Less Risk, More Arbitrage Income for Microgrid Operators and Owners?

on March 26, 2020

Often, microgrid operators have the choice of either purchasing a fixed supply contract or playing in the market, but not both, said James McGinniss, CEO and co-founder, David Energy, a competitive retail electricity supplier.

“Microgrid customers are often faced with a bad choice: They can take an indexed contract in order to capitalize on arbitrage as a value stream, and thus take energy market risk (be exposed to price spikes), or they can take a fixed contract that eliminates risk but also their ability to capitalize on arbitrage,” he said.

His company is now focusing on providing different variations of fixed supply contracts that allow microgrid operators to earn income by participating in the market, especially demand response programs. He expects the offerings to help reduce risk and allow microgrids operators and owners to earn money providing demand response and other services.

David Energy can provide variable or fixed products. “What matters is that we will structure the deal however a customer likes. What we’re offering that is different in the market is a willingness to structure future arbitrage potential into a fixed product. We’ll take the performance risk on an asset in commodity markets. Or, the customers can stay on a variable rate if they want to take that risk, and use our algorithms to manage their assets and achieve further savings.”

The business model is based on software as a service, providing demand side management, demand response and other options and being paid for it.

How the model works
David Energy provides a package, called Micor, that includes technology-agnostic software that allows for the control of numerous assets while participating in the market.

“When you have solar, a battery and backup generator, you have to find a software company to do demand charge management with the battery,” he said. David Energy generally controls the assets for the customer, but sometimes customers control the assets, if for example they want to be in charge of temperatures in buildings. In that case, David Energy sends real time recommendations to the customer through its dashboard.

Many microgrid projects involve developers and customers pulling together a demand response provider, software for the battery and a retailer for energy supply. His goal is to provide an all-in-one service.

“We’re an energy retailer and we have our own software controls,” he said. “We can step in and provide a fixed supply contract that takes into account the arbitrage potential of a battery.”

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Fractal Energy Storage ConsultantsLess Risk, More Arbitrage Income for Microgrid Operators and Owners?

Getting California’s Microgrids Interconnected Is Even More Important Now

on March 26, 2020

California began a policy focus on microgrids earlier this year, as a possible mitigation for the expected wildfires and perhaps even more severe power shutdowns this coming fire season. The idea is that microgrids – basically generating needed power onsite and being able to operate even if the larger grid goes down – can help keep the lights and essential power on for homes, businesses and key facilities like hospitals and other medical facilities, as well as government buildings or any business that feels that it is important to have power even when the grid is down.

The new proceeding at the Public Utilities Commission (PUC), R.19-09-009, has a number of tracks focused on different policy issues. Track 1 is near-term, dealing with possible solutions that can be implemented this year in time to help reduce the severity of the upcoming power shutdown events this summer.

The Commission has made it clear that this proceeding is a very high priority and if they are able to get some solutions in place by this summer, it may well set a record for fast action by the Commission.

I’ve taken part in this new proceeding on behalf of my client, the non-profit Green Power Institute (a unit of the Pacific Institute). We and many other parties have suggested that a focus on interconnection problems facing microgrids will yield the most bang for the buck. In a workshop at the PUC earlier this year every party spoke out about the lengthy and expensive interconnection process facing microgrids and other renewable energy facilities.

A promising solution that seems to have a lot of support among involved parties and policymakers is standardized, single-line, diagrams for the most common microgrid configurations of solar plus battery storage. Having standardized diagrams should allow for much faster processing of interconnection applications that use these diagrams – but only if the processing timelines are mandatorily shortened for those projects. Otherwise, the utilities will just process them more quickly internally but still use the allotted time allowed by the Rule 21 interconnection tariff.

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Fractal Energy Storage ConsultantsGetting California’s Microgrids Interconnected Is Even More Important Now

Innovative Energy Storage Solutions to be Explored on Advancements, Hosted by Ted Danson

on March 25, 2020

JUPITER, Fla., March 25, 2020 /PRNewswire-PRWeb/ — DMG Productions will explore recent developments in energy storage technology on an upcoming episode of Advancements with Ted Danson, scheduled to broadcast 3Q/2020. Check your local listings for more information.

