Energy storage is surging across America.  Total installed capacity passed 1,000 megawatt-hours (MWh) during a record-setting 2017, and the U.S. market is forecast to nearly double by adding more than 1,000 MWh new capacity in 2018 – adding as much capacity in one year as it did in the previous four.

However, this exponential growth has mainly been limited to vertically integrated utilities operating outside of the country’s organized power markets, which serve two-thirdsof all U.S. electricity consumers. So how can energy storage plug into these markets?

In a word, revenue.

Energy storage can collect revenue in America’s organized power markets three ways: platforms, products, and pay-days.  However, different projects will tap these potential revenue streams in different ways, and investors should seek nimble developers who can navigate a complex and evolving regulatory and market landscape.

In part two of this series, we’ll explore how storage will disrupt power markets as more and more capacity comes online, but first let’s cover the three ways it can tap the U.S. organized market opportunity.

Platforms: The Best Laid Plans…

Independent system operators (ISOs) go through a planning process where they identify opportunities for new transmission to improve reliability or market efficiency. Similarly, it’s normal to think about energy storage as a reliability asset, and it can become integrated as a lower-cost, non-transmission alternative to boost reliability.

Here’s an example: A relatively isolated area on the grid must plan for losing a transmission line or local generator during peak demand.  Rather than adding new transmission or local generation, building a storage project can carry a local grid through an emergency.  If the economics add up, the project will then be built, and paid on a cost-of-service basis financed through transmissions charges.

If storage in this example plays the same role as transmission for so-called “reliability transmission expansion”, it should also enjoy an analog to “economic transmission” – transmission built to move surplus energy to constrained areas to create benefits for market buyers and sellers.  But to date, only one such project exists within the U.S. independent system operators (ISOs), located near Baltimore on the PJM grid.

The German industrial giant Siemens is investigating the use of ammonia as a way to store and transport hydrogen in energy systems with high penetration of renewables.

The company this month opened a £1.5 million ($2 million) proof-of-concept plant in Harwell, Oxfordshire, U.K. to test the efficiency of converting electricity to hydrogen, and then to ammonia, and then back.

The plant, funded one-third by Siemens and two-thirds by government agency Innovate U.K., is thought to be the first of its kind in the world.

The U.K. Science and Technology Facilities Council, University of Oxford and Cardiff University are also attached to the project, which includes a wind turbine, a nitrogen generator, a water electrolysis system, a Haber-Bosch reactor and a 30-kilowatt electric genset.

Ian Wilkinson, program manager for the project within Siemens, told GTM that the research into ammonia was complementary to Siemens’ work on other energy storage technologies, such as batteries.

But batteries are primarily useful for electricity, which in the U.K. only accounts for around a quarter of all energy use, he said. “Chemical fuels have a [use case], including energy storage of electricity but also beyond it,” he said.

“It’s pretty apparent that we will need a range of energy storage solutions to decarbonize our electricity generation,” Wilkinson added. “I think a lot of different storage technologies will be required.”

Hyundai is the latest automaker to explore uses for so-called “second-life” electric-car batteries. It’s teaming up with Finnish energy-technology company Wärtsilä to use these batteries for stationary energy storage.

Even after they have degraded too much for continued automotive use, electric-car batteries still have plenty of usable storage capacity. Energy storage is an attractive second use for these batteries because it can boost the adoption of renewable energy. The more renewable-energy sources used to generate electricity, the greener electric cars become. It’s all connected.

While renewable-energy sources like wind and solar help reduce carbon emissions, the wind isn’t always blowing and the sun isn’t always shining. Energy storage helps adjust for the intermittent nature of these power sources by charging up with energy when it’s available, and discharging at a later time. Much of that energy would go to waste without storage batteries, since wind turbines and solar panels often harvest more than is needed at any given time.

Hyundai has already constructed a one-megawatt-hour test array using Ioniq Electric and Kia Soul EV batteries. Going forward, it plans to provide batteries to Wärtsilä, which will then market them to electric utilities and other companies as part of complete energy-storage systems.

