Navigant Research Blog

Pending Blackouts Highlight Benefits of Energy Storage

— June 2, 2016

Production Plant - NightConsequences of the largest natural gas leak in U.S. history continue to be felt across Southern California. The leak at the Aliso Canyon storage facility in Porter Ranch, California had a major impact on the local environment, forcing thousands of residents to abandon their homes and releasing the equivalent of the annual greenhouse gas pollution of 572,000 cars. While the leak has been stopped, the facility is now out of commission and the region faces a major shortage of natural gas, which could lead to 14 days of blackouts this summer and potentially 9 more in the coming winter unless action is taken.  The situation highlights the danger of relying too heavily on any one source of energy and is accelerating plans to transition to a system based on renewable energy.

What the Grid Needs

The potential blackouts this summer result in part from the shortage of gas supplies to fuel peaking power plants needed when demand spikes on hot summer days. In order to avoid widespread outages, the peak demand on the system needs to be reduced. Reducing the overall peak demand has been a focus of grid operators for year, and a number of solutions, including energy efficiency programs, demand response and energy storage systems, are being employed to meet this challenge. While these solutions all have their downsides (such as a low reliability or high upfront costs), the current situation in Southern California highlights the benefits of distributed energy storage systems in particular.

California is already a leader in the distributed storage market, and the threat of numerous blackouts may result in increased demand for these systems. As explored in Navigant Research’s Solar PV plus Energy Storage Nanogrids report, distributed storage systems can provide backup power during an outage (perhaps indefinitely when paired with solar PV) in addition to reducing electricity bills. While backup power is one of the main drivers of interest in distributed storage, these systems can provide much greater value to the grid as a whole. Storage systems aggregated into a virtual power plant can allow grid operators to reduce demand on the system at peak times, shifting energy usage to maximize the use of solar PV and limiting the need for gas-fired generation.

Central vs. Distributed?

As grid operators in California consider how storage can reduce the risk of blackouts, they are examining one of the key debates in the energy storage industry: Is it better to deploy centralized or distributed storage systems? While some of the issues facing the grid can be solved with centralized storage, distributed systems are being installed in increasing numbers without any action from utilities. Centralized storage systems won’t keep the lights on for customers in the event of a major outage and can take much longer to develop, an important consideration given the immediate need for new resources. Overall, it seems distributed storage systems are in the best interest of the California grid. While some customers get improved resilience, everyone benefits from the improved reliability that comes with these flexible assets on the grid.

 

Tracking Blackouts and Microgrids: Surprises in Both Categories

— May 3, 2016

Power Line Test EquipmentThe East Coast’s power outages have made headlines in recent years. Hurricanes and other bouts of severe weather have spurred on a series of state programs to promote greater resilience of the power grid, steering public dollars to new microgrids that serve communities and critical public purpose assets.

The list of states along the Eastern Seaboard now promoting microgrids keeps growing, with Rhode Island and Washington, D.C. being among the latest to join states such as New York, which just announced that it is now offering $8 million for 8 of the 83 projects originally proposed under its much-ballyhooed New York Prize program. No doubt, New Yorkers feel that they are the center of the universe when it comes to microgrids, but folks living on the West Coast may have a different perspective.

Tracking Blackouts

For example, I was surprised to learn that one of the leading vendors in the microgrid space—Eaton—actually tracks U.S. blackouts nationally, regionally, and by state. Eaton’s Blackout Tracker admits that it might be not complete, but it is the best data available on the duration of blackouts and numbers of customers affected. Similar to Navigant Research’s Microgrid Deployment Tracker, the data is global in scale.

Perhaps the biggest surprise in Eaton’s 2015 summary report is that California had led the nation in terms of power outages since the report was first published in 2008. Between that year and 2014, California experienced 525 power outages; New York was in second place with 399. For 2015, the tracker shows that overall power outages nationwide declined compared to 2014, but the number was still significant at 3,571. The number of customers affected by power outages in the United States also dipped slightly between 2014 and 2015, from 14.2 million to 13.2 million.

As noted in the Eaton report, extreme weather is lengthening the duration of power outages. According to estimates by the Lawrence Berkeley National Laboratory, outages are generally lasting 5%-10% longer over time. A study by the National Renewable Energy Laboratory estimated that power outages cost the U.S. economy as much as $188 billion annually. One could argue these dollars would be better spent investing in microgrids rather than being lost as a drag on the economy.

North America in the Lead

Navigant Research has estimated that the cumulative value of assets deployed within microgrids in North America could exceed $50 billion between 2015 and 2024. The next update of the Microgrid Deployment Tracker to be published in 2Q 2016 shows North America leading the world in terms of total identifiable microgrid capacity (42%) and in operational identifiable microgrid capacity (56%).

The biggest surprise in this biennial tally of global microgrid projects? The leading part of the world for energy storage deployed within microgrids is Antarctica of all places, where 100% of all systems feature energy storage. (Of course, this is an extremely small market in an extremely rugged environment.) The largest growth in terms of project entries among grid-tied microgrid segments is expected to come from utility distribution microgrids, which now represent 15% of all microgrid development activity globally. This is a clear sign that utilities are seeking to reinvent themselves in an era of climate change adaptation, increased reliance upon distributed renewables, and the emergence of new utility business models.

 

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