Energy storage can take many forms, including pumped hydro, flywheels, and batteries. Focusing on recent developments in microgrid technology, this segment of Advancements will explore energy storage integrating secondary-use batteries, which are batteries that have been removed from service in Battery Electric Vehicles.

The show will educate about a new energy routing technology that blends and optimizes electrons from any and all sources of energy, which can provide energy off-grid or can supplement the grid. Audiences will see how the Multi-Flex™ energy routing technology can place everything necessary to manage and store energy into a single cabinet and will learn how batteries for storage can be internal to the cabinet or stored in separate racks.

The show will discover how batteries removed from service in Battery Electric Vehicles have been integrated into energy storage systems and will educate about how this technology can produce smooth and reliable power, utility cost savings, and socially responsible energy.

“Indie Power Systems was the first to integrate secondary-use batteries into a commercial energy storage system. This is both ecologically responsible and can provide the lowest-cost energy storage. To accomplish this, the company designed and built a complete energy management system that includes the software logic, the electronics hardware, and of course the Battery Management System,” said Founder and CEO, Steve Tolen.

Highlighting Indie Power Systems’ (IPS) Redundant Array of Inexpensive Batteries (RAIB™) technology, viewers will see firsthand how the technology allows the blending of multiple battery chemistries into a Hybrid Energy Storage System (HESS), and will learn what makes IPS a leader in battery energy storage.

“Today, batteries are the most prevalent method of energy storage,” said DJ Metzer, senior producer for DMG Productions and the Advancements series. “We look forward to exploring how Indie Power Systems optimizes battery storage.”

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Fractal Energy Storage ConsultantsInnovative Energy Storage Solutions to be Explored on Advancements, Hosted by Ted Danson

NextEra’s Secret Recipe For Energy Storage: Planning

on March 25, 2020

One of the biggest criticisms of power produced by renewables is that the wind does not always blow and the sun does not always shine. Since renewable electricity generation can be intermittent, it is at a disadvantage compared to coal, natural gas, and nuclear power plants that produce steady power. As a result, energy storage is considered the missing link between intermittent renewable power produced by technologies, such as solar and wind, and a 24/7 reliable supply of renewable electricity. In addition, no other power industry technology can serve so many vital roles: renewable production smoothing; energy shifting and arbitrage; fast ramping ancillary services; alternatives for peaking generation, transformers, and line upgrades; voltage and frequency support; microgrid supply; electric vehicle charging support; etc.

Over the last decade a surge in lithium-ion battery production has led to an 85% decline in prices, making electric vehicles (EVs) and energy storage commercially viable for the first time in history. Batteries hold the key to transitioning away from fossil fuel dependence and are set to play a greater role in the coming decade.

NextEra Energy, North America’s leading wind and solar generator, is adopting an aggressive approach on the falling cost of energy storage by evaluating the addition of batteries to its existing solar facilities. At the beginning of the year, NextEra’s earnings call showed that the company’s stock has gained more than 50% in the past year, as it deployed 2.7 GW of new and repowered renewables, including 700 MWac of solar power and 340 MW/1.3 GWh of energy storage in 2019.

A small but growing number of utilities across the United States are taking a similar approach to NextEra and adding storage at existing solar plants. In doing so, they can claim the Investment Tax Credit (ITC), tap additional revenue streams, and maximize the existing grid infrastructure.

In fact, NextEra CFO Rebecca Kujawa noted on the same earnings call, “We are designing our own management systems. We believe that some of the real value-add that we are going to be able to provide to customers – that will differentiate us from the competition – is battery system management. This management system and optimization is going to be part of the secret sauce of our batteries.”

