Energy Storage: Applications and Developing Regulation

Posted on June 27th, 2011 by

The following article is part 3 of a multi-part series.

D.            Generation Storage

Energy storage allows generation resources to operate with greater efficiency and complements the integration of renewable generation resources into the grid. Storage systems also provide a clean and efficient alternative to traditional peaking facilities.

1.            Electric Energy time-shift:

Electric energy time-shift involves purchasing and storing electricity from wholesale markets during lower cost time periods and discharging the stored energy for resale in wholesale markets when prices are high. Generation resources can also use stored energy to offset its need to purchase electricity from higher priced wholesale markets.[1] Energy time-shifting is similar to energy cost management. However, cost savings depend upon wholesale markets as opposed to retail electric tariffs.

2.            Additional Peak Capacity:

Energy storage systems can provide a clean and efficient alternative over traditional generation resources supplying peaking capacity. Peaking facilities provide additional reserve capacity during periods when load peaks. These facilities typically operate at around 50% capacity resulting in diminished plant efficiency. However, energy storage providers can configure storage systems to provide optimal peaking efficiency as needed for the relevant peak load.

3.            Renewable Integration:

Energy storage systems complement the deployment of renewable generation.  Renewable resources are both difficult to forecast and have intermittent output, resulting in the production of low value electricity, lack of firm capacity needed to bid into energy markets and an increasing reliance on ancillary services necessary to maintain system-wide reliability. Energy storage systems add value to renewable generation and provide improved ancillary service efficiency necessary to support the integration of intermittent power sources.

Renewable resources often produce energy during off-peak times when energy is both lower in demand and price. These occurrences create inefficiency for both the generation owner and energy markets. Energy storage systems mitigate this problem by allowing renewable generation to bid stored off-peak energy into peak energy markets.  This prevents waste of off-peak production, provides increased value for renewable generation by increasing capacity bids in peak markets, and also improves wholesale market efficiency by increasing the amount of lower cost energy bids.

The intermittent output of renewable resources may prevent resource owners from bidding into energy markets.  In many cases, energy providers must guarantee to supply the amount of capacity it bids into energy markets or it will be subject to financial penalties. Many renewable generation resources cannot meet the guarantee (i.e., firm) requirements because of the systems intermittent power output. However, renewable generation can use the capacity of an energy storage system to meet firm output requirements. The capability of an energy storage system to provide renewable generation with the ability to meet firm requirements and bid into energy markets adds economic value to renewable generation.

The intermittent output of renewable resources increases the occurrence of disturbances that threaten system-wide reliability. For example, photovoltaic cells cannot control the occurrence of clouds and wind turbines cannot control the occurrence, duration or strength of wind gust. The rapid response and discharge times of storage systems provide the necessary improvements in ancillary services needed to mitigate the added stress that such disturbances place upon transmission systems.

[1] Energy Storage: The Missing Link in the Electricity Value Chain. Energy Storage Council. May 2002.

Written by Robert Clifford. Robert is a Boston-based attorney who represents clients before the Federal Energy Regulatory Commission and state public utility commissions.

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