Battery Energy Storage Network Powering Grid Services
Could interconnecting enterprise battery energy storage systems sustain net metering mechanism and promote renewables?
“Alone We Can Do So Little. Together We Can Do So Much” — Helen Keller
Network means possibilities. Currently large enterprises provide battery backup system in case of electricity failure within the premises. With improved grid power availability in most cases these backups are not efficiently utilized. In parallel there is a greater push by the enterprises to demonstrate individual green credentials, this means more sustainable on-premises energy generation with renewables and move away from polluting systems like diesel generators as power backups.
Investment into renewables also optimizes ever increasing energy bills. However, renewables like solar are unpredictable and the excess power generated may not be fully utilized during certain periods and needs to be stored in batteries like lithium-ion for later use. Other option if available is net metering where the excess power could be immediately supplied back to the grid without storing hence saving on investment into batteries. However net metering has its own set of limitations or may not be as widely adapted at all locations. This story tries to explore if an Enterprise Battery Energy Storage System (BESS ) network could help sustain net metering mechanism, promote wider adaption of renewables especially within enterprises and offer reliable of grid services.
The electricity grid has to balance the low demand Vs peak demand scenarios to keep the grid balanced at all times. Sometimes the electric grid is unable to handle the large amounts of intermittent electricity created by renewable sources like solar or wind farms, especially when the demand is low. Opposite scenario is during peak demand, when grid needs emergency supply of power from reserves to meet the sudden spike in electricity demand. Too much or too little power can throw off the balance of the grid and create problems supplying energy to customers. Under such scenarios grid needs to be supported by services which can immediately store or supply energy ( in several megawatt ).
Power grids typically have buffers or elements that can decouple generation from consumption. Currently power grids have limited/bounded buffers like pumped hydro storage . In other scenarios when the grid faces high electricity demand or peak demand conditions, peaker plants helps in the grid balancing by maintaining certain spinning reserves. These spinning reserves are mostly powered by fossil fuels like coal or diesel. Burning fossil fuels also means higher cost which is translated to the electricity consumers in the form of high energy tariffs. These are typically managed by time-of-use electricity tariffs where certain periods in a day have higher electricity tariffs than others.
The most hailed and anticipated form of buffering is to store energy in batteries which is currently limited in capacity. There are several reasons why Enterprise Battery Energy Storage System( BESS) could be widely adapted.
- Cost effective way for longer duration energy backup during power blackout or emergencies — Recently one of the school which was also a hurricane shelter found out that lithium-ion batteries is still the most cost effective way to set up BESS considering other factors like performance characteristics, proven reliability etc.
- Net zero initiatives and more unpredictable energy sources — With increased popularity of enterprise sustainability initiatives like net zero targets, the adaption of renewable power generation like solar and wind energy sources is predicted to increase, this mean more unpredictable power generation. Hence the need for an efficient energy storage mechanism is important.
- Reducing cost and increasing efficiency of renewables — Solar costs have dropped by 85% and wind energy generation costs has reduced by 50% since 2010 with 5–10% improved solar efficiency since past 2 decades.
- Cheaper Lithium-ion batteries — The cost of Lithium-ion battery is predicted to decrease with wider adaption of EVs, its estimated 7 times
increase in demand for EV battery power from 2020 -2030. The price per kWh of batteries is expected to further drop, making more and more efficient to invest in green energy + battery storage to reduce energy costs. It’s estimated a greater than 15 factor reduction in energy storage costs from 2011–2030 with Lithium-Ion batteries. - Operational efficiency — Reducing energy consumption is at the heart of operational efficiency with ever increasing energy prices. Enterprise energy management system powered with AI/ML and battery energy storage system have proven improved energy efficiency of operations by 2.5%.
- Alternate large scale batteries — Several alternatives to Lithium-ion batteries are already being experimented and or at early stages of adaptation. With more research more efficient ways for enterprises to store energy in batteries will emerge.
- Unpredictable energy consumption pattern — The advent of newer technologies like electric vehicles ( hence EV charging) , increased digitization / automation means the demand for electricity in the future will be more unpredictable hence there is a need for more sustainable systems of reserve power like batteries are characterized by their fast response which can immediately provide bursts of electricity power to keep the grid balanced.
Why a battery energy storage network ?
A network plays a key role in scaling up operations and has in the past has opened up limitless possibilities right from telecommunications, internet, cloud computing to social networks.