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Fractal Energy Storage ConsultantsNextEra’s Secret Recipe For Energy Storage: Planning

COVID-19: Solar And Storage Installs Considered ‘Essential Services’ in Locked-Down California

on March 25, 2020

Installing and maintaining renewable energy resources can be viewed as an “essential service”, according to the California Solar + Storage Association (CALSSA), based in one of six major state jurisdictions in the US to have ordered citizens indoors for the time being.

The California State Public Health Officer and Director of the state’s Department for Public Health has ordered that all individuals obey instructions to “stay home or at their place of residence, except as needed to maintain continuity of operation of the federal critical infrastructure sectors”. While described widely as a lockdown, the ruling is described at state level as a “shelter in place” directive.

CALSSA said that while the government information is constantly being updated and must be adhered to, with the association prepared to keep on top of monitoring that dynamic situation and give advice accordingly, it considers that solar and storage installation and maintenance work meets that all-important criteria.

The association’s dedicated resources page for COVID-19 advice referred to a list issued by the State of California of ‘Essential Critical Infrastructure Workers’. It includes electricians and those in the construction industry, particularly those providing services that are “necessary to maintaining the safety, sanitation and essential operation of residences”.

‘Busier than ever’ for customer interest, but circumstances dictate a slowdown
In light of the guidance from CALSSA, one energy storage system provider based in California, ElectrIQ, emailed Energy-Storage.news to say that while COVID-19 has caused “confusion and concern” in the marketplace, the company continues to get its product out into the field.

“Covid-19 has definitely caused confusion and concern in the marketplace,” said Aric Saunders, executive vice-president for sales and marketing at ElectrIQ.

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Fractal Energy Storage ConsultantsCOVID-19: Solar And Storage Installs Considered ‘Essential Services’ in Locked-Down California

Battery Storage at US$20/MWh? Breaking Down Low-Cost Solar-Plus-Storage PPAs in The USA

on March 24, 2020

Over the past few years, a series of renewables-plus-storage projects announced across the USA created headlines and raised eyebrows due to the extremely low combined PPAs involved. Starting in 2015 with a US$139 /MWh PPA signed by KIUC of Hawaii, we then saw the next landmark reached in 2017 with a US$45 /MWh agreement by Tucson Electric Power of Arizona – only to be surpassed last year by the US$40 /MWh Eland PV-plus-storage project in California.

Comparing that to the generation costs of a conventional peaker easily reaching US$200 /MWh, PV-plus-storage makes an increasingly compelling case. It’s no big surprise, therefore, that around 40 of these systems are already in operation in the USA, combining about 533MW of storage with 1,242MW of solar capacity, mostly in California, Hawaii and Florida, as reported by the Institute for Energy Economics and Financial Analysis (IEEFA).

To understand energy storage’s contribution to this boom, we need to break down the combined PPA into a solar and a storage share. Let’s take the aforementioned Eland project for example, in which the PPA without storage would have amounted to US$20 /MWh (“base” price) and a US$20 /MWh “adder” was offered for the storage system, resulting in a PPA of US$40 /MWh for all MWhs delivered. While a PV LCOE at this level is no big news anymore, US$20 /MWh for energy storage seems absurdly low. How is such a low storage adder possible, you might ask, considering that LCOS (Levelised Cost of Storage) is very likely to remain above US$100 /MWh for the next couple of years?

We asked ourselves the same question and decided to drill down into the Eland project (above), consisting of 400MW of PV (AC) and 300MW / 1,200MWh of energy storage located in the Californian Mojave desert, to find the answer.

Reverse-engineering the actual remuneration for the storage system
It is important to understand that the storage adder component of the PPA should not be compared to the LCOS as it is not equal to the actual remuneration for the energy provided by storage. To put the adder into relation to storage costs, we need to “reverse-engineer” this remuneration per MWh, i.e., how much is paid for each MWh discharged from the energy storage system, and we can do this in five steps.

