Greening the Grid - Clean Energy Solutions Center

Greening the GridUtility-Scale Battery Storage: When, Where, Why and How Much?

Paul Denholm | Principle Energy Analyst, National Renewable Energy Laboratory | February 27, 2019

In power systems with increasing levels of variable RE…

• What type of battery storage is valuable for the power system?

• What type of storage will be valuable in a high RE system?

• Is battery storage needed to integrate renewable energy? (Why?)

• How much storage is appropriate?

• Where should battery storage be located?

• When does battery storage become cost-effective?

Answers to these questions are complex and system-specific. Some trends are

emerging…

Overview

• In most power systems, storage isn’t yet needed to integrate larger amounts of variable RE.

– “Stand-alone” RE integration applications are typically not cost effective…yet

• Storage applications need to consider duration, location, and ability to combine and monetize multiple services

• Storage is increasingly cost competitive for short-duration ancillary services, and long duration applications that combine some elements of capacity, energy and transmission services

• As RE penetration increases, this increases the value of storage, and storage becomes an increasingly valuable tool for RE integration

– There are important potential tradeoffs when considering co-location of storage with RE or siting storage closer to load

Key Takeaways

Key concepts and definitions

4

Why all the hype, and why now?

5

Lithium-ion battery price survey, 2010-16 ($/kWh)Source: Bloomberg New Energy Finance, Lithium-ion Battery Costs and Market (July 2017)

Global Cumulative Storage Deployments, 2016-2030 (GWh) Source: Bloomberg New Energy Finance (November 2017)

73% cost reduction since 2010 due to

technology improvements,

economies of scale, manufacturing

competition

Similar trajectory to PV deployment in

early 2000s

Why batteries?

• Applications for energy storage are

defined by the following parameters:

– Power capacity (kW): rate of

charge or discharge (in kilowatts or

megawatts

– Energy capacity (kWh): amount of

stored energy (in kilowatt-hours or

megawatt-hours)

– Storage duration: amount of time

storage can discharge at its power

capacity before depleting its energy

capacity

What type of battery storage is valuable for the power

system?

6

For example, a battery with 1 MW of power capacity and 4 MWh of usable energy

capacity will have a storage duration of 4 hours.

What type?

Is Battery Storage Needed to Integrate

Renewable Energy?

7

• Net load is energy demand after accounting for solar and wind generation

– This is the energy demand that must be met by other resources on the power

system (e.g., thermal, hydro, storage, energy trade, demand response)

– Net load (like normal load without RE) is best balanced at the system level

Balancing Supply and Demand –The Importance of System-Wide Net Load

Figure source: NREL

Report No. FS-6A20-63039

Why batteries?

• We don’t balance or “firm” individual loads

• Why should we balance individual generators?

• The variability and uncertainty of loads and generators are

best optimized at a system level

• We of course need to address any additional need for

operating reserves, transmission constraints etc.

• Need to consider impacts of spatial diversity and all sources

of flexibility for integrating VRE

Do Individual Renewable Energy Plants

Require “Backup” From Battery Storage?

Aggregating windSource: NREL/FS-6A20-63037

Lew et al. 2013Aggregating solar

Balancing individual solar plants could result in

simultaneous charging AND discharging

Why batteries?

Battery Storage Can be Considered as

Part of the Flexibility Supply Curve

10You probably do this first

Cochran et al.

2015

Battery storage has historically

been among the most expensive

options for the integration of

renewable energy (or any grid

service)

But that is changing

When?

What type of battery storage is valuable for the

power system?

What type of storage will be valuable in a high RE

system?

11

Services currently valued in some markets

Proposed or early adoption services

Currently not valued services

Battery storage applications and

potential value streams

Energy and Capacity

Ancillary Services

Transmission Services

Distribution Services

End-Use Applications

mS S Min Hr Day

Energy

Firm Capacity

Fast Frequency Response

Frequency Regulation

Ramping reserves

Contingency Spinning Reserves

Replacement Nonspin Reserves

Voltage Support

Black-Start Capability

Type of Service

Primary Frequency Response

Timescale

Transmission Upgade Deferral

Transmission Congestion Relief

Distribution Upgade Deferral

Distribution Voltage Support

Distribution Loss Reduction

Power Quality

Reliability and Resiliency

Demand Charge Management

Time of Use and Real-Time Pricing

mS S Min Hr Day

Inertial Response

What type?

