When Ontario energy minister Bob Chiarelli told delegates at the recent Canadian Wind Energy Association (CANWEA) annual conference that the province's next renewable-energy request for proposals could require developers to somehow incorporate energy storage into their bids, he launched a debate that will be played out in power markets around the world as they increasingly shift to variable sources of generation such as wind.
For the most part, experts expect storage to evolve in an evolutionary rather than a revolutionary manner alongside this energy transition. "There is no magic number, no tipping point where you absolutely have to have storage," says Anissa Dehamna, principal research analyst at Navigant Consulting. "I think the real driver is, at what point does a grid operator want to build more reliability and flexibility into the system?"
In a report released in October, Navigant said it expects annual additions of storage targeted at renewable-energy integration to soar from 192MW in 2015 to 12.7GW in 2025. How exactly the market unfolds is going to depend on a number of factors, led by the cost of storage and the market rules under which it operates.
"Those two things are going to have a significant impact on how we see storage playing a role on the grid," says Jessica Harrison, head of section for distributed energy resources at consultancy DNV GL.
There is little doubt that costs are falling. Prices for lithium ion batteries have halved since 2013, and a new report by investment bank Lazard on levelised cost of storage estimates it will halve again in the next five years. Other types of storage are on a similar, if not quite as steep, trajectory.
"We're watching what's happening in the marketplace, and it isn't just talk. There are real and significant gains in the price reduction of storage. It is a true phenomenon," says Harrison.
Some of the price decline has been driven by the opening up of ancillary service markets in the US, notes Dehamna. The PJM Interconnection, which is the largest wholesale market in the US, was the first to introduce a performance incentive to attract the fast-acting resources needed by the regional transmission organisation to provide frequency regulation, which requires the injection and withdrawal of power on a second-by-second basis.
It turns out that batteries, with a near-instantaneous response time, are much better suited to the task than the slower-responding gasand coal-fired power plants that have historically provided the service. PJM has deployed more than 100MW of storage since 2013, with more under construction and in the planning stages.
Batteries do not just make frequency regulation easier. Their efficiency may also make it cheaper, even with a higher tariff, by allowing system operators to procure less reserve than they would have to when relying on traditional resources. A study currently being conducted by the Alberta Electric System Operator is bearing this out. "It is showing we can do the same amount of work with less megawatt," says Jacques Duchesne, the agency's programme manager for wind integration.
Wind-industry heavyweights, including NextEra Energy, EDF Energies Nouvelles, Invenergy, RES Americas and AES, see the battery-based ancillary services market as an opportunity to diversify.
"We've installed storage at our existing wind facilities on the east coast, largely in (the) PJM (area)," says Mike O'Sullivan, senior vice-president at NextEra Energy. "It's an interesting dynamic. It has nothing to do with the wind farm. The batteries are not getting their energy from the wind farm. They just needed to be hooked to the grid at a substation."
For many, the configuration O'Sullivan describes might seem counter-intuitive. A scenario where banks of batteries coupled with wind turbines feed a smooth and steady flow of electricity on to the grid may sound more like the ultimate goal for deploying storage in aid of increasing the penetration of renewables, but experts agree it is likely that this application makes the least amount of sense.
"I don't think that storage should be trapped behind renewable-energy facilities," says Nicolas Musizynki, director of energy storage for RES Canada. "If a storage facility is only used to benefit an existing renewables generator, or to transform it into a fully dispatchable facility that looks like what we're typically used to having on the grid, then it's probably not benefitting the system as it should be."
Storage can serve many functions on the grid, and stacking those together to enable a facility to take on different tasks at different times helps build the economic case for what is still, outside of a few specialised grid purposes, a prohibitively expensive technology. "These are fixed-cost assets, so you want to make sure you can use them as much as possible to deliver every ounce of value at any point in time," says Jason Rioux, vice-president at NRStor, a Toronto-based storage provider.
There are some jurisdictions, mainly isolated island grids such as Puerto Rico, where strict interconnection standards have made site-based storage a prerequisite for bringing renewable-energy capacity online, says Dehamna. But in other markets - notably in California, which became an early mover in storage when it mandated the state's investor-owned utilities to add 1.3GW to their systems by 2020 - the preference has been to put storage resources closer to the point of consumption, where they can provide multiple benefits to the grid by acting as a buffer between what is going on in the transmission and distribution systems.
"The one thing that's really tricky about storage is that the benefits travel up and down the grid," says Navigant's Dehamna.
As technology costs continue to fall and regulators write the market rules that will help monetise those benefits, many expect utility-scale storage will continue to evolve much as it did on the frequency-response side. Storage developers are already pushing around the edges of the market for longer-duration backup and peaking power, says Dehamna. Lazard's levelised cost analysis show gas peakers, buoyed by low commodity prices, still hold a competitive edge. But inroads are being made, underpinned by that fact that, as with frequency regulation, storage resources are simply a better fit for the job.
