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United Kingdom

Revolutionary potential

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Until now large scale storage of electricity has been too expensive or too demanding of specific site requirements to be worth serious consideration. Now a British invention in the form of a giant fuel cell could provide affordable and flexible storage -- just the type needed to make wind power that much more attractive, especially in new competitive markets dependent on bi-lateral contracts

Site preparation work started in August on a 15 MW utility scale energy storage plant at Little Barford Power Station in England which, it is claimed, has the potential to bring about a revolution in the power industry. The claim was made at a presentation in London to launch "Regenesys," as it is known, by its owners, Innogy, the new name for the demerged UK energy business of National Power. Regenesys is a reversible fuel cell and following successful trials of a pilot project at Aberthaw power station in Wales, the first plant will have a storage capacity of 120 MWh.

The prototype Regenesys plant appears to be able to store power at a price which is close to commercial viability in a competitive electricity market such as that of the UK. Here the target cost for storage is controlled by the pattern of electricity prices, the lifetime of the device and the rate of return required by the owner. The higher the difference between peak electricity prices when the stored energy is sold and off-peak prices when it is bought, the higher the cost for storage can be while remaining economic. In England the break-even cost is around £700/kW, possibly higher if storage is sited so that it provides additional benefits to a local distribution system. Innogy expects the cost of its first commercial prototype to be around £1000/kW. It is already competitive with many other storage technologies.

The benefits of flexible energy storage are numerous and Innogy's system has particular characteristics (box) which enhance its value even more: it has a fast response time, no self-discharge and minimal environmental impact so that siting should not be problematic.

Innogy is also looking to the future when far more renewable energy -- including wind -- is expected on utility networks in the developed world. As the amount of wind energy on an electricity system increases, it adds to the uncertainty in balancing supply and demand. When this happens the system operators will need to schedule more reserve -- and a flexible and fast-response system such as Regenesys is ideal. The availability of flexible and economic storage means greater use can be made of the intermittent sources such as wind and PV. Where these are used on island networks, or in remote areas not connected to the grid, storage is essential and a system such as Regenesys has many attractions, not least being its modest cost.

A look at the economics

In the liberalised electricity markets of today, the prime purpose of a storage device is to make money. In a public service utility, the prime purpose is to enable the system to operate more efficiently, which it does by reducing the need for high-cost electricity from peaking plant. These seemingly diverse objectives are not necessarily incompatible -- but much depends on the framework of the liberalised market and who owns the storage device.

Electricity provided from a storage device costs money. Unlike wind energy, storage devices do not have zero fuel costs. They must be charged using power from the system. The price of that power will vary, however, so storage owners choose the storage times carefully. Like renewable energy devices, storage has significant capital costs, which means that it must be used as intensively as possible to make it economically viable. Also, in common with the renewable sources, storage systems have much lower load factors than thermal plant because of the need to spend time recharging. Assuming the device takes as long to charge as to discharge, then the maximum theoretical load factor is 50%. Moreover, the overall efficiency of the charging and discharging process rarely exceeds about 75%, so the maximum possible load factor is around 37%.

To maximise profits, a storage system needs to be charged when electricity is at its cheapest, usually during the night. It needs to be discharged when electricity prices are at their highest. In England, and most of northern Europe, this is during winter evenings; in southern Europe, peak prices occur around mid-day during the summer and in California, slightly later during the afternoon. Commercial viability will not be achieved purely on the basis of a few peak hour discharges, however, so the daily patterns need to be followed throughout the year. Over the year, if the difference between the value of electricity during the discharge periods and the cost of electricity during the charging periods covers the cost of the plant, it will be commercially viable.

Tracking electricity spot prices for California and England during typical week days proves the point (figure 1). The lowest prices on both markets -- around $10/MWh and £10/MWh, respectively -- occur between 10 pm and 7 am, although in England there is a "price spike" in the early hours when off-peak heating switches in. With both systems the highest prices -- around $60/MWh and £60/MWh -- occur in the late afternoon, although the patterns are slightly different. There is thus a difference of around $50/MWh or £50/MWh between the highest and lowest prices. Differences as large as this are not repeated every day, but the patterns are fairly well-known and fast-response storage such as Regenesys is able to switch from charge to discharge mode almost instantaneously and so react to unexpected changes in electricity price.