A network of grid-tied battery system powered by connected energy management solutions could provide reliable, scalable and real-time support to ancillary services specially to cater to sudden surge in the demand during peak demand periods in several mega watts. It’s like a network of individual enterprise energy management solutions coming together to offer grid services at scale. Collectively energy storage could flexibly expand the current bounded buffers available for the grid players in significant mega watts.
The network of grid-tied battery system could be augmented batteries to the existing battery backup systems in large enterprises and connected to the grid via net-metering mechanism . The aim is to optimize the energy costs by charging the network of batteries from the grid when there is surplus energy at the grid ( low demand hence low tariffs ) or when surplus energy is generated via renewables like solar and then power a coordinated, reliable, real-time supply of power in several megawatts towards the grid when there is peak-demand at a higher price.
A network also ensures that even when individual battery energy storage systems in some enterprises can’t participate at certain periods, the other enterprises battery energy storage systems will step-up and be able cater to the immediate needed by grids ensuring a reliable service.
Such a support for ancillary services in electric grids could be very lucrative in certain energy markets. The enterprise energy management solution itself will also help enterprises focus on internal efficient consumption of energy especially when there is surge in demand within, a part of electricity could now be prioritized to be catered via enterprise battery energy storage systems instead of grid and hence help optimize the energy bills.
Ancillary services and problems
Ancillary services are specialty services and functions provided by actors within the electric grid that facilitate and support the continuous flow of electricity, so that the demand for electrical energy is met in real time. There are times when the grid needs many megawatt to be supplied or absorbed as soon as possible, and batteries are characterized by their fast response. Electrical faults and other grid events can cause a sudden imbalance between generation and consumption, causing voltage and frequency to become unstable. With increased power generation from renewables like solar / wind there are more uncertainties when the generation may dip suddenly due to uncertain prolonged weather conditions. When such variations occur, power grid operators must balance supply and demand as quickly as possible to prevent blackouts. Typically, there is a certain reserve power which can be quickly supplied like stored hydropower or peaker plants running on standby. However, this may not be sustainable or scalable in the long run , also running on standby like in peaker plants means continuously burning fossil fuels hence costly and polluting . Best mechanism is batteries which can immediately provide short burst of power. So there is a great opportunity for a interconnected enterprise energy management solution which can orchestrate a reliable support service and be scalable in several megawatts to the electric grid players and help solve the grid balancing problem in real-time.
The potential applications of grid-tied battery systems also include frequency control and ancillary services. These applications are more lucrative in some energy markets, especially those that reward on-demand generation capacity. These batteries operate in short bursts of power, as opposed to the longer schedules in energy arbitrage applications. Using the same battery system for energy arbitrage and grid services is also viable.
- Reserve shortages during peak demand hours hindering fast-response to balancing services — In some countries like India, the electric grid operates at 50 Hz, or 50 cycles per second, with a small range of permissible deviations from that frequency. When more significant deviations occur due to sudden generator outages, Frequency Support Ancillary Services (FSAS) are required to bring more capacity online and restore grid frequency within the permissible band. Currently, operators only use slow tertiary frequency control (with a response time frame in the range of 15–60 minutes) to restore grid frequency via the Reserve Regulation Ancillary Services (RRAS), which was operationalized in 2016. Although the grid has come a long way in restricting large frequency deviations over the previous decade, RRAS are still prone to reserve shortages during peak demand hours due to very narrow eligibility criteria to participate in these services. The grid’s evolving needs require an adequate number of fast-responding providers to offer balancing services.
- Global trend towards market-based ancillary services framework —
Globally, grid services are provided through market mechanisms that ensure competitive procurement and expand the pool of participants to the most efficient providers. Ancillary services markets in UK, for example, procure reserves through an auction process that leads to lower costs for the system operator. The California (CAISO) market in the United States also procures reserves and regulation services through competitive bidding by generators on the power exchange. In addition, BESS and demand resources are allowed to participate in ancillary service markets in Australia, parts of Europe, and the United States.
Real-world Example
Energy bills are significant cost to large enterprises and there is huge scope to optimize on energy bills with energy management solutions. A particular case was implemented successfully in Singapore port which set up Battery Energy Storage system (BESS) . The platform used machine learning to provide real-time automated forecasting of the terminal’s energy demand, Whenever a surge in energy consumption is forecasted, the BESS unit will be activated to supply energy to help meet demand, at other times, the unit was be used to provide ancillary services to power grid and generate revenue. The unit was able to improve energy efficiency of port operations by 2.5% and reduce the port’s carbon footprint by 1,000 tonnes of carbon dioxide equivalent per annum.