Energy and Capacity

Ancillary Services




mS S Min Hr Day

Energy

Firm Capacity



Ramping reserves



Voltage Support


Type of Service


Timescale






Power Quality




mS S Min Hr Day

Inertial Response






• Storage can provide a range of grid

services at different timescales

• Value stacking enables storage

projects to monetize a range of value

streams

• Markets and planning need to evolve to

enable power system services that

storage (and other technologies) can

provide

• Renewable integration is largely

captured by existing service

categories

How quickly initial

response is needed

How long response is

needed

What type?

Energy and Capacity

Ancillary Services




mS S Min Hr Day

Energy

Firm Capacity



Ramping reserves



Voltage Support


Type of Service


Timescale






Power Quality




mS S Min Hr Day

Inertial Response






projects to monetize a range of

value streams




provide



categories

A battery providing firm capacity may

also provide energy arbitrage and

transmission congestion relief

Arbitrage alone cannot

pay for storage




What type?

Energy and Capacity

Ancillary Services




mS S Min Hr Day

Energy

Firm Capacity



Ramping reserves



Voltage Support


Type of Service


Timescale






Power Quality




mS S Min Hr Day

Inertial Response










streams




provide



categories

In addition to unvalued services, the

value streams may cut across different

market conditions.

Value recovered from

an ISO/RTO market?

Value recovered from a

cost-of-service

transmission company?

What type?

Energy and Capacity

Ancillary Services




mS S Min Hr Day

Energy

Firm Capacity



Ramping reserves



Voltage Support


Type of Service


Timescale






Power Quality




mS S Min Hr Day

Inertial Response










streams

• Markets and planning need to

evolve to enable power system

services that storage (and other

technologies) can provide



categories

Renewable time-shifting

and curtailment mitigation

Renewable “firming”

Renewable ramping

What type?

Energy and Capacity

Ancillary Services




mS S Min Hr Day

Energy

Firm Capacity



Ramping reserves



Voltage Support


Type of Service


Timescale






Power Quality




mS S Min Hr Day

Inertial ResponseBattery storage applications and


Ongoing competition from various

other flexibility resources

What type?

Energy and Capacity

Ancillary Services




mS S Min Hr Day

Energy

Firm Capacity



Ramping reserves



Voltage Support


Type of Service


Timescale






Power Quality




mS S Min Hr Day

Inertial Response

Two Examples of Potentially Cost

Effective Storage Applications

Operating Reserves

Shorter duration

(<1 hour)

• Regulation reserves to

balance short-term variability

• Fast frequency response to

replace lost inertia

What type?

Energy and Capacity

Ancillary Services




mS S Min Hr Day

Energy

Firm Capacity



Ramping reserves



Voltage Support


Type of Service


Timescale






Power Quality




mS S Min Hr Day

Inertial Response

Two Examples of Potentially Cost

Effective Storage Applications

Peaking Capacity

Longer duration

(>1 hour)

• Peaking capacity resource

• Energy shifting to recover

curtailed RE, arbitrage prices

• Can also provide

transmission services

What type?

Battery storage for the provision of operating

reserves

20

• Significant deployment for

frequency regulation (regulating reserves/ secondary

frequency response)

• Often most cost effective

early application

– Short duration

requirements

– High utilization of storage

assets

Early Deployment of Batteries for Reserves

How much?

Operating Reserves Represents the Ability to Increase

or Decrease Output Based on Grid Requirements

22

Batteries have

extremely fast

response timesBatteries are not

limited by minimum

stable levels and can

typically operate over

full range

Batteries are limited by

stored energy, so

shorter duration

devices may not be

able to provide long-

duration reserve

services such as

replacement reserves

Why batteries?

