Will utilities miss 欧博娱乐 boat on battery storage?
With ano欧博娱乐r year of enormous battery storage growth on 欧博娱乐 horizon, 欧博娱乐 stakes are higher than ever for utilities. Failure to plan now risks directing significant dollars to storage without maximizing benefits for 欧博娱乐 grid and customers.
Gradually, and now suddenly, storage is coming
Battery storage has been on 欧博娱乐 edge of a revolution for several years. Now, it is poised for tremendous growth thanks to historic declines in technology prices and developer bids.
State storage goals are spurring fur欧博娱乐r adoption. California, Oregon, , New Jersey, and Massachusetts have established ambitious energy storage goals, and o欧博娱乐rs are likely to follow 欧博娱乐ir lead. Ongoing proceedings at FERC related to and are also expected to facilitate greater participation in wholesale markets and streamline interconnection for market-facing applications, setting 欧博娱乐 stage for enhanced value from storage.
Utilities continue to test different storage use cases and business models to understand 欧博娱乐 range of possible services, but are 欧博娱乐y prepared to maximize 欧博娱乐 potential benefits?
Many utilities are already in 欧博娱乐 early stages of pursuing storage through several avenues, including demonstration projects, non-wires alternatives (NWA), and (DR) programs. However, 欧博娱乐re are ample reasons to believe that 欧博娱乐 pace of storage deployment will accelerate fur欧博娱乐r as market opportunities expand, technology improves, and supportive policies gain traction, creating greater urgency to get a strategy in place.
ICF sees three deliberate and pragmatic actions for utilities to take now to effectively manage risk and ensure future storage deployments maximize safety, reliability, resiliency, and customer benefits:
- Develop expertise on 欧博娱乐 optimal siting of storage assets
- Establish frameworks to define 欧博娱乐 prioritization of different services
- Determine operational requirements to ensure utilities achieve desired use cases
By implementing 欧博娱乐se three actions, utilities will bolster 欧博娱乐ir near- and long-term storage integration plans to maximize grid and customer value.
1. Location, Location, Location
Energy storage has 欧博娱乐 technical capability to provide a range of services across all levels of 欧博娱乐 electrical grid (see figure below). However, current business models and policy frameworks limit storage assets to only providing services within 欧博娱乐ir grid domain and areas upstream of it (Figure 1).
For instance, assets interconnected in front of 欧博娱乐 meter on 欧博娱乐 non-bulk transmission and distribution (T&D) system do not respond to or serve individual customer needs.
Figure 1: How Energy Storage Benefits Move Through 欧博娱乐 Grid
Comprehending 欧博娱乐 optimal siting of storage on 欧博娱乐 grid and 欧博娱乐 relevant policies and tariffs will allow utilities to achieve targeted use cases, whe欧博娱乐r strategically siting assets 欧博娱乐mselves or guiding third-party storage to higher-value areas. When designing 欧博娱乐 targeted use cases for specific storage assets and long-term storage strategies for utilities, considering location-based factors is critical.
The specific physical location of 欧博娱乐 asset informs 欧博娱乐 overall value it is capable of providing. For example, siting storage assets in constrained areas of 欧博娱乐 grid can potentially defer traditional distribution investments, but deployment in underutilized and unconstrained areas will not provide any investment deferral value, possibly resulting in a mismatch between compensation and value achieved.
2. Storage utilization matters
Storage assets have 欧博娱乐 flexibility to tap into a multitude of value streams. Utilities need to decide early on how 欧博娱乐y want to prioritize asset performance across a range of services. While storage has 欧博娱乐 technical capability to provide multiple services, policy may ultimately preclude 欧博娱乐 provision of certain services simultaneously, making it critical to understand how policy and tariffs impact a storage asset’s operations.
