How Can You Unlock the Value of Grid-Connected Storage?

How Can You Unlock the Value of Grid-Connected Storage?

I recently had the opportunity to both attend and present at an EUCI event focused on Grid-Connected Storage Interconnection and Operations – Technical and Policy Guidelines.

From the discussion at the event, it is evident those working with storage solutions can support a wide variety of diverse applications. The same storage solution can provide load shifting (charging during off-peak hours and supplying energy during times of peak demand), assist with frequency control in real-time, help utilities deal with reactive power issues, act as a resource during a “black start” scenario, and potentially defer upgrades to the power system as a non-wire alternative.

Flexibility: a blessing and a curse
Unfortunately, advanced energy storage solutions have suffered, in part, due to that very flexibility. The solutions simply do not fit neatly into the categories with which utilities have traditionally dealt. There are also challenges around realizing some of this potential including an underlying need for reliable communications to allow their monitoring and, to some extent, the control.
Another issue is around the economics of storage. Since these solutions do not fall into traditional categories, they are often utilized for only a subset of their full capabilities. As a result, they do not realize and are not compensated for their full potential as a power system asset. This is problematic because it is only by recognizing these additional “layers” of value that storage will typically become economically viable.
A framework for value
One state that has been successful in their efforts to address this problem is Oregon. In late 2016, the Oregon Public Utility Commission released rules designed to encourage utilities to evaluate the value of storage in six specific areas:
  • Deferred investment in generation, transmission, or distribution infrastructure,
  • Reduced need for adding peak demand generation capacity,
  • Improved integration of renewables,
  • Reduced greenhouse gas emissions,
  • Improved system reliability, and
  • Reduced variability of price in utilities’ generation portfolios
Scaling for success

Another topic discussed was the challenge around aggregation. As was recently discussed in a white paper I co-authored with Paul DeCotis titled, “How to Effectively Managing Distributed Energy Resources”, aggregation is key to keeping distributed resources manageable for electric utilities. Monitoring and controlling discrete sites simply cannot scale to the levels of growth anticipated for storage.

Aggregation can both improve scalability while providing value through the coordinated operation of multiple sites in an optimized fashion. This aggregation can also allow owners of DERs to actively participate in the wholesale power market. While aggregation may seem straight forward, the reality is that some system operators encourage it while others ban it.

There are also issues around the allocation of costs related to any upgrades and modification required to existing infrastructure to support the addition of storage. It is important to achieve some type of equity that ensures one project does not incur an unfair burden while others effectively get a “free ride” simply because of project timing or their position in the approval queue. Without this parity, development of storage resources may stall as certain thresholds that require such upgrades are approached. This challenge has been recognized and various mechanisms are in place across different areas to deal with it, but there is still a need to refine and build on these mechanisms.

Making the pieces work

The last few years have seen tremendous strides forward in the area of storage, but many challenges still lie ahead and West Monroe is involved in several of the key ones.

West Monroe is working with various utilities to ensure the application and evaluation process for projects involving storage and other DERs needs to be easy to use, keep key stake holders informed, and scale to support the ever growing number of proposed projects. We also continue to explore ways that to keep the ever-growing number of DERMS solutions manageable, allowing new and emerging technology to be quickly integrated with minimal effort.

This type of collaboration and innovation will help unlock the tremendous potential energy storage offers and ensure its full value is realized.

Phone: 312-602-4000
222 W. Adams
Chicago, IL 60606
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