Regulating Reserves

23

• Responds to events (e.g.,

large generator faults) than

can result in decreased

frequency

• Operates during normal

operations to respond to

normal short-term variations in

supply and demand

Operating Reserves

Why batteries?

Why Batteries for Regulating Reserves?

Regulating Reserves

Spinning Reserves

Non-spinning Reserves


mS S Min Hr Day

Inertial Response

Economic Dispatch

Replacement Reserves

Ramping Reserves

1. FrequencyResponsiveReserves

3. ContingencyReserves

5. Normal operationprovided by “energyand capacity”

2. RegulatingReserves

4. RampingReserves

Services currentlynot procured via markets

Proposed or early adoption market services

Currently procured via markets


Option 3mS S Min Hr Day

Timescale

Fast response requirement

means it is the most costly of

current market services

Usually only requires 15-30

minutes of capacity – means

relatively low cost batteries

Operating Reserves

Why batteries?

Batteries Have the Flexibility to Continuously

Provide Upward and Downward Regulation

25

Discharge

Charge

Up

Reserve

Energy

Purchase

Up

Reserve

Up

Reserve Energy

Sales

Energy

Sales

Partial Charge

(Downward

Reserve Call

or Make-up

Energy

Purchase)

Idle Partial Discharge

FullDischarge

Up Res.

Down

Reserve

Down

Reserve

Down

Reserve

Down

Reserve

Energy storage typically has a larger

operating range for provision of

regulating reserves than thermal

generation.

Operating Reserves

Why batteries?

• More variable RE could increase the need for various reserves, including regulating reserves

– BUT ... integration studies show a relatively small increase in operating reserve

requirements as solar and wind are added

• For example, regulation reserve requirements have decreased in Texas as wind penetration has

increased

Impact of Increasing Amounts of Renewable

Energy on Reserve Requirements?

26

There is also competition for the

provision of operating reserves

from other sources, including

curtailed wind and solar and

demand response

?

Operating Reserves

How much?

• Something will need to replace inertial response and primary frequency response (PFR) from

synchronous generators

• Inconsistent terminology, but “fast frequency response” captures the ability of resources

(including storage) to measure and rapidly respond to deviations in frequency.

• FFR could replace some of the need for inertial response.

Other Reserve Services? Increasing Interest in

Frequency Responsive Reserves

27

Econ. Dispatch

Inertia

Frequency

(Hz)

Time (approx.)

60

Event

Occurs

0 s 10 s 30 s 5 m 10 m 30 m 1 hr

Contingency

Reserves

Non-Spinning / Replacement

Spinning

Regulating Res.

PFR Frequency Responsive

Reserves

Operating Reserves

How much?

Example: Fast Frequency Response

from Energy Storage

Source: Gevorgian, Burra, Morjaria (2018) https://www.nrel.gov/docs/fy18osti/71551.pdf

Operating Reserves

How much?

https://www.nrel.gov/docs/fy18osti/71551.pdf

How much operating reserve do we need?

• Limited need for high value

reserves.

• Total market for regulating

reserves in all U.S. RTO/ISO

markets is ~2.6 GW.

• Already have ~700 MW of

new battery storage

• Increased competition from

DR and other sources

• What’s the next big thing?

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

California Texas Florida

Frac

tio

n o

f An

nu

al P

eak

Dem

and

Cap

acit

y N

eed

ed (M

W)

0

10

20

30

40

50

60

70

80


Cap

acit

y N

eed

ed (G

W)

Operating Reserves

How much?

Battery storage peaking capacity

30

Recent Focus – Peaking Capacity

0

2

4

6

8

10

12

14

16

18

20

22

24

Pe

akin

g C

apac

ity

Inst

alle

d (

GW

)

Installation dates of U.S. peaking capacity (non

CHP CT, IC, oil/gas steam)

Significant peaking capacity now over 40 years old

Over the next 20 years, we would expect about 152

GW of peaking capacity to retire in the U.S.