Hyundai expects 29 gigawatt-hours of used electric-car batteries to be available by 2025, compared to the 10 GWh of batteries currently available for the energy-storage market. The prediction is based on an assumption of vastly expanded electric-car sales. Tesla has already pioneered the model of selling both electric cars and batteries for energy storage. BMW, Daimler, and Nissan have also discussed selling energy-storage battery packs, but not on the same scale as Tesla.

Other automakers have also experimented with alternative uses for electric-car batteries. Nissan plans to use Leaf batteries to power streetlights in a Japanese town devastated by the earthquake and tsunami that struck the country in 2011. Nissan partner Renault is using second-life batteries as part of its “Smart Island” project off the coast of Portugal. General Motors and Toyota have used batteries from the Chevrolet Volt and Camry Hybrid, respectively, in small-scale projects.

Jardelund, Germany, is now host to what is currently Europe’s largest battery energy storage system, a 50MWh project completed and announced just a few days ago by NEC Energy Solutions.

The customer, EnspireME, is a joint venture (JV) involving Dutch renewables company Eneco and Japan’s industrial conglomerate Mitsubishi Corporation. Power stored in the batteries can either be sold in Germany’s weekly primary reserve control markets to grid operators who would then use it to provide the balancing power, or the system’s operators and owners could directly use it to provide primary control reserve, where it can be used in direct competition with coal and gas.

While original plans for the installation involved surplus wind energy being stored in the batteries, the latest update from NEC ES said only that Eneco and Mitsubishi are set to investigate connecting the Jardelund battery system to the output of local windfarms. Electricity would be stored in periods of curtailment, where wind energy is ‘throttled down’ from entering the grid due to temporary oversupply.

The whole 48MW / 50MWh project apparently took NEC ES around eight months to complete, according to Eneco director for Generation and Storage, Hugo Buis, who said he was “very impressed” with the integrator’s efforts. Energy-Storage.news first reported on the project in April last year.

“This investment in energy storage will generate revenue for Eneco and Mitsubishi Corporation in the primary reserve market and also demonstrate the economic benefits of pairing energy storage with renewables, first proven with solar and now with the abundant wind generators in the Jardelund region,” NEC ES CEO Steve Fludder said.

NEC ES provided full EPC (engineering, procurement and construction) services including delivery of its adaptable Grid Storage Solution (GSS) and energy storage system controls software, AEROS. The installation uses around 10,000 lithium-ion battery modules.

The news comes shortly after NEC ES was announced as supplier to a 20MW battery storage project in the UK for Danish company Ørsted.

Earlier this year, in an interview with NEC ES’ Steve Fludder, the CEO said that in his estimation, a successful future for the energy industry would be centred around the creation of ‘enterprise platforms’ enabling asset owners and system owners to capture value across the whole marketplace.

BYD brought its two new energy storage offerings to Intersolar Europe in Munich this week as falling battery prices continue to make stationary energy storage a lucrative solution for businesses and homeowners around the world.

BYD makes the news regularly for its electric buses, SkyRail, and occasionally, its solar projects, but it has slowly been developing its stationary energy storage solutions. The new energy company brought its residential and commercial energy storage products to Intersolar Europe in Munich where the BYD Modular Outdoor Energy Storage System was nominated for the 2018 Electrical Energy Storage Award.

Commercial Energy Storage – the Modular Outdoor ESS

BYD’s commercial offering, the Modular Outdoor Energy Storage System (ESS) is, as the name implies, an energy storage system designed to be installed outdoors, where the IP55 certified Power Control System cabinet that it lives in can withstand the elements. BYD is putting the finishing touches on this new system which will be available for purchase in Q4 of 2018 and Q1 of 2019 around the world.

What makes the ESS unique is its module design that allows for additional storage capacity to be added or removed to fine tune the system to meet the storage demands of many more consumers than would be allowed with a fixed capacity battery system. This is something that is customized once with the purchase of the system but could also be upgraded over time as needs change.

The new ESS that is on display in Munich comes with twice the energy density than the last generation, and has an impressive 25-year service life for most of the components, with the exception of the battery. Energy density is the amount of power stored in a given volume, meaning that the new ESS can store twice the amount of energy in the same physical footprint than the last generation. The focus on delivering a robust product designed for a set-it-and-forget-it installation resulted in a mean time between failure (MTBF) of over 100,000 hours for the ESS.

