Navigant Research Blog

Can Hybrid Projects Usher in the Next Generation of Renewable Energy?

— September 16, 2016

Wind and SolarIndia’s ambitious plans for renewable energy development are faced with a number of challenges. Chief among these challenges is the limited availability of land for wind and solar plants in the densely populated country, as well as the cost and technical challenges of interconnecting projects to the grid. These challenges have driven some developers and equipment manufacturers to explore hybrid renewable energy facilities, combining both wind and solar generation at a single site. This hybrid concept has been explored in other areas with limited land available for new development, most notably in Japan, where a 56 MW hybrid wind and solar project was commissioned in 2014.

Wind and solar development is often limited by the relatively high upfront costs for land acquisition, grid interconnection, and project development. The availability of grid interconnections can prohibit the development of many potential wind and solar sites, and the cost for interconnection often requires developers to build larger-than-ideal facilities. As a result, many of the optimal locations for wind and solar generation have already been developed, particularly in densely populated regions.

Hybrid Wind and Solar

The concept of a hybrid wind and solar project aims to eliminate many of the barriers to development by maximizing the value of a facility to overcome the costs for acquiring land and interconnecting to the grid compared to individual technologies. In the United States and other countries, select areas have already been set aside for renewables development. A hybrid system can allow developers to maximize the megawatts of capacity installed per each acre of available land. In addition to overcoming upfront costs, a hybrid project can take advantage of the complementary generation profiles of wind and solar. Wind is often most productive at night while solar power is naturally only generated during the day. By co-locating these generation sources at a single site, a project can more closely represent a baseload resource on the grid, facilitating easier integration and making the resource more valuable for grid operators. The improved predictability of generation output is further enhanced if an energy storage system is also combined at a single facility. This is exactly the aim of developer Windlab Ltd. for the Kennedy Energy Park it is developing in Queensland Australia. The project, scheduled to come online in 2018, will feature 30 MW of wind, 20 MW of solar PV, and 2 MW of battery energy storage capacity.

This hybrid power plant concept doesn’t stop on land, the Danish company Floating Power Plant is currently testing its hybrid wind and wave power generation platform known as Poseidon in the waters off of Northern Europe. While the concept of hybrid renewable plants holds significant potential, it will have to overcome the existing approach of both developers and utilities to typically work with only a single technology per project. However, as the industry matures and ideal sites become scarcer, the benefits of hybrid projects are likely to increase and these projects may eventually become the norm.

 

Automakers Expanding From the Garage to the Home with Energy Storage

— September 1, 2016

Lithium BatteriesAs the residential energy storage industry continues to take shape around the world, the landscape of companies involved is becoming increasingly diverse. While the industry is still in nascent stages, the number of new companies entering the market (and their differing backgrounds) is growing. Companies offering dedicated residential energy storage products include battery pack manufacturers, inverter manufacturers, software providers, solar PV vendors/developers, and automotive manufacturers. With the growing popularity of EVs, it comes as no surprise that automakers are looking to leverage their battery expertise to develop complementary products. These companies are eyeing a piece of the residential storage market expected to be worth $5.4 billion annually by 2025, according to Navigant Research’s Residential Energy Storage report.

In June 2016, after months of speculation, automaker BMW officially announced a residential energy storage product featuring the same batteries used in its i3 vehicles. The company joins several of its competitors that have already repackaged their vehicle batteries into home energy products. Fellow German automaker Daimler already offers Mercedes-branded home battery systems, and Nissan offers a similar product through a partnership with energy technology specialist Eaton. These companies are not alone; EV pioneers Tesla and BYD both have dedicated residential energy storage products and are actively working to expand in this area.

Seeking Advantages

Automakers see several advantages as they enter the increasingly crowded market for residential energy storage systems. Customers looking to purchase or lease EVs may be prime candidates for purchasing residential energy systems. The ability to upsell EV customers to also purchase home battery systems could provide a lucrative sales channel with lower customer acquisition costs than competitors. Additionally, automakers are actively working to position themselves within the emerging vehicle-to-grid space. Both BMW and Nissan have announced vehicle-to-grid pilot projects with power providers Pacific Gas & Electric and Enel, respectively. These programs seek to utilize the available capacity in EV batteries and the flexibility of EV charging to help alleviate congestion and reduce peak demand on the grid.

Furthermore, automakers may have a distinct advantage in the coming years through low-cost access to repurposed EV batteries. Some companies have already capitalized on this resource through partnerships with storage project developers to supply these used batteries at a competitive price. According to analysis in Navigant Research’s Alternative Revenue Models for Advanced Batteries report, “the effective energy capacity available from EV [lithium ion] batteries for second-life stationary energy storage system applications is projected to exceed 1 GWh per year in 2022.”

Across the growing energy storage market, new players are entering and looking to leverage their expertise from a variety of complementary industries. Automakers are not alone in having identified the advantages their existing businesses will provide as they compete in the energy storage market. Solar PV providers, energy service companies, and even utilities are all seeking to leverage their customer base and technical expertise to provide the most attractive and cost-effective solutions in this rapidly evolving market.

