5 things utilities should consider for energy storage
Energy storage has arrived. It’s gone from a nice-to-have to a must-have for utilities that are integrating renewables on the grid. For utilities navigating how to integrate storage into their planning, here are a few things to consider.
1. Look for grid congestion
In some parts of the grid, transmission capacity has not kept pace with growing end-user demand due to an increase in renewables and distributed energy resources. Strategically placing storage along demand-strained transmission or distribution systems can not only improve performance of these systems, but also help delay or even avoid costly upgrades.
Think of it this way — to add more capacity to a transmission system often requires a full replacement of wires and transformers to deliver more power to a node on the transmission or distribution (T&D) system. Energy storage has the ability of clipping the peak demand on that system, shown in the figure below as “overload,” allowing the existing transmission and distribution system to be used.
For example, Arizona Public Service installed a 2 MW, 8 MWh battery array instead of rebuilding 20 miles of transmission and distribution lines last year. The energy storage project will delay transmission investments for three to six years and has been deemed “very, very cost-effective.”
Peak demand curve for a transmission and distribution (T&D) system
2. Reevaluate plans for peaker plants
Today, thermal and electrochemical energy storage are competitive with natural-gas peaker plants in many cases. In fact, the California Public Utilities Commission has directed Pacific Gas & Electric to solicit bids for energy storage to replace three Calpine Corp. gas-fired peaking plants (Feather River, Yuba and Metcalf) in Northern California, which are considered too costly to continue running.
Along with financial benefits, energy storage has a number of advantages over peaker plants. In a recent article, Greentech Media summarizes the benefits with the following statement: “Batteries ramp up their discharge faster than a gas plant. They run without dumping pollutants into the air, so they can sit much closer to dense load pockets than can a new gas plant.”
However, energy storage is not going to be the answer every time. In some cases, peaker plants will continue to make sense, but it is important to assess each technology for its benefits as well as for potential unforeseen costs or risks.
“Consider carefully any planned investment in new gas to avoid stranded assets. Leading states (e.g., AZ, CA) have already begun taking a hard look at new gas – developers and utilities across the US should take notice,” advises Mark Dyson from the Rocky Mountain Institute (RMI). This follows a recent RMI study showing that Distributed Energy Resources — including storage — could “avoid $1 trillion of costs for new gas-fired power plants in the U.S.”
Does the gas peaker vs. energy storage debate sound contentious? It is. In fact, there was a whole conference dedicated to this subject in May.
3. Consider the speed of installation
Natural Gas peaker plants on average take six years to build. However, Tesla and its consortium in South Australia built and launched a 100-megawatt battery in less than 100 days as seen in the image below. Similarly, Southern California Edison and San Diego Gas & Electric replaced the capacity of the Aliso Canyon gas plant with storage in six months.
“The sheer speed at which the Aliso Canyon batteries were deployed for Southern California Edison and others shows that California utilities have discovered the essential battery storage value proposition,” said Janice Lin, executive director of the California Energy Storage Alliance (CESA).
Utilities owe it to ratepayers to review timelines and capacity for new gas plants and assess their feasibility compared to storage.