Firstly, we need to account for the fact that the storage adder is paid for all MWhs delivered by the project, not only for the MWhs discharged from the storage system. Taking a sample day from the Eland project, the amount of energy discharged from storage (1,200MWh) is significantly smaller than the amount of energy delivered by the solar-plus-storage system in total (4,700 MWh), i.e., the energy for which the project is remunerated. In other words, the renumeration for 1 MWh of stored energy is distributed over several MWh delivered by Eland in total, in this case, 3.9 MWh. Hence, the ratio of total energy remunerated over energy discharged from storage, 3.9, needs to be multiplied with the storage adder to calculate the actual remuneration for energy discharged from the storage system. That results in an “adjusted adder” per energy from the energy storage system of US$20 USD/MWh * 3.9 = US$78 /MWh.

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Fractal Energy Storage ConsultantsBattery Storage at US$20/MWh? Breaking Down Low-Cost Solar-Plus-Storage PPAs in The USA

Energy Storage in Europe: Big Things Expected Despite 2019 Slowdown

on March 24, 2020

With many climate protection advocates as well as the industry itself calling on Europe’s lawmakers to recognise the importance of energy storage, a “significant slowdown” in 2019 is expected to be countered with a more positive outlook going forwards.

Yesterday (23 March 2020), the European Association for Storage of Energy (EASE) and analysis firm Delta-EE released the latest annual edition of its European Market Monitor for Energy Storage (EMMES). It shows that 1GWh of energy storage was deployed across Europe in 2019, a “significant slowdown” compared to the previous year, when over 1.4GWh was installed.

Market dynamics across the continent are complex – the main form of remuneration for large-scale energy storage in particular is to be found in providing frequency regulation and other ancillary services to grid operators, rather than in bulk storage and dispatch of energy from batteries. This front-of-meter segment, where battery systems are connected directly to the grid, saw a slowdown as frequency containment reserve (FCR) markets are becoming saturated in former leading regions such as the UK and Germany, the report found.

At the Energy Storage Summit hosted in London by our publisher Solar Media, for example, Jochen Schwill, CEO of Next Kraftwerke, an aggregator that plays into those markets, said that weekly prices paid for services in Germany have halved, while there is no market for longer duration storage.

“The prices in these markets has reduced from €16 (US$17.26) per MW per hour back in 2015 down to €6 per MW/hour today so it’s a big reduction in this price and Next Kraftwerke is a German aggregator, so they were taking the batteries to the market – and the German market is seriously slowing down in the past [couple of] years,” Corentin Baschet, head of market analysis at market research and technical consulting services company Clean Horizon, told Energy-Storage.news in an interview.

Europe’s FCR market is now interconnected, with six countries involved (Germany, France, Austria, Belgium, the Netherlands and Switzerland – with Denmark set to also join soon) and this has increased the efficiency with which batteries can quickly balance the supply and demand for electricity across the continent.

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Fractal Energy Storage ConsultantsEnergy Storage in Europe: Big Things Expected Despite 2019 Slowdown

‘Immediate And Potentially Devastating’ to US Projects: Hard Truths Emerge From ESA COVID-19 Survey

on March 24, 2020

The energy storage industry in the US is experiencing delays and could be staring in the face of potential job losses, according to a poll conducted by the national Energy Storage Association (ESA).

“The COVID-19 virus has placed unprecedented stress on the physical and economic health of communities around the world, and in just a few short weeks has upended our daily personal and work lives for an undetermined period ahead. For individuals working in the energy storage industry, the story is no different,” a statement sent out yesterday from the ESA read.

The association had sent out a short survey last Wednesday, 18 March finding out from 175 respondents that “the impact has been immediate and potentially devastating to our industry”.

Almost two-thirds (62%) of respondents are “already experiencing delays in project development,” while an actual two-thirds (66%) expect to “incur delays soon”.

Of that latter figure, 44% are experiencing short-term impacts (defined as a month’s worth of delays) already, while more than a third (37%) anticipate six months or more of delays in project deployment.