 

In the Energy Cloud, Software Is King

— July 27, 2016

Energy CloudDistributed energy storage systems (ESSs) may present the most challenges and opportunities for both distributed energy resources (DER) developers and grid operators. Recent industry partnerships and product developments are highlighting the growing role that ESSs can play in the emerging Energy Cloud. These new partnerships seek to provide a solution that can make distributed ESSs much more attractive to utilities as an asset, rather than a new challenge to deal with.

The proliferation of DER presents challenges to utilities, which typically have limited visibility and control over the edges of their network. Distributed ESSs can provide the backbone of a highly dynamic and two-way power grid, acting as flexible sources of both load and generation to match intermittent generation with fluctuating demand. However, ESSs on their own can only provide minimal value to the grid; the key is in the advancing software platforms that enable distributed storage to act as the microchip of the Energy Cloud.

Emerging Alliances

While many leading distributed storage vendors have developed their own software platforms to manage an aggregated fleet of systems, several new partnerships are taking software offerings to the next level by bridging the gap between these independent resources and utility control rooms. Distributed storage provider sonnen and grid software provider Enbala Power Networks recently announced an agreement to jointly offer a distributed energy aggregation and control platform to utilities. The companies see utilities benefiting from this offering through an enhanced ability to handle the unpredictability of distributed renewables being deployed on their network. Their solution will also allow for the creation of virtual power plants (VPPs) to help improve overall grid stability and resiliency.

A similar partnership was recently announced by storage vendor Advanced Microgrid Solutions and software provider Opus One. Through the coordination of distributed storage systems and real-time grid level energy management, the companies will offer utilities a greater degree of distribution grid visibility, control, and optimization. This partnership allows each company to focus on its core competencies while offering utilities a solution that solves several of their issues and enables the grid to handle greater amounts of DER.

Software Is Key

These new industry tie-ups support the emerging trend that both energy storage management software and coordinated grid management software will be crucial to establishing a network saturated with DER. As these diverse and often unpredictable resources continue to be installed, it becomes increasingly important for grid operators to have visibility and control over what’s happening at each level of their network. Both utilities and DER vendors recognize that the optimal integration of these new grid assets will require collaboration among various stakeholders.

 

Residential Solar and Storage Begin to Transform the Grid

— July 6, 2016

Rooftop SolarAs electric grids around the world transition to a more distributed, intelligent, and clean system, markets leading the charge are facing issues that highlight the challenges to come for all.  These early adopter markets, including Hawaii, Australia, California, and Germany, have many similarities, such as relatively expensive electricity and very high levels of distributed solar PV penetration. While numerous studies have looked into the effects that the evolving energy system will have in these locations, a recent study from the Australian Energy Market Operator (AEMO) makes some bold predictions about the impact of residential solar PV and energy storage systems (ESSs) in particular. This year’s is the first AEMO study to take into account both residential energy use and production in estimates of future demand.

A number of factors are converging to drive unprecedented changes to the electricity industry in Australia. The country has some of the highest penetrations of distributed solar PV in the world, with PV systems installed in an estimated 13% of all Australian homes. Additionally, the country is expected to be a leading market for residential energy storage, with 2.4 GW of new capacity forecast to be installed by 2025, according to Navigant Research’s new Residential Energy Storage report.

Changes Ahead

One of the main conclusions from AEMO’s study is that these residential systems can dramatically shift when the grid’s overall peak demand occurs. While traditional peak demand has been on summer days or early in the evening, PV generation will push peak demand later into the evening, after sunset. In fact, the study predicts that the lowest point of net usage may actually become the middle of the day. This transition is already being seen in areas with particularly high PV penetrations, such as South Australia and Queensland. As peak demand is pushed later into the day, the risk of a rapid spike in net load arises as PV generation quickly ramps down in the evening, a demand spike known by many as the duck curve.

These changing demand patterns will bring about a much greater need for system flexibility both from generation sources as well as the demand side. Flexible loads in homes and businesses that can act as solar sponges by absorbing excess PV generation throughout the day will be critical to maintaining system stability and limiting the rapid increase in demand at the end of the day. As discussed in the new Residential Energy Storage report, residential ESSs are an ideal solution to provide the foundation of a home energy management system that maximizes the use of PV energy onsite while also providing a reliable source of ramp control for grid operators.

Exploring Solutions

Australia’s utilities have been working to address these issues and recognize the unique ability of ESSs to solve many of the challenges they face. Electricity providers Ergon Energy and AGL Energy have been actively exploring opportunities to own residential ESSs themselves to ensure the benefits these systems provide are shared between the grid operators and their customers. While these programs offer great potential, and perhaps a glimpse into the future of the electricity system, many questions remain around how the costs for these systems will be allocated and how to maximize the value they provide. Although there are a number of business cases that support distributed ESSs, most focus on only providing a single service. Unlocking the maximum potential will require new levels of collaboration between utilities, regulators, and vendors to capture the complex value streams these systems offer.

 

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