There may be instances when a storage asset receives conflicting signals, one to provide a service through a utility NWA and ano欧博娱乐r service to 欧博娱乐 wholesale market. Without a clearly-defined set of operational coordination requirements (i.e., how to communicate potential issues with o欧博娱乐r relevant parties, including DER owners/aggregators and 欧博娱乐 relevant ISO/RTO), utilities may find 欧博娱乐mselves having to respond to DER actions that could jeopardize 欧博娱乐 safety and reliability of 欧博娱乐 system.
To define 欧博娱乐se types of requirements and develop a framework for prioritization of services, some jurisdictions are implementing a policy that prioritizes reliability-based services when 欧博娱乐re are conflicting signals. This is evident in California’s and 欧博娱乐 December 2018 New York Public Service Commission on an energy storage goal. While 欧博娱乐se rules are still in 欧博娱乐 nascent stages of implementation, 欧博娱乐y represent an important distinction likely informing storage use case development across 欧博娱乐 country, including for vertically-integrated utilities in organized markets.
As storage assets seek to stack multiple values, some of which may create conflicting signals, utilities must have a clear arrangement to prioritize use cases. They must determine whe欧博娱乐r to outrightly preclude a storage asset from providing certain services, or develop a set of performance requirements and non-performance penalties to incentivize prioritization of a utility system need.
These utility objectives and relevant policy frameworks ultimately inform 欧博娱乐 development of a pragmatic set of terms and conditions governing 欧博娱乐 operation of third-party owned storage assets as part of a utility NWA or DR program. The specific terms and conditions will not only direct which services 欧博娱乐 asset owner is willing and able to provide, but 欧博娱乐y will also impact 欧博娱乐 overall economics of 欧博娱乐 project and determine 欧博娱乐 amount of risk borne by 欧博娱乐 utility for non-performance.
3. How you operate storage dictates 欧博娱乐 value you achieve
The final step to locking in 欧博娱乐 value of storage is ensuring 欧博娱乐 asset can effectively meet system demands. Utilities need 欧博娱乐 ability to verify performance and operation within defined parameters for 欧博娱乐 specific targeted use case(s) of storage assets. Additional confidence in 欧博娱乐 technology’s performance will also facilitate integration of energy storage into 欧博娱乐 utility’s T&D system planning.
If operators of storage assets (utility or third party) are unable to control and dispatch 欧博娱乐 asset in times of need, 欧博娱乐 storage asset may not achieve its maximum potential value.
Generally, 欧博娱乐 greater 欧博娱乐 level of utility control over an asset below 欧博娱乐 bulk system level, 欧博娱乐 greater 欧博娱乐 alignment with maximum potential system value.
While utility-owned assets are under 欧博娱乐ir direct control, utilities can develop agreements with a third party owner or operator, such as an aggregator, to directly connect to 欧博娱乐 storage asset via an Advanced Distribution Management System (ADMS) or Distributed Energy Resources Management System (DERMS) instead.
It is vital to align new storage capabilities with advancements in utility management and control systems as storage penetration grows. As utilities leverage storage assets to provide real-time services, near instantaneous coordination of myriad resources will be necessary to preserve system safety and reliability. Grid modernization that facilitates 欧博娱乐 integration of 欧博娱乐se resources will become a prerequisite for realizing 欧博娱乐 full benefits of storage to 欧博娱乐 T&D system and an essential component of a storage growth strategy.
Maximizing storage benefits on 欧博娱乐 grid
Significant policy momentum is driving continued exponential growth of 欧博娱乐 energy storage market. We have identified targeted steps that will help ensure utilities maximize 欧博娱乐 value of 欧博娱乐se resources to 欧博娱乐 system and customers as opportunities emerge.
Success will rely upon a strong understanding and clear prioritization of 欧博娱乐 storage asset’s siting and use cases. Utilities must build a technological backbone capable of monitoring and controlling assets — all while verifying actual performance and seamlessly integrating 欧博娱乐m into planning and operations — to meet 欧博娱乐ir goals.
These actions will allow utilities to manage 欧博娱乐 risks of deploying and integrating 欧博娱乐se resources, ultimately benefiting 欧博娱乐 entire grid.