Navigant Research Blog

Is Mobility Key to Unlocking the Maximum Value of Energy Storage?

— December 27, 2017

The ability of distributed energy resources, including energy storage systems (ESSs), to defer investments in new transmission and distribution (T&D) infrastructure has emerged as one of the most attractive uses of the technology. Navigant Research has covered this topic in recent reports, including Energy Storage for Transmission and Distribution Deferral and Non-Wires Alternatives. In some cases, ESSs and other technologies can be used to entirely avoid the need for infrastructure upgrades, though these situations are rare. Most energy storage projects providing these services are designed to defer infrastructure upgrades for a period of 3-6 years on average. A deferral period of this length typically results in costlier T&D projects being profitably deferred with energy storage.

ESS vendors have worked for years to develop mobile storage technologies with the aim of overcoming this barrier and opening a much larger addressable market for potential T&D deferrals. While an ESS project may only defer T&D investments for 3 years, the storage system itself will last much longer. In theory, moving an ESS from one location to another every few years will allow for numerous T&D projects to be deferred and will maximize the value of a single storage system. The challenge with this concept has traditionally been designing a hardware platform capable of being moved from one location to another with relatively low costs, while not damaging sensitive batteries and power electronics. The maturation of the storage industry over the past few years has resulted in new designs for mobile ESSs that can be efficiently moved from site to site.

ESS Solution Product Testing

Con Edison in New York was one of the first utilities in the US to launch a project testing mobile ESS solutions. The mobile systems for this pilot project are designed to optimize existing T&D assets, defer investments and upgrades, and support the grid during emergencies or in response to unanticipated events. When not needed by the utility, the ESSs will be located at the Astoria generation plant, owned by project partner NRG Energy. At this facility, the systems can participate in the New York Independent System Operator (NYISO) markets for frequency regulation, operating reserves, and day-ahead or real-time capacity.

Con Edison and NRG Deployable Storage Asset      

Source: Consolidated Edison

The concept of mobile energy storage is quickly gaining traction in the industry. New Jersey-based startup Power Edison has developed integrated ESS products designed from the ground up for mobility, which it claims can significantly lower the cost of transportable storage. The company’s products come preconfigured in shipping containers, with power ratings from a few tens of kilowatts to several megawatts. The systems are specifically engineered to handle vibrations, changing environmental conditions, and other disruptions due to transportation with a custom-built trailer that can protect sensitive hardware components and not void vendor warranties.

ESS Solutions Add Value

A growing number of utilities have expressed interest in these innovative ESS solutions; however, questions remain around the true cost to move systems from one location to another and the potential effects to system hardware. The upfront costs for mobile ESSs are typically much higher than a standard stationary system due to the need for custom-built enclosures, battery mounting hardware, and trailers. Despite these challenges, mobile ESSs present a major opportunity to enhance the value and flexibility of energy storage on the grid.


Can Virtual Marketplaces Unlock the Potential of Distributed Energy Resources?

— March 28, 2017

In previous posts, I have explored innovative business models that aim to maximize the value of solar plus energy storage systems in Australia. The country has quickly become a leading market for these technologies—as well as the advanced business models and platforms necessary to unlock their full potential.

Navigant Research tracks the rapidly growing Australian market through its new Energy Storage Projects Data Service, which provides unique insights into the dynamics of markets around the world. As shown below, the majority of storage systems in Australia are being used to integrate new solar projects and maximize their value for both customers and the grid.

While the Australian market for both solar and energy storage has grown exponentially in recent years, these technologies will only be an economical investment for select customers given current business models and regulations. A new program being launched by software provider GreenSync hopes to change this situation by opening new opportunities for customers to benefit from its distributed energy resources (DER).

Navigant Research Data Services

(Source: Navigant Research)

Making Connections

GreenSync’s software-based marketplace, known as the Decentralized Energy Exchange (deX), aims to provide an avenue for distributed solar PV and energy storage system owners to trade their system’s services with local network operators in exchange for payments. Initially, the primary goal of the exchange will be to help operators manage both peak demand and variable solar generation on the grid. The opening launch of the marketplace will focus on trials with two utilities. ActewAGL, in Australia’s Capital Territory, hopes to understand how market-integrated batteries can alleviate constraints in certain parts of the grid, particularly those struggling to handle high levels of solar PV. United Energy in the Melbourne area is piloting the deX marketplace to reduce grid congestion where summer peak demand is straining existing infrastructure.

These utilities join a number of others in Australia that are working to understand how networks of DER can be utilized to provide services for grid operators in addition to the customers who own them. Utilities like AGL Energy, SA Power Networks, and Ergon Energy are working with various vendors to maximize the value inherent in energy storage systems and other flexible DER to improve the efficiency of the grid while allowing for greater amounts of solar PV to be added by customers.

Coordination Is Key

For DER providers to reach the most customers and realize the full potential of their technologies, these types of virtual aggregation platforms will be essential. Without proper coordination, the growing number of DER on the grid can result in significant systemwide inefficiencies, and their benefits may only be accessible to select electricity customers. Collaboration and coordination among DER stakeholders on the grid are key themes explored in Navigant Research’s recent white paper, Navigating the Energy Transformation.

The ability to effectively aggregate and coordinate distributed systems will be crucial for both utilities and vendors to capitalize on all the values these systems can provide. Vendors with a narrow focus on only providing cost savings and backup power for customers will significantly limit their addressable market, as their solutions may be too costly for many customers. They also risk missing out on the opportunity to play a foundational role in the development of the next-generation transactive energy system that will transform the industry.


