Energy storage is a hot topic across the country. Rapidly falling prices, improved performance, and a whole lot of investment are creating quite a buzz in the energy storage sector.
In the first installment of this blog series, I provided a quick overview of storage technologies, the economic forces shaping the emergence of a viable energy storage market, and some of the barriers to robust energy storage deployment. This installment will take a deeper dive into some of the storage technologies currently deployed in the U.S. (see map below).
The benefits an energy storage asset can provide to the grid depend on the amount of power it can put out at any given moment and the amount of time it can sustain that output.
For example, the Midcontinent Independent System Operator (MISO) requires an asset to inject energy into the grid at its rated capacity for at least four hours to be eligible for a variety of products in its Capacity, Energy and Ancillary Services markets.
Below is a brief description of some of the energy storage technologies deployed throughout the country.
Keep in mind that the relevant question is not what they are capable of doing, but how those capabilities can translate to valued services for the grid.
The technical capabilities of an energy storage resource, and their alignment with an independent system or regional transmission operator’s market rules, ultimately dictate which services it can provide to the grid and the associated revenue streams it can access.
Pumped Hydro & Compressed Air Energy Storage
Pumped hydro and compressed air energy storage are used to time shift generation of electricity to a time that is more advantageous for the electric grid. This service is called bulk power management and it can be extremely useful in system peak management and load shifting.
Pumped hydro energy storage uses electricity during off-peak hours to pump water to an elevated reservoir, converting electric energy to potential energy. During periods of high demand the water is released to flow through a turbine to generate electricity.
There are 36 pumped hydro facilities operating in the U.S. with a combined capacity of a whopping 20.4 GW. These are big, expensive facilities that give grid operators flexibility to dispatch generation on demand. Furthermore, they can generate electricity for four or more hours, making them a long-term energy storage technology.
The ability of pumped hydro to generate revenues depends in large part on the differential pricing of off-peak power used to store the water and the ability of the pumped storage facility to produce electricity during peak demand.
The idea behind compressed air is to use electricity, either from the grid or co-located renewables, to power pumps that compress air in a large space, like depleted natural gas reservoirs, to later be released to generate electricity. There are two of these facilities in operation in the U.S. with a total installed capacity of 114 MW.
Flywheels & Supercapacitors
Like pumped hydro, flywheels also store energy by converting electric energy into another form. The difference is that flywheels convert electric energy into kinetic energy in the momentum of a rotating mass. These low-maintenance, long life span technologies can cycle between storing and releasing energy over 100,000 times, giving them an excellent cycle life. However, they have relatively small capacities and cannot release energy to the grid anywhere near the four-hour threshold.
In 2010, MISO created a new product classification to provide an avenue for flywheels to participate in its markets. Because of this technology’s short injection time capabilities, the Stored Energy Resource product classification is only able to provide Regulating Reserve services to MISO’s system. New York’s NYISO and California’s CAISO both offer a similar product called a Limited Energy Storage Resource.
Supercapacitors have capabilities similar to those of flywheels, but operate on a completely different basis. Instead of converting electric energy into another form, supercapacitors store large amounts of energy as an electric charge. They can discharge very quickly, are efficient, and have long life spans. While they can have a wide range of capacities (10kW to 1 MW), they cannot continuously discharge energy for long periods of time, and again can’t meet the four-hour threshold.
Advanced batteries are a pretty broad category in the energy storage technology space. In my last post I noted that advanced batteries are the hallmark of the energy storage industry. Over half of the country’s active energy storage projects in the U.S. Department of Energy’s Global Energy Storage Database are batteries, with lithium ion batteries making up the largest portion.¹ With Tesla Energy’s gigafactory producing both grid-scale and residential-scale products, and other manufacturers targeting both sectors as well, the scale and scope of lithium ion battery applications is pushing the boundaries of what energy storage has historically been capable of.
Unlike the technologies described above, batteries store and release energy through electrochemical reactions. Large-scale battery installations can be designed to discharge power for the critical four-hour duration, ramp up and down quickly and accurately, smoothly transition between charging and discharging, and provide reactive power. This combination of energy density, flexibility, and precise control means that advanced batteries can deliver a robust suite of services including ramping support, voltage support, frequency regulation and response, energy arbitrage, and capacity firming, to name a few.
The question in front of developers, utilities, and regulators is how to best capture and monetize the value advanced batteries provide.
There are numerous projects being installed across the country to do just that. In Hawaii, First Wind and Xtreme Power paired a 10MW battery with a 21MW wind farm. The battery was dispatched to deal with the volatility of high wind energy penetration on Maui’s grid by prioritizing ramp rate control, frequency response, frequency regulation, and voltage support services. The battery project resulted in a more reliable electric grid and facilitated a higher penetration of renewable energy on Hawaii’s electric grid.
Developers and utilities are also working to develop energy storage business models based on distribution and transmission investment deferral, peak demand reduction, and energy arbitrage. Because the energy system is shaped largely by state-level policy and ISO/RTO market rules, it is somewhat difficult to apply lessons learned from demonstration projects generally across the entire country. For example, the business models developed in the PJM ISO which aim to firm the capacity from variable wind energy resources would not be economically viable in MISO, where the capacity market is suppressed because of state-approved Integrated Resource Planning processes.
To overcome this barrier, GPI is working to support the development of battery storage projects and identify viable economic models for energy storage in the Midwest and encouraging MISO to enable battery projects to capture the full value of their flexibility.
The final installment of this blog series will detail some of the major regulatory barriers to energy storage deployment in the Midwest. In the meantime, you can follow our work on MISO’s ongoing energy storage initiative and review other stakeholder input here.
¹ There are many other kinds of batteries beyond lithium-ion being deployed onto the grid including lead-acid, nickel-cadmium, vanadium redox flow batteries to name a few. Each battery chemistry has its own unique characteristics, which you can read about in the US Department of Energy’s Quadrennial Energy Review.