Navigant Research Blog

Smaller Utilities Explore Energy Storage-Enabled Solutions

— April 20, 2016

GeneratorWhile California’s investor-owned utilities have received the most media attention for their high-profile energy storage procurements, smaller municipal and cooperative utilities around the country are beginning to recognize the value that energy storage can provide. The services that energy storage systems (ESSs) can provide these smaller utilities may differ from larger organizations, as will their procurement processes.

One notable difference is that municipal and cooperative utilities are generally able to make much quicker decisions regarding investments, as they are not as burdened by regulatory oversight and financial commitments to shareholders. Many of these organizations have been exploring the diverse benefits that energy storage and microgrids can provide, particularly as renewable energy developments become more common for smaller utilities. It is estimated that member-owned electric cooperatives in the United States have nearly 240 MW of solar PV capacity online or in development, which may bring about the need for energy storage to effectively integrate these resources and ensure grid stability.

Problems to Solve

Much of the interest from publicly owned utilities in energy storage and microgrids stems from the generally large geographic area that these entities control. In addition, many customers are located at the end of long feeder lines in relatively remote areas. As utilities see load growing at the end of these isolated circuits, issues around relatability and the need for significant new investments will arise. This challenge is magnified by the fact that many public utilities do not own generation assets, making it different to control frequency and voltage on their system when the generators feeding power are potentially hundreds of miles away. Increasingly cost-effective energy storage is emerging as an ideal solution to these problems by allowing utilities to defer investments in new infrastructure, enabling greater control over their networks and improving reliability for remote customers.

Emerging Solutions

Municipal utilities are able to solve challenges using energy storage either distributed throughout their service territory or at a single facility. For example, the Eugene Water & Electric Board in Eugene, Oregon is developing a solar PV and energy storage microgrid utilizing a 500 kW lithium ion battery from developer Powin Energy. The system will ensure the operability of critical facilities in the event of an outage as well as reduce the expensive peak demand energy the utility buys on wholesale markets. Eventually the utility may look to sell excess capacity into energy markets themselves. An alternative model is being tested by the Glasgow Electric Plant Board in Kentucky, which will deploy distributed ESSs at the homes of 165 customers in partnership with Sunverge. The systems will charge at night when costs are low and discharge during the day or during peak demand, reducing the need to supply additional power and lowering overall costs. This network of ESSs will also provide detailed, real-time insights about the local grid’s performance and ensure customers have power in the event of an outage.

These programs demonstrate the various ways that smaller utilities can enjoy the benefits of energy storage while improving service for their customers and integrating local renewable resources. As energy storage costs continue to fall, there will be numerous opportunities for the nearly 3,000 publicly owned and cooperative utilities in the United States to benefit from the technology.

 

Nevada’s Net Metering Change May Present Opportunities for Storage

— April 15, 2016

GeneratorNevada’s public utilities commission (PUC) has changed the net metering rules for solar PV, effective January 1, 2016. Not only will this development erode the business case for new systems, but will also affect approximately 17,000 existing customers. SolarCity and Vivint have eliminated jobs in Nevada, and Sunrun has exited the solar PV market in the state. Two customers have filed a class-action lawsuit against utility NV Energy in protest of the decision. Although this rule change has been characterized as a bait-and-switch for solar PV customers, this is also an opportunity for residential energy storage under two scenarios.

The first scenario would be if residential energy storage with PV can be aggregated to deliver services to NV Energy. The aggregator—which could either be the utility itself or a third party—would share the payment with residential customers. In order to make the storage option appealing to customers that have invested heavily in solar PV, it would need to be offered using a low capital expenditures (CAPEX) business model. The value of the services delivered through the virtual power plant would need to at least cover the monthly grid connection charge and would also need to help the customer minimize the amount of solar PV energy exported to the grid and maximize self-consumption. The Nevada PUC could also opt to waive the grid connection fee for solar PV plus storage plants because distribution system issues would be mitigated by using a storage system.

Customer Disconnects

A second scenario that may present an opportunity for storage is if the storage can help customers disconnect completely from the grid. This would be a much more radical move for customers, but would help them avoid the grid connection charge. This charge starts at $12.75 to $17.90 per month in 2016 and is slated to increase to $38.51 per month by 2021. Although the yearly grid connection fee is relatively modest in 2016 at between $153 and $214, it is set to double to $462 within 5 years. Customers could spend over $1,500 over a 5-year period in grid connection charges alone. This solution’s business case would take many years to pay for both the battery and the solar PV. Therefore, this solution would also require some financing mechanism to ease the CAPEX burden on the homeowner in order to gain market traction. This scenario would be appealing to customers dissatisfied with the local utility, or who are looking to move off-grid for ideological reasons.

The chart below forecasts the power capacity and revenue of residential solar PV and energy storage systems—referred to by Navigant Research as nanogrids—as 40.8 GW and $79.5 billion from 2015 to 2024. North America is slated to account for 16.8% of the global market over the 10-year period. One of the key issues to tapping into this market will be creative customer offerings and go-to-market strategies on the part of vendors in this space.

Solar PV plus Energy Storage Residential Nanogrid Capacity and Revenue by Region,
World Markets: 2015-2024

Anissa Blog Chart

 (Source: Navigant Research)

 

The Invasion of the Storage-Enabled Virtual Power Plants

— April 13, 2016

Energy CloudNavigant Research recently published a white paper detailing Five Trends for Energy Storage in 2016 and Beyond. One of these trends focuses on the coming invasion of energy storage-enabled virtual power plants (VPPs) into energy markets.

