states expressing concern with so-called “ Net Meteri ring In Integrit ity ” • Net Metering is theoretically granted to eligible generation resources only, not stored grid-supplied electricity that is later exported – How do we ensure that NEM kWh credits are only granted to NEM-eligible? • Related concerns around “arbitrage” activities via time -of-use rates – When is arbitrage desirable or undesirable? • Strategies to ensure Net Metering integrity sometime limit storage charging/export capabilities – This may have serious implications for “grid interactivity” and flexibility provision in in th the fu future 20
Use Case: Frequency Regulatio ion (Transmis issio ion-le level) l) • Significant deployment for frequency regulation (regulating reserves/ secondary frequency response) • Often most cost effective early application – Short duration requirements – High utilization of storage assets Source: US Energy Information Administration. (2017). 21
Battery ry hybridiz izatio ion wit ith conventio ional l power pla lants Quick-start capability of hybrid facility Southern California Edison hybrid battery storage, gas turbine peaker system Source: International Energy Agency Pairing battery electricity storage systems with peaking plants can allow for the provision of spinning reserves without the power plant actually running. 22
Myt yth: Storage is is needed to in integrate renewable les in in all ll cases Source: IEA-RETD. (2016). RE-TRANSITION. 23
Energy storage is is a growing threat to peaking capacity in in many U.S. states • Short duration storage projects (e.g., 2 hours) are nearly at parity • Regulators in leading U.S. states (e.g., CA & NY) state that storage with 4-hour capacity is eligible for providing system capacity • Emergence of “Clean Peak Standards” 24
A Virtuous Cycle: Hig igher penetrations of win ind and solar may in increase the market potential for peaking batteries 70,000 Demand 60,000 50,000 Megawatts Residual 40,000 Demand 30,000 20,000 Solar Wind Shorter Generation Generation duration peak, 10,000 lower cost storage 0 12 AM 3 AM 6 AM 9 AM 12 PM 3 PM 6 PM 9 PM 12 AM Hour Some power systems are nearing a tipping point for 4-hour storage providing capacity services instead of conventional generators Source: Denholm, Paul. Utility-Scale Battery Storage: When, Where, Why and How Much?. Greening the Grid. 2019.
EMERGING STORAGE USES CASES FOR THE PROVIS ISION OF FLEXIB IBILITY 26
Trend: Emergence of DER Aggregatio ion Example: South Australia’s AGL Virtual Power Plant 1000 residential BTM storage- plus-DPV customers (5 MW, 12 MWh) Intended Use: Customer Compensation: – Voltage support for distribution – $1,000 incentive to install storage feeders with high solar penetrations – 1-year contract: $100 signing – Capacity and frequency regulation bonus, $45 / 3 months (bill credit) at wholesale market level Image credit: twitter.com/aglenergy 27
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