Navigant Research Blog

Distributed Energy Storage Poised to Support UPS Service Needs

— February 6, 2018

In a previous blog, I highlighted how corporate commercial and industrial (C&I) energy, facilities, and sustainability managers have new choices to manage their energy management and sustainability needs, giving rise to the growth of Energy as a Service (EaaS) solutions. Within Navigant Research’s EaaS framework, distributed energy storage systems (DESS) is a key component of the load management and optimization solution given its unique ability to control load and support resiliency needs alongside onsite distributed generation like solar PV.

Are New Solutions Worth the Expense?

The value of onsite resiliency creates much debate within the industry. There is little choice but to deploy uninterruptible power supply (UPS) systems to provide continuous electrical service with high power quality to support resiliency needs for mission critical operations such as data centers, telecom operations, financial services centers, and hospitals. These mission critical UPS systems use complex, valve-regulated lead-acid battery systems. And given critical needs for continuous electrical service, these customers have been slow to adopt new or untested UPS systems using standalone lithium ion, even if these new solutions could improve the total cost of operation.

Due to the high costs associated with these systems, many C&I facilities without mission critical operations have been slow to deploy UPS systems to address electrical service outages. These non-mission critical facilities currently view electrical service outages—and the resulting financial impacts of the associated downtime—as an unmanageable cost of doing business. A recently released Navigant Research report, Advanced Energy Storage for UPS Applications, focuses on the drivers, barriers, technology issues, and market forecasts for this new non-mission critical UPS service segment.

UPS and DESS Go Hand in Hand

In this report, Navigant Research anticipates the emergence of a new UPS service option that will leverage DESS technology to provide resiliency support for certain non-mission critical C&I operations. Specifically, it’s expected that these DESS will be designed to provide demand charge reduction, enhanced demand response market participation, UPS service, and/or grid ancillary services to utilities and competitive markets where applicable. Further, DESS systems integrators and project developers are expected to leverage the energy storage financing innovation in the marketplace to provide UPS as a service without CAPEX to non-mission critical facilities to meet their unmet resiliency need.

In the near term, it will take some time for the regulatory frameworks to mature to allow DESS to efficiently provide ancillary services to the grid and add that project revenue stream. Further, ESS integrators and project developers will need to work on a cost-effective software/hardware technology for this new UPS service application. And while there are already systems integrators and project developers, like Sharp SmartStorage®, now pursing this segment, Navigant Research will continue to watch how these factors come together to grow this DESS market segment.

 

Three Innovative Energy Storage Projects Announced in 1Q 2017

— April 7, 2017

The energy storage industry is heating up in 2017 because of several new projects. Navigant Research’s Energy Storage Tracker 1Q17 report provides a comprehensive list of global energy storage projects and identifies new and emerging market leaders in the industry. This blog discusses some of the most notable new projects that show how these systems don’t necessarily provide just one type of service. Energy storage systems can come in several different flavors and provide multiple benefits.  

ENGIE Deutschland Kraftwerksgruppe Pfreimd Storage Plant

ENGIE Deutschland currently owns and operates a pumped hydro station in Kraftwerksgruppe Pfreimd, Germany, but the company sought to profit more effectively from the load leveling and peak shifting market. To do so, ENGIE awarded a contract to Siemens AG to install its SEISTORAGE Li-ion battery technology, power electronics, and battery management system. Rated at 12.5 MW and over 13 MWh, the battery system works in conjunction with existing pumped hydro resources and will enable the plant to provide all levels of reserve capacity—from short duration frequency regulation services to long duration bulk storage. ENGIE believes that this hybrid energy storage system illuminates the vision of its future energy storage business predicated on how to balance the volatility of renewable energy generation while providing multiple grid services. This project is set to come online in late 2017.

Vattenfall Wind Farm Battery Energy Storage System Installation

State-owned Swedish utility Vattenfall plans to install up to 1,000 Li-ion batteries to address the intermittency issues of several of its wind farms. The batteries, supplied by automaker BMW Group, are the same as the batteries used in the BMW i3 electric car, effectively providing an additional revenue stream for BMW’s existing business. Vattenfall plans to build the first a battery energy storage system (rated at 3.2 MW) at its Princess Alexia wind farm near Amsterdam. A larger 22 MW installation will be constructed at the company’s Pyn y Cymoedd wind farm in South Wales on a later date. This project is a part of National Grid’s Enhanced Frequency Response (EFR) tender issued in 2016. 

E.ON Texas Waves Wind Farm Installation

Multinational energy company E.ON looks to become one of the premier industrial energy storage businesses in the world. E.ON recently announced it will colocate short duration energy storage systems at its Pyron and Inadale wind farms in the western part of Texas. Dubbed Texas Waves, the project will collectively utilize 18.8 MW of Li-ion battery technology from Samsung SDI. The system will provide multiple ancillary services to the Electric Reliability Council of Texas market, namely wind ramping and smoothing, load leveling, and Volt/VAR support. Energy storage software provider Greensmith will provide the battery management system to each of the installations to help ensure the stacked revenue streams of the system.

The Improving Landscape of Energy Storage

Storage is shifting to become an essential component of new energy systems to ensure projects can reach maximum profitability. To match this growing popularity, companies like Tesla and Alevo are expanding internal resources to ensure they have the best and brightest minds to capitalize on new technology and opportunity in the market. Overall, the global energy storage industry is poised to continue growing quickly over the next several years. Energy storage industry stakeholders should explore new and seemingly unconventional methods to become involved in new projects. Doing so could help develop untapped markets, create new technology, and spur innovation in the industry for years to come.

