In 1882, the world’s first public electricity generating station was opened near Holborn Viaduct in London to provide street lighting. Since then, Britain has added huge volumes of new generation to the network, growing from a few kilowatt-hours in the late 1800s too more than 300TWh in 2014, according to the Digest of UK Energy Statistics.
The electricity network has seen little change in more than 100 years compared with other industries, for example manufacturing and telecommunications. However, we have now entered what some are calling the third industrial revolution, transforming our electricity networks and moving towards a low-carbon economy.
During this shift, the demand for energy is expected to grow, with US market research firm Transparency predicting that the smart grid technologies market will be worth £75 billion (£50 billion) by 2019.
One obstacle to the functioning of the electricity market has been the absence of cheap, efficient and reliable storage, which would enable the grid to be balanced by absorbing excess or off-peak energy for peak time distribution. The integration of more wind and solar will put a strain on baseload generation. As renewable penetration increases, demand for baseload generation will decrease throughout the day until it goes below the minimum needed for plants to stay online, resulting in operators having to switch them off. But when solar and wind generation drops, there is a steep ramp up in demand and the baseload is required to come back online.
This is referred to by industry as the duck curve. Storage solutions could be charged during the daytime, effectively increasing the minimum load and also supporting the network when the peak returns.
With the advancement of battery technologies, storage is no longer a myth but a reality, which has been demonstrated at scale around the world. Earlier this year, energy storage was identified as one of the foundations for developing a clean energy future by the Global Apollo Programme, which aims to make the cost of green electricity lower than coal-fired electricity within ten years.
The UK government and regulator Ofgem have funded several demonstration projects in the past 24 months, including a fully automated 6-10MWh smarter network storage project hosted by UK Power Networks, which is assessing the role of storage in cost effectively delivering the UK’s carbon plan. It is expected to save more than £6 million on traditional network reinforcement methods. S&C Electric Europe was chosen as the lead supplier to the £18.7 million project, drawing on its extensive experience of deploying storage projects in the UK and around the world.
Capacity margins in the UK are at a seven-year low, and the network is reliant on CCGT and diesel gensets for back-up. The use of these technologies goes against the government’s low-carbon ambitions and they offer only a short-term solution. Storage is a longer-term solution that can be used to supplement peak capacity when required, and improve the utilisation of plants on the system, not only by providing capacity but also flexibility. The need for this flexibility is increasingly important, due to the rise in intermittent renewables.
By 2050, decarbonisation of specific sectors in the UK will result in a 110GW increase in electrical demand from transport, and a change to electric heating will add 200GW to peak demand. Under Ofgem’s RIIO-ED1 price control programme, Britain’s 14 electricity distribution network operators will undertake £25 billion of network upgrades between 2015 and 2023, helping to deliver a sustainable energy sector while providing customers with value for money on that investment.
If the UK and other economies are to roll out storage across their electricity networks, then more appropriate market mechanisms need to be introduced to support the industry, and companies must provide the business case for projects. California has in the past few years set a storage mandate of 1.3GW – with Japan, Germany, and Porto Rico all setting their own incentives to encourage the deployment of storage.
S&C is working with network operators to explore the applications and business cases for energy storage and has installed 20 per cent of the world’s utility scale batteries. The PJM market, the world’s largest competitive wholesale electricity market serving more than 61 million people in 13 states and the District of Columbia in the US, is rewarding storage for providing fast frequency response. Ancillary grid services, such as frequency regulation, are crucial for maintaining the stability and reliability of the power system.
Frequency regulation is used to minimise the mismatch between generation and loads by quickly adjusting generation output to maintain the grid’s ideal frequency – 60Hz in parts of the world and 50Hz in others. S&C’s storage management systems are being deployed across networks to balance community energy demand.
To further understand the potential for storage solutions, we have developed four business scenarios to help customers better understand how assets can be deployed:
Scenario one. The customer owns and operates the storage device, receiving all revenue generated from the asset.
Scenario two. The customer hosts the asset, which can then provide additional revenue streams if some of the services of the storage project are contracted to third parties. However, the customer is not responsible for contracting the services or owning the asset. Under this scenario, an aggregator can own the assets, sharing any revenues generated, and it would underwrite any risks.
Scenario three. The customer leases the storage technology from the manufacturer, with the manufacturer taking responsibility for installing and decommissioning the technology. The project would, however, likely be financed by a third party. At the
end of the lease contract, the manufacture could extend the life and value of the technology by relocating the project to another customer site.
Scenario four. An aggregator owns or leases the asset and secures a contracting service to a number of clients, such as SSE’s Constraint Managed Zones, which is inviting interested parties to enter the pre-qualification questionnaire stage of a tendering process in which it is looking to purchase constraint management services for a specific time of the year. An aggregator has the advantage of a portfolio of assets, enabling it to provide multiple services and hedge against non-availability.
As technology continues to advance, the electricity network holds huge potential for innovation. However, if economies are to make the transition to a low-carbon economy, governments need to evaluate and update legislation to fit an industry landscape that is shifting. In conjunction with supporting market mechanisms, businesses need to educate the younger generation of engineers on the benefits of implementing storage and clarify the business case for these solutions. Achieving this will provide a better understanding of the market for energy storage and how projects can yield returns on investment.
Mick Barlow, application director,
S&C Electric