Navigant Research Blog

Vehicle-to-Grid Emerges in New Deployments

— June 2, 2013

Using plug-in electric vehicle (PEV) batteries to support ancillary services for the grid has been a promise of the PEV revolution for years, but signs of the market’s viability have been limited until recently.  Two recent developments are driving innovation and development in this market, and proving the worth of vehicle-to-grid (V2G) technology.  In January, the U.S. Department of Defense (DOD) announced it will purchase 500 V2G-capable vehicles this year through a $20 million investment.  Additionally, last month, PJM Interconnection and NRG Energy successfully tested a fleet of V2G-enabled Mini-E’s.  The Mini-E’s accrued an average of $5 per day by participating in PJM’s frequency regulation market.

The DOD’s order is significant not only because of its size, but also because the Pentagon plans to make money on the program.  Often, government programs for clean technology investments are based on environmental objectives (reducing greenhouse gas emissions) or national security concerns (reducing consumption of foreign oil), rather than achieving a net positive financial return.  In this case, the program’s financial goal is explicit: the Pentagon is making a business decision to invest in V2G.

V2G’s profitability has much to do with Federal Energy Regulatory Commission (FERC) Order 755, issued in late 2011.  The order mandates that energy generation assets participating in frequency regulation markets managed by independent service operators (ISOs) and regional transmission operators (RTOs), such as PJM, must prioritize and compensate generation sources according to how quickly and accurately they are able to respond to the operator’s generation signal.

Aggregation Required

Advanced batteries in PEVs are one of the few generation assets that can respond quickly and accurately.  This means that when PEV batteries are used for frequency regulation they can be compensated around 3 times more per kilowatt (kW) than slower, more traditional assets, like natural gas power plants.  PJM was the first ISO or RTO to implement the rules. Additionally, PJM reduced the minimum power capacity generation assets must produce to participate in its frequency regulation market to 100 kW.

The last point is pivotal, as it represents a major challenge to V2G development.  Though PEVs store a substantial amount of energy, the power any single PEV can discharge or absorb from the grid is limited by the battery size, and by bi-directional electric vehicle charging infrastructure.  Thus V2G-enabled PEVs must be aggregated to participate in ancillary service markets, as in the case with the NRG Energy/PJM trial.  While 100 kW is substantially higher than most PEV batteries can discharge or absorb from the grid, the reduced minimum allows V2G proponents to participate with fewer vehicles, especially when using medium duty PEVs that typically have higher power and energy storage capabilities than light duty vehicles.

The military has a large fleet of non-tactical, medium duty vehicles, such as refuse trucks, maintenance vehicles, and buses, at bases around the country.  Many of these vehicles are largely sedentary and can be connected to the grid for more hours than most vehicles in commercial fleets, making V2G a better fit for the DOD than for many private sector fleets, at least so far.  The DOD’s use of this technology will advance it considerably, laying the foundation for software and infrastructure developers to make this technology a possibility for greater numbers of private fleets – and making PEVs much more attractive.


Younicos, Samsung Build Battery Parks in Germany

— June 2, 2013

The motto of Berlin-based microgrid vendor Younicos is “Let the fossils rest in peace.”  In a previous blog, I discussed the practical viability of creating 100% renewable energy systems, including microgrids.  Younicos is among the companies that purport to be able to create such systems, thanks to the robustness of its smart bi-directional inverter, which eliminates the need for a fossil prime mover within a microgrid, and to careful selection of appropriate energy storage technologies.

While the company’s microgrid efforts are focused primarily on remote systems ‑ such as the 3 MW pilot project on the Portuguese island of Graciosa, designed to achieve 75% renewable generation ‑ the company has also recently marked several major milestones with grid-tied applications, some of which also feature the ability to disconnect from the wider grid.

