Cleantech Market Intelligence
Frequency Regulation: An Early Win for Storage?
Batteries and other storage technologies are noted for their versatility in performing many grid applications that utilities and ISOs provide today as well as opening up new markets that will make the operation of the grid more economical overall. Frequency regulation, one of these applications, is central to the stable operation of the grid and has been the focus of much energy storage activity in the U.S. over the last few years.
Frequency regulation is an ancillary service with one main objective: To keep the frequency of the grid at 60 Hz. Through the highly unpredictable effects of having thousands of people flip their lights on and off, run their dryers, and turn the air conditioning on over the course of the day, frequency on the grid can change rapidly, both above and below the 60 Hz average. If the frequency isn’t controlled, things plugged into the grid would start running erratically, and many appliances and pieces of equipment could be damaged. So utilities are careful to maintain that 60 Hz sweet spot.
The main technology of choice for maintaining the frequency at 60 Hz is gas turbines, which have low inertia and whose power output is relatively easy to adjust. Batteries and other storage technologies such as flywheels are also considered suitable for performing frequency regulation given their ability to produce quick bursts of power that can be used to keep the grid at 60 Hz. Storage, however, has an added benefit. It can regulate frequency by storing and emitting energy without adding additional fuel costs or carbon emissions. In contrast, gas turbines require constant inputs of fuel and add to the overall carbon emissions of the grid.
Today, assets that provide frequency regulation amount to about 1% of peak load. In other words, for every 100 MW of power-generating capacity, there is about 1 MW of frequency regulation capacity. A number of studies, however, suggest that, as intermittent renewables become a larger presence in U.S. electricity generation, that 1% requirement will grow.
For the time being, grid operators have found that the 1% frequency regulation requirement still does the trick and keeps the grid at 60 Hz even as renewables have been on the rise in certain parts of the U.S. As states look to meet their renewable portfolio standards (RPS), which can range from 10% to 15% by 2020 in many states, to 33% by 2020 in California, the frequency regulation requirement may need to increase.
Having the wind pick up at a 300 MW wind farm could have the same impact on the grid as thousands of people turning their dryers on at the exact same time, so it’s likely that the frequency regulation capacity on the grid will have to go up given this added instability. Our estimates suggest that, given the increases in intermittent renewables in the U.S. over the next ten years to meet RPS targets, the frequency regulation requirement could hit 2% by 2020.
For vendors of energy storage technologies, that means that, starting mid-decade, there will be an even greater market opportunity for ancillary services as renewables grow on the grid, not to mention the additional grid integration services that will need to accompany those renewables.