Getting down to business, the Modular Outdoor ESS is the most impressive to real customers because the cost per unit has been dropped by 20% while also being more efficient to install. Both of these make the new system cheaper to install, with lower returns on investment. The new unit also comes with an integrated active cooling system that cools the batteries while using 20-30% less power.

As we move towards renewables in our efforts to decarbonise our economies, energy storage is becoming increasingly important. Could householders become an integral part of national electricity networks?

When Adam Courtney decided he wanted to reduce the energy bills at his “not particularly energy efficient” Grade II listed house in Godmanchester, England, solar panels were the obvious answer.

But, he says, he soon realised that the savings weren’t as great as he’d hoped. Renewable sources of energy don’t necessarily deliver at the right time and cloudy days saw his family drawing heavily on the national grid.

Meanwhile, he had spare capacity on sunny days, but got very little in return.

“We’d ended up feeding back into the grid, but the payment is tiny, so I ended up thinking ‘why do that?’,” he says.

Instead, the data centre owner decided that he himself could make better use of the electricity he was generating, if only he were able to store it for when it was needed.

He started researching battery storage – even at one point considering building his own system – before opting for a Tesla Powerwall that can store the excess energy generated by the solar panels.

The unit and supporting hardware costs just under £6,000, with installation costs of up to £3,000 on top. But it enables him to buy energy at cheaper times, lowering the running costs of both his home and the family’s two electric cars.

“With Economy 7 there’s cheaper electricity at night and the Powerwall knows it’s going to be sunny tomorrow so it knows how much power to buy,” he explains.

“My bill was £140 a month, but I spend £25 a month now on electricity, and most of that goes on the cars.”

More energy storage providers – such as Ovo Energy, Powervault and Moixa are entering the market – particularly as electric vehicles (EVs) promise to become a useful addition to the domestic energy mix. BMW i3 batteries are already being used to store windfarm energy in Wales, so it makes sense to integrate such car battery tech into homes.

A key factor when planning energy storage systems (ESS), for example for a microgrid, is to determine the expected cost savings and performance benefits provided by various ESS configurations.

Battery modelling offers a powerful way of predicting the lifetime performance and return on investment that will be provided by each ESS option.

Fuel savings are often a key factor in the choice of energy storage configuration, especially for microgrids which are often located in remote communities and rely on diesel generation, with logistical challenges around fuel delivery. However, cutting fuel consumption is just one of the purposes of battery modelling for microgrids.

Battery modelling techniques continue to evolve to better address the wider context of microgrid and renewable energy deployments. For example, simulations are now key to the project development process, as they deliver insights into renewable and storage applications ahead of deployment and help determine how much power and energy are required overall.

PRECISE MODELLING

Modelling an entire microgrid at a high level is a valuable exercise in assessing the viability of different deployments of renewable energy schemes with storage. However, when it comes to modelling the detail of these systems – such as bridging between multiple diesel generators in a large microgrid, or optimizing the set-points for operating with diesel generators in a smaller microgrid – more precise modelling is required.

High-frequency data, with granularity of no more than ten-minute intervals, is valuable. Such modelling provides insights into system operation, including diesel synchronization and cool-down times, to minimize diesel starts, maximize fuel savings and optimize battery
life.

High-level modelling is typically based on hourly data, and the granularity of ESS dispatch is correspondingly coarse. This kind of modelling is feasible even with minimal data input.

For example, an initial model of a microgrid can be constructed with minimal inputs, such as the coordinates of an island village off the US Pacific coast having a peak load of 150 kW in January. Based on this information, high-level modelling can be used to construct a typical load profile, and location-specific solar or wind data can be downloaded.

The modelling software can then quickly carry out multiple simulations to discover the optimum renewable energy power rating, along with an appropriate level of energy storage. The results illustrate fuel savings and, if sufficient inputs are provided, ROI.