In 2014, an AES 100MW lithium ion battery storage project was among the 2.2GW of winning bids in utility Southern California Edison's competitive tender for capacity resources in the Los Angeles area, selected alongside thermal, demand-response and efficiency projects.
And when NextEra Energy CEO Jim Robo announced in September 2015 that his company would plough $100 million into storage projects over the following 12 months, he predicted that if storage-cost declines follow the same path as solar - as many observers expect they will - there may never be another gas-fired peaking plant built in the US after 2020.
Enthusiasm for the potential of storage aside, more than one speaker at the CANWEA conference cautioned against moving too far too soon, incurring the added expense of deploying new solutions before existing ones are exhausted.
"The frequency with which we're talking about storage these days is actually a reflection of the work we still have to do on integration," notes CANWEA president Robert Hornung.
Tools such as improved wind forecasting, larger balancing areas, increased interconnections with other markets, targeted transmission build and geographic diversity have helped grid operators integrate more renewable-energy capacity than anyone originally thought possible. And the emergence of smart communications and data-gathering technologies is bringing options like demand response - which taps into the flexibility of load to change with available generation - to the fore.
There is also significant flexibility in the wind turbines themselves. Work done over the past year by the North American Electric Reliability Corporation has helped bring that into perspective, says Charlie Smith, executive director of the Virginia-based Utility Variable Generation Integration Group. "What that examination has shown is that a wind plant, properly designed and operated, can provide every ancillary service that a fossil plant can provide," he says. "How they are compensated for those services, though, is still a big question."
NextEra's O'Sullivan believes there needs to be more work done on solutions that essentially use wind to help integrate wind. "What I think the industry long-term will have to figure out, and this a collaborative effort by manufacturers and developers, is how not to focus all the time on net capacity factor or how cheap the turbine can be, but on some of the other products - from an innovation point of view - that you can bake into the design of the project."
Both the range of services wind energy can provide to the grid and how it gets paid for them are issues that are taking on greater significance as the penetration of wind and solar grows, says Smith. Variable generation is already pushing down wholesale power prices, and with less money in the energy market, revenue from the provision of non-energy services will become an increasingly important part of the financial equation for generators.
"Markets are going to have to evolve," he says. As they do, it could prove key to creating a value proposition for installing storage at the project level. Combining PV and storage is allowing developers in that sector to play in markets that solar alone cannot tap, notes DNV GL's Harrison, particularly in the area of localised voltage and grid support. There could be a similar business case for wind coupled with storage, she says.
"I think more study needs to be done on the wind front for people to understand how to make that happen, both on the policy side and on the developer side. That is something we are starting to look at."
EUROPE PLAYS CATCH-UP GERMANY AND THE UK LEAD THE WAY, WRITES SHAUN CAMPBELL
North America has taken the lead in developing storage systems for renewable energy, but several projects are now under way in Europe.
In September 2015 German turbine maker Enercon and renewable-energy developer Energiequelle opened a storage plant at Feldheim in Brandenburg state, north-east Germany (pictured).
With a total power output of 10MW and 10.8MWh of capacity, it is believed to be the largest of its type currently operating in Europe. It uses 3,360 lithium-ion storage modules manufactured by LG Chem of South Korea.
The plant has been designed to provide load-balancing power to the local transmission grid, relieving the grid when there is an over-supply of electricity by storing surplus power, and releasing it when required. The Enercon-developed control system (above) allows the plant to adjust to changing grid conditions in a matter of seconds.
Utility E.on is also active in the energy storage field, and recently started construction of its modular, multi-megawatt, multi-technology, medium-voltage battery storage system (M5BAT) for short) in Aachen, western Germany. Backed by a EUR6.7-million grant from the economic affairs and energy ministry, the scheme uses different battery technologies in combination for a total storage capacity of 5MWh. It is due for commissioning in mid-2016.
The M5BAT project will focus initially on two aspects: testing the distributed provision of control reserve for stable grid operation, and the associated exploitation of electricity price arbitrage. The system will be connected to the local medium-voltage network for its first year of operation, and used to balance out the energy supply, while the trading of capacities on the energy market will also be trialled.
According to E.on, the M5BAT's 5MWh capacity is sufficient to supply power to 10,000 households for around 60 minutes in the event of an outage. The average duration of a power outage in Germany is less than 16 minutes.
RES, one of the pioneers of energy storage in the US and Canada, has recently announced its first contract to build and support a new system in the UK.
It will be installed alongside a solar park in the west of England, to test different applications of energy storage on the grid. It will be RES's tenth energy storage facility worldwide, pushing the company's storage portfolio to 78MW/48MWh.
"We are bringing the energy storage expertise we've developed in North America to the UK for the first time," said Gordon MacDougall, managing director for western Europe at RES. "We are confident that this project will open the door for other opportunities in the UK."
Windpower Monthly is hosting an energy storage event Wind and Solar Energy Storage Advancements, 8-9 June in London. For details go to www.windpowermonthly.com/event