What can be done?
The ESA highlighted the benefits that energy storage brings, including increasing grid efficiency and lowering the cost of power supply, adding longevity to existing grid infrastructure, allowing for more clean energy resources to be added and enabling backup for when blackouts occur. This is added to the employment of some 60,000 people across the US and around US$1 billion a year of economic activity that energy storage accounts for.

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Fractal Energy Storage Consultants‘Immediate And Potentially Devastating’ to US Projects: Hard Truths Emerge From ESA COVID-19 Survey

Coronavirus Outbreak To Impact China’s Battery Storage Production

on March 23, 2020

The novel coronavirus (Covid-19) outbreak has caused a slowdown of China’s economic growth, and with China being a global manufacturing hub, is having a negative impact on the world economic growth as well. The majority of the factories remain closed or are not able to attain full production capacity due to shortage of staff and raw materials. These actions have negatively impacted stock markets across the world. Corresponding to the spread of this coronavirus outbreak, risks are on the rise.

The current scenario in China is going to have an effect on the global clean energy sector, including renewable energy sources, battery energy storage, electric vehicles (EVs), and renewable heat and cooling. China is a world leader in renewable energy investment, which can be seen in the country’s wind power installation; wind turbine manufacturing and solar photovoltaic (PV) manufacturing. The country is increasing its portfolio of renewables, decreasing coal consumption, and enhancing efficiency in an effort to deal with carbon emissions. The Chinese Government has also been involved in numerous measures to boost strong battery manufacturing with the aim of being a leader in the global battery market.

China’s battery manufacturers, supported by the government’s industrial expansion vision, are coming up with massive battery production plants. CATL and BYD, two of the largest battery manufacturers in China, are widening their production capacities abroad backed by the Chinese Government. Lithium-ion (Li-ion) batteries are the undisputed market leader in the electrochemical storage projects across the world. The global lithium-ion battery market is dominated by players such as Panasonic, LG Chem, Samsung SDI, BYD and CATL. Their position will strengthen over the next five years but with a tilt towards Chinese suppliers, led by BYD and CATL.

As of December 2019, the number of Li-ion battery megafactories that are in pipeline to 2029 stood at 115, with 88 of them in China. Europe’s planned Li-ion battery capacity is 348GWh by 2029, while China’s pipeline stands at 564GWh by 2028. The total Li-ion battery capacity which is under pipeline is equivalent to 39 million electric vehicles (EVs) by 2029. Encouraging government policies, huge manufacturing base, protectionist measures, along with rising demand for batteries augur well for the Chinese battery market.

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Fractal Energy Storage ConsultantsCoronavirus Outbreak To Impact China’s Battery Storage Production

Panasonic To Suspend Battery Production at Tesla Joint Venture in Nevada Due to Coronavirus

on March 23, 2020

TOKYO, March 21 (Reuters) – Panasonic Corp 6752.T said on Saturday it will temporarily suspend production at its battery joint venture with U.S. electric carmaker Tesla Inc TSLA.O in Nevada because of the coronavirus outbreak.

The Japanese electronics company, which supplies battery cells for Tesla’s electric vehicles, will scale down operations at so-called Gigafactory 1 early next week before closing it for 14 days, Panasonic said in an emailed statement.

A Panasonic spokeswoman declined to comment on how the suspension would affect Tesla, which produces battery packs using Panasonic cells at the Nevada plant.

Tesla on Thursday said its operations at the Nevada battery plant would continue, while it would suspend production at its San Francisco Bay Area vehicle factory on March 24.

Panasonic said Nevada plant employees affected by the shutdown will receive full pay and benefits for the entire period. During the closure, the facility will undergo intensive cleaning, it said in the statement.

TechCrunch, which first reported the planned suspension, said Panasonic has about 3,500 employees at the Nevada plant.

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Fractal Energy Storage ConsultantsPanasonic To Suspend Battery Production at Tesla Joint Venture in Nevada Due to Coronavirus