New Utility Program Hopes to Stimulate Sustainable Energy Storage Growth

— February 17, 2017

There is considerable debate throughout the energy storage industry about what the optimal location is for energy storage systems (ESSs) to provide the most value. Systems can be installed either behind the meter (BTM) for individual customers, or located strategically on the utility side of the grid. While these two types of systems are typically designed for different purposes, the advances being made in storage software platforms are blurring the lines between these markets and the specific services they are able to provide. A recently proposed energy storage program from utility Consolidated Edison (Con Ed) is hoping to capture the most advantageous aspects of both approaches.

Although BTM energy storage has been a rapidly growing market over the past 2 years, a number of challenges remain that limit growth prospects. One of the major issues is that the value of an ESS varies considerably from one customer to another and across different regions. To realize a solid return on investment from energy storage, customers must have specific load profiles with enough variability to result in high demand charges and the willingness to invest in a relatively new technology. While opportunities to participate in competitive wholesale markets are often touted by vendors, actual revenue streams from these opportunities remain uncertain or entirely unavailable in many areas. As a result, excess storage capacity that could be used for participation in these markets is not built into projects, leaving economies of scale unrealized.

A New Approach

With its newly proposed energy storage program, Con Ed hopes to overcome many of the barriers facing BTM storage while also taking advantage of customer facilities to host new systems. Through this proposal, Con Ed will partner with developer GI Energy to deploy in front of the meter battery ESSs that will be located at customer sites. In exchange for hosting these systems, customers will be paid a set rate for leasing their space. This should make hosting storage a lucrative opportunity for a much greater number of customers, regardless of their energy usage patterns.

The utility believes this program will be able to realize much more value from a battery system compared to customers installing these systems on their own. By leveraging the utility’s support and third-party financing, Con Ed will be able to deploy much larger storage systems resulting in greater economies of scale. Additionally, these systems can be installed in select locations of the grid experiencing capacity constraints or other challenges to allow for the deferral of new infrastructure investments. These systems will also compete to provide services in wholesale markets when available, such as energy arbitrage, capacity, and frequency regulation. While a much greater array of values can be realized from these systems, the host customers still get what they are looking for—reduced energy costs.

Initially this program will seek to deploy four relatively large (1 MW) storage systems in select locations throughout Con Ed’s territory. However, if successful, this program could be expanded to all customers and potentially provide a framework for similar programs in other regions. There remains a number of details to be worked out through this program, including how exactly the systems and the services they provide will be paid for, how various services will be prioritized, and specifically how the utility will select which developers to work with. Despite the uncertainly around a few pieces of the program, Con Ed’s proposal is an innovative approach to stimulating sustainable energy storage market growth for the benefit of all stakeholders.


MESA Standards Aim to Organize a Diverse Market

— December 15, 2016

IT InfrastructureLast month, the MESA Standards Alliance officially released the first draft of a protocol for communications standards between utility control centers and energy storage systems (ESSs). This marks an important development for the ESS industry given the relative lack of existing standards and the increasingly diverse range of products in the market. Founded in 2014, the MESA Alliance is an organization of industry groups including both product vendors and utilities working to accelerate the growth of the ESS industry. MESA is developing open, non-proprietary specifications and standards for multiple types of ESSs.

Compared with the broader energy industry, standards for ESS components and software have barely begun to develop. Yet there is a clear need for standardization. Many vendors and other stakeholders in the industry cite the diverse operational characteristics of ESS components and the differing utility interconnection protocols as barriers to growth and cost reductions. There are basic standards currently in place covering ESS design and the integration of systems into the grid, and efforts are underway to update these protocols or supplement them with more in-depth standards. To date, the main standards for ESS come from the International Electrotechnical Commission (IEC), most notably the group’s TC 120 standards. However, these standards are more high-level and cover aspects such as defining unit parameters, testing methods, environmental issues, and system safety.

MESA Standards

MESA’s protocols are among the most comprehensive standards in the industry, aiming to accelerate the market through greater system interoperability, scalability, safety, quality, and affordability. A key focus for the grid is on standardizing communications between components within an ESS and between a system and the grid. This type of standardization can give customers more choice in the market and reduce project-specific engineering costs. These standards will also hopefully reduce training costs and improve safety for field staff through uniform procedures for safety and efficiency. The two primary segments of MESA standards are:

  • MESA-Device: Addresses system design for the components of an ESS, including the storage medium (batteries), inverters/power electronics, and meters
  • MESA-ESS: Specifies how an ESS communicates with the utility’s grid control and power scheduling systems (and is built on the DNP3 protocol)

The recently published draft protocol is for MESA-ESS and primarily addresses ESS configuration management, ESS operational states, and the applicable ESS functions. MESA hopes that these standards will enable electric utilities and grid operates to more effectively deploy and manage ESSs—including fleets of multi-vendor systems—to meet various needs with minimal custom design or engineering.

As the ESS industry has matured, software and controls platforms that communicate with grid systems are emerging as key to the technology’s value. However, there are a growing number of software platforms available, each with differing characteristics. Navigant Research’s new Energy Storage Software: Aggregation, Asset Management, and Grid Services report explores these platforms in detail. More open and official standards in the industry could result in greater interoperability between the various platforms, thus enabling greater customer choice. These developments can allow technology suppliers to focus on their core competencies and will hopefully lead to more rapid cost reductions and innovations.


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