Energy Storage Applications

Applications & System Wide Benefits of Energy Storage and Power Electronics Integration

Energy storage provides a myriad of beneficial services and cost savings to our electric grid, and companies are deploying storage technologies for a number of different purposes.  Large scale energy storage also allows today's electrical system to run significantly more efficiently, and that greater efficiency means lower prices, less emissions and more reliable power.
Traditional energy sources - like coal and natural gas power plants - have to be turned on and off as demand fluctuates, and are almost never operating at peak performance. This means that energy not only costs more, but pollutes more, than is necessary to meet our energy needs. And the slow ramp up time of these bulk generation facilities means they cannot respond to spikes in demand in real time, potentially leading to brownouts and poor power quality. With the widespread adoption of renewable energy resources, energy storage is equally useful. As is often noted, these energy sources are intermittent in nature, producing energy when the sun is shining and the wind is blowing. By storing the energy produced and delivering it on demand, these clean technologies can continue to power our grid even when the sun has set and the air is still - leveling out jumps in output to create a continuous, reliable stream of power throughout the day. But warehousing energy from diverse resources for use at a different time is only one of the many applications of energy storage. Storage technologies also improve the quality of power through frequency regulation, allows companies to produce power when it is cheapest and most efficient, and provide an uninterruptible source of power for critical infrastructure and services.
Renewable Generation Value Enhancement Electricity storage can enhance the value of energy from renewable generation in at least two fundamental ways.  Storage can “firm-up” renewables’ output so that electric power (kW) can be used when needed.  Similarly electric energy (kWh) generated during times when the value is low can be “time-shifted” so that the energy can be sold when its value is high.  One option would be to charge existing storage with electricity from wind generation as well as from the grid.  Another would be to install additional storage at the renewable site. Substation Upgrade Deferral A utility can defer the upgrade of certain substation components or perhaps even an entire substation by having an electricity storage system at the proper location.  For example, a storage facility within the substation allows stored electricity to be distributed at specific times when the power limits of one or more transformer or circuit breaker would be exceeded.  One might wish to consider this item as part of a broader T&D deferral, but structurally the substation is different from the lines and may be owned by different entities. Energy Arbitrage Arbitrage involves purchasing inexpensive electricity when its demand and cost are low; and then selling the electricity when demand and price are high.  Storage systems that operate in this market generally have the capacity to storage large amounts of energy, interact with the power grid at the transmission level, and operate on a diurnal cycle of charge and discharge.  Examples are pumped hydro plants, compressed air electricity storage facilities, and large battery installations. Time-of-Use Energy Cost Reduction This is much like arbitrage, but it is on the user side of the meter.  Customers that pay “time-of-use” energy prices may find that storage can reduce their overall cost for electric energy.  Customers increase the amount of stored electricity during off-peak time periods when their electric energy price is low, then discharge the energy during times when on-peak (time-of-use) energy prices apply. Demand Charge Reduction Similar to other cases, electricity storage can be used by the end-user who must pay an incremental amount (typically each month) for the peak power delivered for any 15-minute period during that month.  This is a negotiated cost and is based on the amount above some base value.  It is a single value, say 5 $/kW/month and changes from month to month as the demand changes.  The user typically controls certain parts of the load, such as air conditioning, large pumps, etc to keep the demand charge under control.  Onsite electricity storage provides the user with additional control of process costs and allows control of the demand charge so it is less of a factor in determining facility operation. Transmission and Distribution (T&D) Upgrade Deferral This application is sometimes referred to as “Deferred T&D Upgrade Investment”.  It involves the temporary use of an electricity storage device.  The storage unit is installed on the power grid, usually near the end use, where the need for a T&D upgrade is forecast.  The electricity storage system allows the existing transmission line to be used for a longer time, either because it is not replaced or is not upgraded.  The benefit is equal to the annual carrying charges for the capital investment that are avoided if the upgrade is deferred. Transmission Support and Avoidance of Congestion Charges (Peak Demand Charges) Electricity storage improves the performance of the transmission system to the extent that it increases the load carrying capacity of the transmission system; a benefit accrues if additional load carrying capacity defers the need to add more transmission capacity and/or additional T&D equipment.  This provides a benefit to the owner of the transmission system. Utilities that do not own transmission facilities pay those who do for transmission “service”.  Thus, when non-owners use the transmission system to move energy from one place to another the owners impose an “access” charge to cover carrying charges and operations and maintenance costs.  Today, transmission capacity for a transaction can include an access charge, which is scaled with overall power flow in the corridor, not just a linear relationship based on needed power flow.  The end user may avoid these charges by installing electricity storage. Reduced Cost for T&D Losses When storage near a load is charged off peak, the total resistive (I2R) losses over the period of a day are reduced.  Losses associated with the lower current are smaller than the losses along the same transmission corridor during heavy load periods.  A benefit accrues if there is a significant differential between T&D resistive losses on peak versus losses off-peak.  For example, if T&D I2R losses are 8% on peak and 5% off-peak the avoided losses are 3%.  As a result, fuel use and related air emissions are reduced.  The benefit is the total cost of the extra energy generated and the cost of extra generation and transmission capacity.  This can amount to some 20 to 50 $/kW/year. T&D Life Extension Consider a 3 MW upgrade to a 9 MW distribution system, which will eventually be needed to supply a 12 MW load.  The total expenditure for the change might be $1,500,000 to $2,000,000 and the annual carrying charge for the investment would be about $150,000, i.e., $50 per kW per year.  Since, in practical cases, the total increase in capacity is not needed immediately.  If the load growth is typical of the US, it will be less than 2.5 % each year.  Thus, a 225 kW electricity storage system would ensure capacity during the first year.  Similarly, an additional 225 kW could be added the next year, etc.  So long as the annual cost of the storage system is less than the annual carrying charges, it is a good solution.  In fact, with the leverage, it is possible that the storage system would pay for itself in less than two years.  At some point, however, the grid upgrade must occur.  At that time, the electricity storage system will be disconnected from the grid.  Depending on the life expectation of the storage system, it could then be used for exactly the same purpose at a different site. Power Quality Improvement Energy storage systems can be used to follow load, stabilize voltage & frequency, manage peak loads, improve power quality, defer upgrade investments, and support renewables. Electricity storage provides several benefits for electric power utilities, transmission companies, electricity generators, and electric power end users.  These benefits include: reduced financial losses due to poor power quality and power outages, energy price arbitrage involving charging with low priced “off-peak” energy for use later when energy cost and price is high, and a variety of services that can be described, but which may or may not provide revenue at present.  An economist might say that though the benefits exist, they are not internalized, meaning that today no mechanism whereby the supplier can accrue revenue from the benefit. Simply put, the electricity market is not economically efficient because of the way the services are priced.  Over the past decade or so, which has seen several attempts at reregulation, the value of the benefits that electricity storage can provide have been expanded and quantified.  Some have been evaluated, isolated, and even demonstrated.  The latter include, for example, the class of benefits called “distributed” benefits (those which accrue because of the location of the storage capacity), and benefits associated with superior performance of the transmission system. Reduced Need for Generation Capacity Today, many electricity storage systems including batteries, capacitors, and flywheels interact with the grid via an electronic power controller. Some power markets assign high value to this functionality, allowing the owner of a facility with this characteristic to accrue monetary benefits. The utilities generally have several reserves:
  • Spinning Reserve – Generation capacity that is on-line but unloaded and that can respond within 10 minutes to compensate for generation or transmission outages.  “Frequency-responsive” spinning reserve responds within 10 seconds to maintain system frequency.  Spinning reserves are the first type used when shortfalls occur.
  • Supplemental Reserve – Generation capacity that may be off-line or that is comprised of a block of “curtailable” and/or “interruptible” load and that can be available within 10 minutes.  Unlike spinning reserve capacity, supplemental reserve capacity is not “synchronized” with the grid (frequency). Supplemental reserves are used after all spinning reserves are on-line.
  • Backup Supply – Generation that can pick up load within an hour. Its role is, essentially, a backup for reserves.  Backup supply may also be used as back up for commercial energy sales.
Frequency Regulation For small power systems, for example where there are only one or a few generators, significant load increases will cause the frequency to slow and the voltage to droop.  Similarly, the frequency will increase when there is loss of load.  If the frequency varies by too large an amount, there are system wide impacts as motors speed up or slow down, etc.  Of particular significance is the case where the frequency and voltage decrease.  Under these conditions, electric motors tend to demand greater current to maintain power output and thus worsen the effect. Large power systems have frequency control requirements that set limits at which the utility or the generator must carry out some action.  An electricity storage device can supplement the power system while total generation is increased either by the addition of generators or while the power output of online generation is increased.