• Aging peaking capacity in the U.S.,

• Other growing economies with increasing peak demand (air conditioning, climate impacts)

Peaking Capacity

How much?

Challenge of Comparing Storage to Conventional

Peaking Capacity: 1) Capacity Credit/Capacity Value

Capacity credit/capacity value reflects the ability of a generator to be available during periods of highest

system stress. This is typically during the periods of peak demand. Analysis must determine the

energy capacity (hours) needed to provide an alternative to conventional peaking capacity.

Florida has narrow peaks well suited for shorter duration storage

22,000

24,000

26,000

28,000

30,000

32,000

34,000

36,000

38,000

40,000

42,000

12 AM 6 AM 12 PM 6 PM

Load

(M

W)

Hour of Day

4 Hr Storage

6 Hr Storage

8 Hr Storage

Load Met withOther Generators

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

22,000

24,000

26,000

12 AM 6 AM 12 PM 6 PM

Load

(M

W)

Hour of Day

4 Hr Storage

6 Hr Storage

8 Hr Storage

Load Met with Other Generators

New York has longer peaks so requires longer duration storage

Peaking Capacity

How much?

Challenge of Comparing Storage to Conventional

Peaking Capacity: 2) Operational Value

• Batteries and combustion turbines with the same power capacity may have substantially different

operation in economic dispatch

• Batteries and CTs typically have low generation capacity factor (<20%) but batteries may still

have higher capacity factors than CTs

• Batteries may have different operational profiles, acting to avoid thermal generator starts. This

value is difficult to capture, and is uncompensated in ISO/RTO markets.

• LCOE vs LCOS may be a poor comparison metric

0

10

20

30

40

50

60

0

50

100

150

200

250

300

350

0 12 24 36 48 60 72

Syst

em

Mar

gin

al P

rice

($

/MW

h)

Sto

rage

Ge

ne

rati

on

(M

W)

Hour

Storage Generation

System Marginal Price

Peaking Capacity

How much?

Simulations of storage in

production cost models

often show short spikes of

battery output to avoid

thermal plant spikes and

address ramping events

$0

$50

$100

$150

$200

$250

$300

$350

$400

3 4 5 6 7 8

Bat

tery

(M

od

ule

On

ly)

Inst

alle

d C

ost

($

/kW

h)

Hours of Storage Needed

High Cost CT/HighValue Location

Low Cost CT/LowValue Location

So How Cheap Does Storage Have to Be?

We are nearing a tipping point for 4-hour storage providing

capacity services – but how big is this market?

GTM 2020

Estimate

($217/kWh)

Denholm et al. unpublished

Peaking Capacity

When?

Potential for Storage as Peaking Capacity in

Today’s Grid

0%

2%

4%

6%

8%

10%

12%

14%


Sto

rage

Pen

etra

tio

n

(Fra

ctio

n o

f A

nn

ual

Pea

k)

4-Hour 6-Hour 8-Hour

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000


Sto

rage

Cap

acit

y (M

W)

4-Hour 6-Hour 8-HourBattery duration Battery duration

Peaking Capacity

How much?

• Renewable energy can lower the cost of using batteries for peak demand

reduction

Higher penetrations of RE will change the

economics of battery storage

Source: Denholm et al., Overgeneration from Solar Energy in California: A Field Guide to the Duck Chart, 2015

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

12 AM 3 AM 6 AM 9 AM 12 PM 3 PM 6 PM 9 PM 12 AM

Me

gaw

atts

Hour

Shorter duration peak,

lower cost storage

Load

Net Load

Wind Generation

Solar Generation

Some power systems are nearing a tipping point for 4-hour storage providing capacity services instead of conventional generators

Peaking Capacity

How much?

How Do Renewables Affect This?

Zero PV

10% PV

5% PV

With increased PV penetration, the capacity value of PV decreases while the capacity value of storage increases

Peaking Capacity

How much?