While the trend of energy-storage enabled VPPs entering into energy markets may sound ominous, it isn’t. It is simply a step forward in the transition away from a centralized power system toward a distributed energy system that resembles the Energy Cloud.

What Is a VPP?

A VPP is defined as a “system that relies upon software and a smart grid to remotely and automatically dispatch and optimize DER [distributed energy resources] via an aggregation and optimization platform linking retail to wholesale markets.” An energy storage system (ESS)-enabled VPP is a VPP that uses energy storage as the foundation of the plant. Storage acts as a foundational element because once storage is included in a VPP, the VPP becomes dispatchable and schedulable. In addition, other assets that are not schedulable—such as load or solar PV—become more attractive.

For example, solar PV can be included in a VPP, but in order to balance the uncertainty of energy generation availability, aggregators design and build portfolios that meet a commitment to a utility while minimizing risks (such as significant cloud cover causing the aggregator to miss its commitment). However, by using an ESS in a solar PV portfolio, the aggregator would have more flexibility designing a portfolio and could bid more confidently and aggressively in the market. Energy storage of all types adds flexibility to VPPs.

Gaining a Foothold

By the end of 2016, Navigant Research anticipates that ESS-enabled VPPs will have cleared the proof-of-concept stage. With pilots in Switzerland, California, New York, Kentucky, Australia, and Ontario, the ESS-enabled VPP trend is gaining a foothold in key markets in North America, Asia Pacific, and Europe. However, ESS-enabled VPPs have only been in operation for as little as a few months (with the exception of Ice Energy, which has been using the company’s Ice Bears in a similar fashion for the past several years). By the end of 2016, nearly all of these VPPs will have over a full year of operational data available.

Utilities and grid operators with these systems will learn how ESS-enabled VPPs operate and benefit the grid in periods of both extreme summer and winter weather. Utilities can use this data to build a rate case for ESS-enabled VPPs and give regulators a justification for allowing utilities to build and operate these systems. The primary risk for utilities is that regulators have not developed regulation around VPPs as an asset class—it remains to be seen whether utilities will own and operate VPPs exclusively, or if customers will have a choice of VPP-providers, similar to how customers can often choose their energy supplier.

 

Clean Cars, but Dirty Batteries?

— April 11, 2016

moving white carThe raw materials used to fabricate advanced batteries are becoming increasingly important when predicting future market trends. In Navigant Research’s Five Trends for Energy Storage in 2016 and Beyond white paper, improving battery power and energy densities of advanced batteries will come in part by a shift to increased modularity of manufacturing concepts. Not only does this modularity need to occur in energy storage project design, but also in raw material synthesis of battery components. Designing a better battery—especially the (good, yet imperfect) lithium-ion (Li-ion) battery that can address short-term power applications and longer duration energy applications—will be critical for the market to continue to develop.

Increased interest has grown around materials used in advanced battery anodes, and graphite, an allotrope of carbon, is currently one of the leading options due to its abundance in nature, large surface area, and high specific capacity. Current methods of processing natural graphite into coated spherical purified graphite (CSPG), the final product used in battery anodes, can be expensive and harmful to the environment. A consortium of six mining and manufacturing companies are looking to address these issues by jointly acquiring a micronizing and spheronizing mill to produce CSPG. These types of partnerships could push the advanced battery industry forward in developing high-performance electrode materials for next-generation battery technologies.

Improved Performance

Utilizing CSPG in battery anodes leads to improved charge/discharge cycle performance attributed to lower resistance at the anode/electrolyte interface. All companies involved in the partnership have agreed to share their proprietary spheronizing knowledge with each other going forward, with the end goal of meeting cost and capacity targets for Li-ion batteries developed for transportation. Being able to process CSPG locally and efficiently decreases purification times, dramatically improves costs, and significantly reduces environmental impact.

Currently, around 70%-80% of naturally occurring graphite used in batteries is mined and processed in China. It is purified using hydrofluoric acid, a toxic substance that is highly corrosive, dissolving glass and metal surfaces upon contact. Unsustainable methods in place to fabricate batteries and their materials bring rise to questions of whether they are truly a clean alternative and if electric vehicles (EVs) are end-to-end better for the environment. As much as 25 kg of high-purity CSPG is needed to fabricate the anode for one Li-ion EV battery, so ensuring that purification process is as inexpensive and pollution free as possible will be important as demand for these batteries increases.

A Growing Market

The advanced battery market is putting pressure on graphite demand, and improved graphite manufacturing methods means better forecasts for EVs in the future. Navigant Research estimates that light duty plug-in EVs in use will reach over 13.9 million vehicles by 2024 and that Li-ion battery prices will for EVs will drop by over 50% over the same timeframe. Technological improvements of advanced batteries can exceed expectations by better, leaner manufacturing methodologies; more strategic partnerships that further develop the battery’s shortcomings could help foster these improvements while decreasing the environmental footprint.

 

Blog Articles

Most Recent

By Date

Tags

Clean Transportation, Electric Vehicles, Finance & Investing, Policy & Regulation, Renewable Energy, Smart Energy Practice, Smart Energy Program, Smart Transportation Program, Transportation Efficiencies, Utility Innovations

By Author


{"userID":"","pageName":"Energy Storage","path":"\/tag\/energy-storage","date":"5\/1\/2016"}