New Hampshire, USA -- There's a fundamental dichotomy in U.S. energy infrastructure. Power is mostly produced from resources inland, but most of the consumption is in the major population centers along the east and west coasts. Thus, we have a spiderweb of transmission and distribution (T&D) systems to get power from where it's generated to where it's consumed. As those load centers increasingly demand more energy, significant investments in transmission infrastructure are needed - but building out addition transmission creates congestion at the load centers, according to experts. Creating enough T&D to satisfy peak demand and avoid congestion would be like building a 32-lane highway to combat rush-hour traffic: for two hours a day it would be well used but the other 22 hours it would be overkill. And utilities dislike underutilized investments.
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Enter energy storage. "In theory, to provide stability, you put energy storage where the instability is," said Rick Luebbe, CEO of Energ2. Steve Minnihan, senior analyst at Lux Research, agrees; all things being equal in terms of $/kWh costs and architectures, "the most value is putting [energy storage] where you have the highest volatility." Of course the reality is that costs (and prices) are not equalized; there are different costs for utilities to put in large centralized energy storage facilities, compared with putting lots of batteries in smaller installations further out on the grid.
Thus, the key to energy storage, many argue, is putting it at the very edge of the grid where it can optimize generation, transmission, and distribution, from integration of renewable energy generation to demand response programs, and can better respond as grid back-up power in the event of storms and disasters. "The highest economic value [of energy storage] is not at the substation but at the edge, improving distribution losses and performance in the supply chain," explained Doug Staker, VP of business development for Demand Energy.
Energy storage's value increases as approaches the edge of the grid and the customer's load, with economic benefits accruing to both the utility and the end-user. Credit: Demand Energy, inspired by KEMA's locational value of energy storage perspective.
A Home Everywhere
Energy storage can solve many problems all along the energy supply chain: T&D deferral, demand response, power quality & reliability, frequency control, and mitigation of solar and wind energy intermittency. Because of this, the desired end goal influences where an energy storage technology is best placed.
"In some cases there are transmission constraints that could benefit from energy storage, and in some cases it makes sense for the energy storage to be sited near the system load" to reduce system losses, explained Frank Novachek, director of corporate planning for Xcel Energy. The utility holding company has been involved with a number of energy storage demonstration projects, from a wind energy/battery installation in Minnesota to the Solar Technology Acceleration Center (SolarTAC) in Colorado. He also emphasizes the need to view and operate energy storage as a resource that supports the grid system, and not solely to support renewable generation.
Much of S&C Electric Company's 150-MWh of energy storage worldwide is at the substation level and used for peak shaving, backup power supply, in microgrids, and for capital deferral. The company also is a big proponent of "community energy storage" (CES) at the edge of the grid where it can best manage the effects of distributed renewable energy resources, and will be even more important with growing adoption of electric vehicles and residential renewable energy installations.
"Right now utilities aren't well equipped to meet the sudden increase in power demand associated with charging electric vehicles, nor do utilities have a way to address the effects of distributed resources, such as unpredictable increases in electric demand if the output of these resources suddenly drops," explained Dan Girard, S&C's director of renewable energy and energy storage. "Where energy storage is closer to the load, it can be particularly effective at managing the effects of distributed renewable energy resources, and thus protect power quality and grid stability." Deploying distributed energy storage in a building-block approach "may be particularly valuable as the industry gains more experience in applying and operating energy storage systems," he added.
A Classic Example
Applications for energy storage are "dizzying," acknowledged Steve Hellman, president of Eos Energy Storage. "You can make a case for centralized storage at the point of generation," he said, but "we're of the opinion that there's a strong and compelling case on a distributed basis." Eos Energy Storage is undertaking a "sub-utility-scale" pilot project with ConEdison, starting with a study of how its batteries could be used to reduce peak load or manage voltage regulation, and all of the integration touchpoints needed in a real-world environment: wrapping the DC battery system with an inverter, all power conversion systems, communications platforms and controls, etc.
"What we're evaluating most is distribution upgrade deferral," he said, installing energy storage for "pretty standard peak shaving." Deploying that energy storage in the load center, he explained, "allows you to effectively debottleneck all that upstream transmission infrastructure" — monetizing the value of that battery, the energy arbitrator, and the infrastructure investment. ConEd is also exploring energy storage as voltage regulation at the end of the distribution line, leveling out variability.
The project is part of a broader go-to-market strategy, dubbed "Genesis," where Eos hopes to work closely with six or seven major utilities to understand their energy needs and incorporate those requirements into its product development processes. While NRG, for example, sees energy storage as a merchant asset on the grid in a more centralized power plant application, ConEd is a "perfect partner" for distributed energy storage because it operates one of the most complex distribution systems in the country, Hellman said: the vast majority of it is underground, and costs soar to $1 million per city block to upgrade it - assuming it's even feasible to shut down an entire block and dig up and replace everything.
New York City is a classic example of densified energy consumption and congestion problems, agreed Staker. It's not easy to increase the size of the conduit feeder system running underground into the city, and running kilometers of transmission is inefficient and impractical due to line loss. Utilities analyze the peak load on the distribution feeder and determine when it's more efficient to move up to the next size of conductor — they're already incentivized to utilize the capital employed in generation and transmission capabilities. But if they can timeshift energy into the system, and cash it in on the edge of the grid and use it locally, "that can be a better optimization method," Staker explained. And aggregating points of storage across an entire city — 30-40 buildings in Manhattan, say, controlled and managed to benefit the building owners as well as ConEd — "that is utility-scale."
A Commodity Like Oil
That terminology, "utility-scale" and "grid-scale," illustrates another problem, suggested Erick Petersen, VP of marketing at Demand Energy — it "is deceiving" and represents "a classic utility mindset" that frames the discussion as a centralized service and thus centralized control. "It assumes and creates the persona that it's 100 MWh of storage in one big central location," rather than recognizing how energy is used and where it is located, he said. Storage on a distributed basis "can get to grid-scale very quickly" and "is significantly more robust" than upstream centralized grid-scale storage assets, he said.
Whether energy storage is defined as distributed or grid-level is "kind of an artificial differentiation," offered Eos' Hellman. Like any other commodity, electricity should be managed and stored throughout its supply chain, he believes, as a buffer wherever there's a change in scale (e.g., wholesale/bulk to smaller volume) or in time (e.g., a day or a month to the next day or month). Typically such management is too expensive in an electricity supply chain that must instantaneously match supply and demand, but as storage technology costs come down "you can expect to see it in just about any instance where electricity is being transformed in time or space." He compares it to, of all things, oil — it's stored at the wells as crude, in bulk distribution centers at various points along its supply chain during the refining process, and at the end of the line where demand needs it at gas stations and then inside cars and homes and businesses.
But it's on the customer side of the meter where Staker sees the real benefit of energy storage: reducing consumers' energy used during peak times, reducing demand charges for commercial customers, and a reduced load that benefits the grid, which will ultimately help grid operators focus more on utilization and not asset capitalization. "It's just another tool in the tool bag," he said.
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