Impact of PV on 4-Hour Storage Potential in California

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30

4-H

ou

r S

tora

ge C

ap

acit

y (

MW

) P

rovid

ing

100%

Peak D

em

an

d

Red

ucti

on

Cre

dit

PV Penetration (%)

2017 Estimated PV Penetration



Denholm and Margolis 2017 Consistent correlation of storage

capacity with PV. Very limited

correlation with wind in the U.S.

Peaking Capacity

How much?

Where should storage be deployed?

39

1. At the load site?

2. Near remote renewables?

3. Coupled with other generation technologies (e.g., solar + storage, gas +

storage)?

Where should storage be deployed?

40

Where?

Location 1: Within Load Centers

• Allows replacement of peaking capacity in congested

regions

– Reduced siting challenges of thermal generation

– Defers investment in transmission and distribution

– Avoided T&D losses

– Scalable

Southern California Edison hybrid battery

storage, gas turbine peaker system

Where?

Location 2: Co-Located with Remote

RE Resources

Example: Interaction

Between Storage and

Transmission in the

Western United States

• Best wind resources are not close to major population centers

• Significant transmission capacity will be needed

• Transmission typically operated at relatively low capacity (based on capacity factor of wind)

Where?

Storage can reduce transmission

requirements

Where?

0

100

200

300

400

500

600

700

800

900

1000

0 2000 4000 6000 8000

Po

wer

(MW

)

Available Wind

Delivered Wind

Delivered Wind plusStored Wind

Capacity Factor of

this 200 MW of

transmission is about

10%

Duration curve for 1000 MW of wind in Texas

Remove 200 MW of

transmission and add

150 MW of storage

When evaluating such configurations

it is important to consider the ability

of storage to provide additional

services. But also compare to load-

sited storage.

Location 3: Integrated with Renewable Generation

• Enhance unit flexibility

• Reduce costs through shared componentry

• Provide streamlined acquisition for off-takers

• Can lead to inefficient levels of storage if required with all variable

RE (ignores benefits of geographic diversity)

DC-coupled (flexible charging)AC-coupled (flexible charging)

Where?

Energy and Capacity

Ancillary Services




mS S Min Hr Day

Energy

Firm Capacity



Ramping reserves



Voltage Support


Type of Service


Timescale






Power Quality




mS S Min Hr Day

Inertial Response

Siting Can Change Relative

Value of Various Applications

Which location is best?

…It depends!

Analysis is needed to optimize

the costs and benefits of various

storage siting optionsSiting near remote

renewable resources

may increase

transmission value

Siting closer to load can

increase capacity and

energy value

Where?

1. Stand-alone “renewable integration” applications of energy storage are typically neither needed nor cost effective in most grids.

2. Ancillary services (regulating reserves) appears to be cost effective for a few storage devices, but with limited market size.

3. When properly scheduled, long-duration (several hours of capacity) batteries provide an alternative to combustion turbines for meeting peak capacity requirements.

4. We are approaching a “tipping point” where storage provides a cost-effective alternative to conventional peaking capacity.

– This application also needs to consider the energy arbitrage value of storage. Combining energy and capacity applications is key as the value of storage for energy arbitrage alone is relatively low and is unlikely pay for any existing storage technology/device.

– RE will help accelerate the storage tipping point and increase the overall market size.

5. There is no easy “one size fits all” rules for where storage should be located. It is very application and grid-specific.

6. Careful analysis of storage is required to ensure it is sized and located properly, and that appropriate rules exist that can capture the value it can provide.

Conclusions / Opinions

NREL is a national laboratory of the

U.S. Department of Energy, Office of

Energy Efficiency and Renewable

Energy, operated by the Alliance for

Sustainable Energy, LLC.

Thank you

47

Questions?

Greening the Gridgreeningthegrid.org

Email: [email protected]

Webinar Panel

Paul Denholm

National Renewable Energy Laboratory


Jennifer Leisch

United States Agency for International Development


mailto:[email protected]

mailto:[email protected]

Documents

Greening the Grid - Clean Energy Solutions Center