EIA Quantifies ‘Many Different’ Grid Functions Of Batteries
Driven largely by installations over the past three years, the electric power industry has installed about 700 MW of utility-scale batteries on the U.S. electric grid, according to the U.S. Energy Information Administration (EIA). As of October 2017, these batteries made up about 0.06% of U.S. utility-scale generating capacity. The agency notes another 22 MW of batteries were planned for the last two months of 2017, with 69 MW more planned for 2018.
New energy storage information available in the 2016 edition of EIA’s Annual Electric Generator Report provides more detail on battery capacity, charge and discharge rates, storage technology types, reactive power ratings, storage enclosure types, and expected usage applications.
The EIA says batteries, like other energy storage technologies, can serve as both energy suppliers and consumers at different times, creating an unusual combination of cost and revenue streams and making direct comparisons to other generation technologies challenging.
The decision to build a new power plant depends, in part, on its initial construction costs and ongoing operating costs. Although battery projects have a relatively low average construction cost, the EIA says they are not stand-alone generation sources and must buy electricity supplied by other generators to charge and cover the round-trip efficiency losses experienced during cycles of charging and discharging.
Battery costs also depend on technical characteristics such as generating capability, which the EIA notes can be described in two ways for energy storage:
Power capacity or rating. Measured in megawatts, this is the maximum instantaneous amount of power that can be produced on a continuous basis and is the usual type of generator capacity discussed.
Energy capacity. Measured in megawatt-hours (MWh), this is the total amount of energy that can be stored or discharged by the battery.
As the EIA explains, the battery’s duration is the ratio of its energy capacity to its power capacity. For instance, a battery with a 2 MWh energy capacity and 1 MW power capacity can produce at its maximum power capacity for two hours. Actual operation of batteries can vary widely from these specifications, the agency notes. Batteries discharged at lower-than-maximum rates will yield longer duration times and possibly more energy capacity.
The EIA says short-duration batteries are designed to provide power for a very short time – usually on the order of minutes to an hour – and are generally less expensive per megawatt to build. Long-duration batteries can provide power for several hours and are typically more expensive per megawatt.
On the revenue side, batteries have relatively low capacity factors because of charging durations and cycling limitations for optimal performance. Nevertheless, the EIA says they can uniquely capture a range of value streams, which can sometimes be combined to improve project economics. As the EIA explains, some of the uses for batteries include the following:
Balancing grid supply and demand. Batteries can help balance electricity supply and demand on multiple time scales (by the second, minute, or hour). Fast-ramping batteries are particularly well suited to provide ancillary grid services such as frequency regulation, which helps maintain the grid’s electric frequency on a second-to-second basis.
Peak shaving and price arbitrage opportunities. By buying power and charging during lower-price (or negative-price) periods and selling power and discharging during higher-price periods, batteries can flatten daily load or net load shapes. Shifting portions of electricity demand from peak hours to other times of day also reduces the amount of higher-cost, seldom-used generation capacity needed to be online, which can result in overall lower wholesale electricity prices…