 

New Distributed Energy Services Model Targets Large Corporate Energy Users

— June 9, 2016

AnalyticsThis past week, MGM Resorts and Wynn Resorts announced they will pay exit fees to Nevada Power to allow them to purchase wholesale power on their own. To do so, MGM and Wynn will pay $86.9 million and $15.7 million in fees, respectively, to ensure their decisions are ratepayer-neutral. MGM Resorts indicated that important drivers behind its decision to leave Nevada Power included not only the desire to reduce its energy spending, but also to procure more renewable energy to meet its customers’ desire for environmentally sustainable travel destinations.

Given these developments, it is reasonable to wonder what type of energy companies might be best poised to help companies analyze and execute similar strategies. Further, Navigant is watching closely to see if this kind of disruptive customer choice will spread to other utility service areas and emerge as one of the megatrends discussed in Jan Vrins’ Take Control of Your Future  blog series.

An Integrated Approach

One recently formed company that appears poised to meet the turnkey energy needs of customers like MGM Resorts and Wynn Resorts is Edison Energy. Edison Energy, part of the deregulated service offering of Edison International, has recently assembled several acquisitions under a single banner that can support an integrated approach to energy procurement (renewable or otherwise) through the use of energy efficiency and distributed renewable generation paired with battery energy storage. The companies under the Edison Energy banner include:

  • SoCore Energy, a distributed solar storage developer that helps commercial and industrial companies and rural cooperatives to develop onsite solar storage, energy efficiency, and demand response solutions.
  • Eneractive Solutions, a full-service energy services company that develops and executes energy efficiency projects at colleges, universities, schools, data centers, and other commercial and industrial sites.
  • Delta Energy Services, a custom energy consulting services firm that focuses on energy management strategies, energy procurement, and enterprisewide energy data management for large commercial and industrial energy users.
  • Altenex, which provides renewable energy advisory and procurement services focused on long-term power purchase agreements for renewable energy on behalf of large corporate clients with significant sustainable energy commitments.

At Navigant Research, we see battery energy storage as a key unifying technology that will position energy efficiency, demand response, and onsite distributed generation technologies like these to take advantage of new virtual power plant software and power market rules driving distributed energy resources business models. New turnkey offerings addressing the needs of large corporate entities like what Edison Energy is now doing along with new efforts by GE Current and Duke Energy Renewables should be watched closely as large corporate energy users look to chart new courses to take control of their future  and meet their sustainable energy needs.

 

Partnerships Form to Tackle Behind-the-Meter Storage

— April 11, 2016

Control panelAs highlighted in recent Navigant Research blogs, growth in the battery energy storage system (ESS) sector will be accelerated by standardized contracts and the move to more standardized, modular ESSs being deployed in the marketplace. Further, many interested stakeholders in the ESS sector now strive to develop battery ESS installations that can potentially monetize multiple revenue streams. Navigant Research believes the evolution of these trends will continue to support the growing energy storage market. A recently released Navigant Research white paper examines key ESS trends in greater detail, each of which addresses issues to further enable energy storage to meet its transformative and disruptive potential.

The Clean Energy Group’s Resilient Power Project recently hosted an excellent webinar that highlighted the joint go-to-market approach being undertaken by ViZn’s flow battery technology and Schneider Electric’s distributed energy resource (DER)/microgrid technology stack in the behind-the-meter energy storage sector. The partnership between ViZn and Schneider Electric represents a compelling, turnkey offering, with a financing partnership that highlights the trends referenced above.

Technology Stack

ViZn’s hybrid zinc iron redox flow battery has been designed to provide both long-duration energy and short-term power service in a standard 1 MW/3 MWh module. ViZn uses chemicals such as zinc oxide (commonly used in sunscreen) as the anolyte and yellow prussiate of soda (a table salt anti-caking agent) as the catholyte, along with a sodium and potassium hydroxide solution. The company claims these key chemical components give the battery design a stronger safety profile compared to most advanced batteries.

Schneider Electric, which Navigant Research recently recognized as an industry leader in microgrid controls, is bringing its Demand Side Operation technology coupled with its DER Box and Microgrid Controller technology stack to the projects as shown below:

Schneider Electric Demand Side Operation with Microgrid Controller

Schneider image

 (Source: Schneider Electric)

In addition to the technology stack, the ViZn/Schneider Electric development team plans to provide economic modeling of all potential revenue streams for the customer installation, including energy efficiency savings, resilient backup power, demand charge savings, energy arbitrage, and demand response capacity market participation. The partnership has also developed standardized lease, power purchase agreement, and shared savings agreement options with a third-party (as yet unnamed) financing partner. It appears the proposed technology stack will be able to take advantage of frequency regulation revenue where power market rules are available.

Most of the early project activity in behind-the-meter energy storage by companies like Green Charge Networks, Stem, and others has focused on demand charge savings at smaller commercial and industrial facilities with short-term demand spikes. The ViZn/Schneider Electric offering outlined above should bring a technology offering package to sectors of the energy storage marketplace with higher facility peak demand, variable load profiles, and more complex energy storage needs. This is important for the market because these new sectors represent a portion of the behind-the-meter energy storage space that has not implemented much battery energy storage to date. Navigant Research will be watching closely for more details on project deployments and financing partnerships in the near term from these two companies to see how their strategies play out.

 

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