Younicos has already deployed a 1.2 MW battery park for the Swedish utility Vattenfall in Berlin, which has been providing grid balancing services since December 2012, the first grid-tied system prequalified to provide frequency response in Europe.  Frequency response is a vital ancillary service in regions where the high penetration of renewables places stress on power quality.  This initial hybrid battery park project relies upon both sodium sulphur and lithium ion battery technologies.

Replacing Fossil Fuels

Last month, on Earth Day, the company announced a major partnership with Samsung SDI to deploy Samsung’s lithium ion battery in projects with an exclusive system integrator agreement for grid-tied battery parks in Germany, Austria, Switzerland, and other European markets.  With Samsung SDI providing a unique 20-year performance guarantee, the new partnership will soon have bragging rights to the first standalone 5 MW/5 MWh battery park in Germany for WEMAG, a municipal utility serving West-Mecklenburg that currently relies upon wind and solar for 80% of its power generation.  Ideal for addressing the volatile nature of distributed renewables that rely upon feed-in tariffs, the system is expected to be commissioned in June 2014.

This enhanced battery park will be able to not only adjust the frequency of the utility grid, but also provide voltage control, black starts, and short circuit power, services previously provided inefficiently by fossil generation sources.  In fact, the battery parks can respond to grid signals in less than 10 milliseconds, which is 3,000 times faster than conventional approaches.

According to Samsung and Youncios, the ideal size for these battery parks is actually 10 MW/10 MWh, and they can be financed solely on the basis of revenues from frequency regulation and other ancillary services.  This is yet another new business model for smart grid/microgrid applications, providing further evidence that high-penetration renewable energy systems are grounded in real demand from emerging markets for grid reliability services.


Energy Storage Gets a Boost in California

— June 2, 2013

Upfront capital expense is often cited as the most important barrier to adoption of energy storage – particularly for business and residential customers.  Technology vendors tend to clamor for adoption subsidies and bemoan the dearth of incentives on offer for energy storage.

One market with strong subsidies for energy storage is California.  The state encourages the adoption of wind up to 3 megawatts (MW), together with energy storage systems (ESSs) up to 3 MW, through the state’s Self-Generation Incentive Program (SGIP).  According to the SGIP, “advanced energy storage” systems “convert electricity into another form of stored energy and then convert [it] back to electricity at another time.”

ESSs became eligible for SGIP incentives in 2009.  The storage must be coupled with an eligible technology, currently limited to fuel cells and wind turbines, and must be able to discharge at rated capacity for a 4-hour period, minimum.  Unfortunately for electrolyzer companies, hydrogen is ineligible.

The minimum system size is 30 kilowatts (kW) for the generation capacity, and the advanced storage system may be no larger than the rated capacity of the generation asset.  Smaller systems within the 30 kW to 1 MW power rating are preferred, and these have the highest subsidy per watt.  Advanced storage systems from 30 kW to 1 MW receive a $2 per watt incentive, which is prorated at $1 per watt from 1 MW to 2 MW systems, and down to $0.50 per watt from 2 MW to 3 MW.

A Bigger Slice

Since 2009, ESSs have gone from representing a tiny fraction of the SGIP to a significant investment on the part of California.  In 2009, one application out of 30 was for energy storage, representing 8% of the capacity funded and 5% of the total subsidies awarded.  By 2012, advanced energy storage represented 83% of applications (out of 590 applications total).

California is one of four markets that offer a subsidy for adopting energy storage.  The other four are New York, Germany, and Japan.  California has one of the longest-running programs, and is also one of the broadest.  Energy storage is taking a bigger and bigger piece of the pie where the SGIP is concerned – even though the average size of the projects is relatively small.

As is evident from the chart below, the budget for the SGIP varies wildly.  However, between California’s AB2514 (which effectively provides an renewable portfolio standard for energy storage) and the SGIP, which provides a funding mechanism to ease the financial burden of adopting storage, California is well positioned to benefit from energy storage.

SGIP Spending by Technology and Advanced Energy Storage Capacity, California: 2009-2012

Energy Storage Gets a Boost in California

(Source: Navigant Research)


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