This is just an example of how a single system within a large enterprise in isolation could prove to be a successful case. Now imagine a network of battery energy storage systems coordinated by connected enterprise energy management systems which could provide a more scalable solution towards grid players.
Sample business case
Consider an example case where a large enterprise is charged 15 cents/kWh during off-peak hours, and 35 cents/kWh during peak hours. In this case, it’s possible to charge a battery system with off-peak electricity and use that energy when the higher tariff is being applied. The consumption measured by the power company is shifted from hours with a price of 35 cents/kWh, to hours with price of 15 cents/kWh. In other words, the enterprise is saving 20 cents for every kWh stored at low price and consumed at high price.
If the enterprise in this example has a 1,000 kWh battery with 96% round-trip efficiency, energy arbitrage can provide the following savings on daily basis:
- 1,000 kWh are stored each day at 15 cents/kWh, with a total cost of $150.
- The 960 kWh are used to avoid consumption at 35 cents/kWh, saving $336 per day. This could be done with demand forecasting using ML models.
- A 1,000 kWh battery would be saving $186 per day, or $67,890 per year.
- Augmenting renewable power generation like solar and wind could further reduce the 15 cents / kWh charges above to zero whenever renewable power is available. Further machine learning algorithm could correlate the weather predictions ( hence renewable energy production ) , the local energy demand and peak/off-peak hours at the grid and prepare a schedule or plan recommendation based on which enterprise can smartly shift the power source from grid to battery optimizing energy bills even further.
The above energy arbitrage has potential benefits in terms of lowering energy bills within the enterprise. But to take it a step further, to move beyond energy arbitrage and to be able to offer grid services interconnecting individual energy management system could open up rewards from ancillary services for on-demand generation capacity and frequency control applications. In some energy markets providers of short burst of power in several megawatt is very lucrative hence help individual enterprises lower the annual energy bills further.
Challenges
There are multiple challenges which a interconnected enterprise energy management system will need to address to provide reliable grid services
- The long-term business case with the cost of maintaining the battery energy storage systems in individual enterprises Vs the efficiency gain with energy arbitrage and grid services is still not proven.
- BESS cost base has gone up almost 25% year-on-year , a network of BESS and could help claw back some of that return-on-investment quickly by opting to offer grid services.
- The network of battery energy storage systems is somewhat similar to a marketplace business hence will need equal participation ( hence balance ) from enterprises who are willing to participate, offer adequate battery energy storage systems and the need from energy market for utilization of such a capacity of battery energy storage system for catering towards balancing the grid. If either enterprise participation or grid service demand diminishes then such a marketplace may not be sustainable.
- Coordinating a real-time response from a network of battery energy storage systems will need complex analysis / machine learning recommendations with multiple parameters from within the enterprises and globally across enterprises .
- Net metering mechanism is still not very popular with power utilities hence coordinated supply from distributed battery energy storage systems will need to be effectively tracked and delivered to the grid in real-time.
- Some early trials showed signs of accelerated battery life degradation due to continuous utilization during the grid applications. The stress from continuous operations of the battery accelerated the aging process , significantly limiting the battery lifetime.
Summary
Despite the challenges there are several driving factors which favor such a network of enterprise battery energy storage systems offering grid services in the future.
- Increased adaption of renewables means more unpredictable power generation and grid will need to balance this with the demand.
- Increased digitization, automation and advent of new technologies like EVs means more unpredictable electricity consumption patterns . Electric grid players needs to balance such peak demands with emergency supply to keep the grid balanced.
- Burning fossil fuels either from spinning reserves at the grid or for local diesel generators within enterprises is increasingly becoming unpopular option due to net zero targets . Renewables and batteries are an increasing choice for emergency energy storage and use.
Collectively a network of enterprise battery energy storage represents several mega watts of real-time resilient electric capacity which could offer valuable grid services if managed intelligently by interconnecting enterprise energy management systems. A network of battery energy storage systems could easily outweigh the potential challenges in future by opening up new possibilities just like internet opened up new possibilities by interconnecting islands of computers or computer networks.