Facts & Figures

Did you know?

  • According to market research firm IHS, the energy storage market is set to “explode” to an annual installation size of 6 gigawatts (GW) in 2017 and over 40 GW by 2022 — from an initial base of only 0.34 GW installed in 2012 and 2013.
  • The U.S. energy storage industry comprises hundreds of companies and thousands of American workers building commercial energy storage systems throughout the country.
  • Flywheel and battery energy storage systems are operating today in the competitive ancillary services power market – providing a 10x faster and more accurate response to a power dispatcher’s signals compared to power turbine generators.
  • Over 60 million Americans in 13 mid-Atlantic states plus the District of Columbia are saving money and receiving highest quality service thanks to energy storage systems operating in that region.
  • PJM Interconnection projects that just a 10-20% reduction in its frequency regulationcapacity procurement - made possible by additional storage projects - could result in$25-50 million in savings to residential, commercial and industrial consumers.
  • The California Public Utilities Commission (CPUC) approved a target requiring the state’s three largest investor-owned utilities, aggregators, and other energy service providers to procure 1.3 gigawatts of energy storage by 2020.
  • An IMS Research report expects the market for storing power from solar panels – which was less than $200 million in 2012 – will catapult to $19 billion by 2017.
Citation: Electricity Storage Association, “Technology Applications”, Electricity Storage Association, (accessed March 2012. Updated March 2016.)