Breaking even

Electricity price, working lifetime and the rate of return an investor expects to see on its stake in a project are the three factors governing the break-even point for the cost of storage. The annual distribution of pool prices in England and Wales for 1999 provides an indication of what the market price of electricity is likely to be (figure 2.) Assuming the storage plant can be managed so that it always charges up during the cheapest periods and discharges during the dearest, the difference between these two prices is quite high if the device only operates for a few hundred hours per year. If it operates for longer periods, then the difference will be lower, but it will "sell" more electricity.

Using the pool prices as a guide, the cost target for storage with low maintenance costs, such as stated for Regenesys, is around £700/kW, assuming a 15 year life and a discount rate of 8%. As Innogy expects the cost of its first installation to be around £1000/kW, it needs to reduce costs by 30%. Since various stages in the production process are capable of further automation, that reduction should be achievable. This assumes there are no dramatic changes in the pattern of electricity prices following the introduction of the new trading arrangements (NETA) to replace the pool price system next year. The cost target would be lower in California and in the NordPool region, where prices are lower. The target will be lower still in France and other locations where the difference between peak and minimum loads is smaller. It is this difference which influences the electricity price differences.

The Regenesys system can also provide local benefits to enhance the value of distributed generation. These include added reliability, voltage support, reactive power and savings of transmission and distribution losses and of capacity charges. The precise levels will vary between the utilities and locations but could be worth an extra £0.01/kWh, or possibly more. This means the "profit" on each unit of electricity which is resold from the storage plant might raise the break-even cost to, say, £800/kW in some locations.

Issues and myths

Energy storage, it is often claimed, can enhance the value of electricity produced by intermittent sources such as wind. In some circumstances this may be true, but only if the extra value storage given to the electricity system is greater than the cost of providing it. Electricity from storage devices costs about the same as generation from conventional thermal plant. A "dedicated" storage facility for a wind farm will therefore roughly double the cost of generation from the wind farm. Although there may be a few occasions during the year when the value of the electricity from the storage facility plus the wind plant output could double, it makes better economic sense to use storage for the benefit of the electricity system as a whole. That way, storage devices achieve higher load factors (and hence lower generation costs) and the economic benefits are much greater.

What matters in an electricity system is meeting the demand, rather than achieving constant output from every generation source. On a calm day, when demand is low, there is no point in wasting stored energy to compensate for lack of wind farm output. Nearly 20 years ago a review of several utility studies by the British Wind Energy Association in its book "Wind Energy for the Eighties" concluded that the economic and technical implications of energy storage should be assessed in relation to the system as a whole. That remains true today despite the onset of liberalisation and moves towards distributed generation. Numerous utility studies have shown that integrated systems can function quite happily with at least 20% or more wind energy without any major modifications, irrespective of whether or not storage is available.

The other problem with "dedicated storage" is determining the correct size of plant. There can be lengthy periods of calm weather requiring quite large capacities to ensure a smooth output. Calm periods of up to 12 hours are common in Europe, even during the winter when wind strengths are at their highest. There is a sizing dilemma: if the storage facilty is too large it will end up costing too much and fall into disuse; if it is too small, it will not cover all the calm periods and be regarded as not much use.

The best option for a wind farm owner depends on the institutional framework. Storage is perhaps particularly useful in markets where all generators have to secure contracts with suppliers, such as under the new British electricity trading arrangements, rather than markets where output is pooled and deficits and excesses of supply and demand are largely ironed out. Innogy's wind business, National Wind Power, is well placed to benefit from the use of Regenesys. One of the key assets of Regenesys is that it can switch on or off, or from charge to discharge mode very quickly, allowing it to react almost instantaneously to any rapid changes in price or demand -- or, if necessary, to changes in wind farm output.

In Europe and America

Innogy expects to commission its prototype plant and commence commercial operation in the spring of 2002. There is considerable interest in the system and links have already been established with potential users in the United States as well as with the Danish grid operator Eltra, which is to operate a Regenesys storage plant for one of its offshore wind farms (Windpower Monthly, September 2000). In the US, Innogy has signed an initial agreement with utility Tennessee Valley Authority (TVA) that could lead to the construction of the first Regenesys plant in North America. A technology which enables electricity systems to operate more efficiently -- and therefore with fewer emissions -- is an attractive concept. Its relevance to wind energy may be limited in the short term but it will become increasingly important as wind and the other intermittent renewable sources play a more major role in electricity supplies in the future.

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