Even among high-level stakeholders, there are real gaps in education, knowledge and understanding of what energy storage is, and what it can do. Not long ago, the constant use of hyped and inaccurate terms such as ‘silver bullet’ or ‘Holy Grail’ by some in the industry to describe energy storage technology, almost as if batteries are some sort of miracle cure for decarbonisation, probably did more harm than good for the overall perceptions of the industry.

So if energy storage is not a ‘silver bullet’ – and it’s becoming clear that it is not – then what exactly is it?

We were privileged at last week’s Intersolar Europe/ees Europe shows in Munich, Germany, to be joined by four leading thinkers – and doers – in the energy storage industry, who helped us tackle this difficult question.

1. Marek Kubik – Market director – Fluence
2. Scott McGregor – CEO – RedT
3. Emilien Simonot – CTO, Renewables – InnoEnergy
4. Jean-Baptiste Cornefert – MD, e-services – Sonnen

Throughout the 45-minute discussion, you will hear how the economics of clean energy are changing rapidly, how batteries and other energy storage can play a huge role in decarbonisation – if used correctly – and what needs to happen now to create and maintain a sustainable, profitable and socially beneficial industry.

“Energy storage is just a box…The [real] silver bullet is cheap solar and cheap wind, that’s what’s driving energy storage,” Scott McGregor from redox flow energy storage provider RedT said.

The energy dynamic around renewables is changing so quickly in Colorado that Zach Pierce, a senior campaign representative for the Sierra Club, can hardly keep up with it. “I feel like we’re having to rewrite the talking points on the drawing board every month in Colorado,” he said.

In December, the state’s largest utility — Xcel Energy — released a short report summarizing the responses to the solicitation it had issued to power suppliers for bids to bring new sources of electricity to the grid. The utility received 430 bids, and 350 of those were for renewable energy projects.

That was remarkable on its own, but what surprised people even more were the bids for projects that added battery storage to the mix. They were cheaper than anyone expected.

“It’s a testament to how quickly the market is changing,” Pierce said.

Changing attitudes

For years, renewable energy advocates have pushed utilities and regulators to consider adding battery storage to their electrical generation portfolios for flexibility and to reduce intermittency problems that come with solar and wind. Until recently, it wasn’t considered a realistic option: Batteries were expensive and largely untested by utilities, and risk-averse regulators mostly let grid managers ignore them in their bids, statements and long-term planning documents.

Analysts say that’s starting to change as batteries come down in price, as momentum builds behind renewables and as renewables create a natural market for storage. Utilities increasingly look at batteries as a tool for leveling out power available over the course of the day and for replacing bulky and expensive peaking power plants that have high costs but only occasionally run at or near full capacity to meet peak demand (in the Southwest, this might be one hot day in the summer when everyone has their air conditioning turned up).

NEC Energy Solutions announced that they have completed and commissioned an energy storage system for Germany-based EnspireME, a joint venture between Eneco, a Netherlands-based renewable energy company and Mitsubishi Corp.

The 48 MW energy storage system located in Jardelund, Germany has over 50 MWh of storage capacity and will generate revenue from the primary reserve market by providing reactive power to stabilize the transmission grid.

NEC provided turnkey engineering, procurement and construction services which included its GSS end-to-end grid energy storage solution and its AEROS proprietary energy storage controls software to build the largest energy storage system in Europe. The 48 MW energy storage system built for Germany-based EnspireME, a joint venture between Eneco and Mitsubishi Corp., has over 50 MWh of storage capacity. The system will generate revenue from the primary reserve market by providing reactive power to stabilize the transmission grid.

Transmission system operators (TSOs) in Europe are required to secure a certain number of capacity reserves to prepare for sudden power loss or an extensive blackout. The storage capacity from the system will be sold to the German electricity market through weekly common auctions where European grid operators purchase the reserve capacity they require in the primary reserve control market to guarantee the 50 Hz (Hertz) frequency on the grid. The energy storage system can also take over the role of primary reserve provider and become a more sustainable alternative to coal and gas fired plants.

In addition, Eneco and Mitsubishi Corp. will investigate connecting the battery to local wind farms, providing further value for wind farm owners by storing excess electricity generated during periods of curtailment.