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Energy Systems Engineering masters student at University College Dublin with an interest in electric cars, rare earth metals and energy.
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  • Energy Storage is Not Needed for Renewables Integration 9 comments
    Aug 26, 2009 09:38 AM | about stocks: ABAT, ALTI, AXPW.OB, HEV, ENS, ZBB, VLNC, ULBI, ACPW, BCON
    There is a debate as to whether storage is required to integrate renewables. An understanding of the necessity for storage is important for investors in the storage space. Some protagonists for and against are:

    No need for storage
    "[Electrical Energy Storage] is not needed with current levels of renewable generation nor with renewable generation levels projected in the near term"
    Energy Storage FactSheet, Pew Climate TechBook (May 2009)
    “..even in this aggressive scenario, the model did not build new storage until 2024, when there were already 200GW of wind capacity on the grid supplying 15% of the nation's energy."
    “..energy storage is not needed to integrate wind energy with the electric grid..”
     “[Renewable Targets] can only be reached if renewables are smoothed and made dispatchable by energy storage.”
     “The need for storage to integrate solar and wind cannot be over emphasized.”
    NanoMarkets: Batteries and Ultra-Capacitors for the Smart Power Grid: Market Opportunities 2009-2016 (August 2009)

    "Alternative energy storage is an investment tsunami"
    John Petersen, Seeking Alpha (November 2008)

    Yes or No?
     On balance it is clear to me that energy storage is not needed for the foreseeable future. Storage can be broken into two types: large scale for bulk storage of renewables and small scale storage for intra-hourly changes. The main arguments promulgated by proponents of large scale storage suggest it is required to:
     
    • Smooth renewable output (make renewable energy dispatchable)
    • Reduce wasteful spending on transmission
    • Prevent the pollution from backup power plants
     
    Large Scale
     
    Smooth renewable output
    The argument goes that wind often blows heavily at night and is wasted. Thus we need to store it and make it dispatchable at times of peak demand. It is true that wind is variable however forecasts are reasonably accurate and wind output tends to only change gradually. This allows for the other power plants to be adapted to accommodate the changing wind so that very little wind energy is wasted, even at night.
     
    A 2008 GE Energy study for the Electric Reliability Council of Texas (ERCOT) showed that if Texas had 15,000 MW (presently ~8,000MW) of wind that a 30-minute drop of 2,400 MW would only occur once a year and that such occurrences “can be addressed by existing technology and operational attention”. Existing conventional coal and gas power plants regularly abruptly stop generating for mechanical and other reasons and this is handled by the current system.
     
    The current capacity factor of American power plants is approximately 40% and demand across the year varies by a factor of three from the low point to the high point. The variability inherent with wind and solar is not foreign to the current system and it is not a prerequisite that renewables be made dispatchable. Storage is not needed to manage this variability.
     
    Reduce wasteful spending on transmission
    The argument goes that building a 1,000 MW transmission line to link up a 1,000 MW wind farm from, say, the windy midlands to the load centres is wasteful because the wind only blows at the rated capacity a small percentage of the time. Better to build a smaller transmission line and use storage to store the wind energy when it blows heavily and produce a constant, dispatchable output from the wind farm.
     
    This issue was thoroughly investigated by NREL in a just published paper. It was assumed that the wind owner paid for transmission. Wind and storage were operated as one entity to maximise revenue using real marginal prices from different electricity markets. The storage was Compressed Air Energy Storage (CAES) priced at $750/kW. Limited storage was found to make sense when transmission was priced above roughly $350/MW-km. Transmission line prices using this MW-km metric have been highly variable in the past, with more above $350 than below. However the authors note that transmission costs are “extremely lumpy”, meaning the marginal cost to go from 800MW to 1,000MW will not be a proportionate increase due to the significant portion of costs that goes into siting a transmission line. Further discussion of transmission costs may be found here. At any rate, pumped hydro and CAES are the only technologies that offer the required scale in terms of kW and kWh.
     
    It is true that storage can defer the need for transmission upgrades by reducing congestion. However that is akin to putting a band-aid on the transmission line. Capital is all upfront for storage systems and the payback period is measured in several years, within which time an upgrade would most likely have been built. This can alter the economics of this type of storage.
     
    Prevent the pollution from backup power plants
    This is frankly a canard. Apart from the case of wind and storage being co-located to reduce transmission, storage is not just used to store wind or solar energy. It stores whatever energy is cheapest. Frequently this is coal and storage allows coal plants to operate at a higher level through the night than they otherwise would. The flip side is that wind and solar need to have backup natural gas plants ramp up and down which reduces fuel efficiency. However this efficiency penalty is only between 0.5-1.5%. A Netherlands and a forthcoming Irish study have both shown that all things considered, storage actually increases net system CO2 emissions.
     
    Small Scale
    Small scale storage can be divided into second to second smoothing (regulation/load following) and spinning reserve (responsive reserve).
     
    Second to second smoothing is not dramatically altered by renewables. Supply and demand of electricity must be almost instantaneously balanced. While wind and solar vary, the second to second variations are not dramatic, particularly when aggregated over a large geographic area. Furthermore the demand also varies as people switch lights on and off, for example. There is no need, and in fact it is counterproductive, for every single wind or solar farm to try and produce a constant output. Oftentimes an instantaneous decrease in wind will cancel out with an instantaneous decrease in demand. This leads to a fundamental principle that: “it is the net system load that needs to be balanced, not an individual load or generation source in isolation”.
     
    That being said, wind will increase the amount of regulation reserve required. The same GE study showed that 100 MW (a 20% increase) of extra regulation reserve would be required at the 15,000 MW wind penetration level in the ERCOT grid.
     
    There is the suggestion that the new storage technologies such as flywheels and batteries that can provide very fast responses are required. The CAISO  stated in February 2009: “based on analyses prepared by the CAISO thus far, [fast regulation products] are not [needed]”. CAISO were advised to take a technology neutral approach to regulation and to not pilot alternative energy storage devices.
     
    Following on from the second to second there is spinning reserve which can quickly be ramped up quickly and sustained for longer periods. At present both second to second and spinning reserve is predominantly provided by natural gas and hydro plants. These are capable of providing these ancillary services as renewable penetrations increase. There is no inevitability that other technologies need to be used.
     
    Alternative storage technologies such as batteries and flywheels will compete on a purely economic basis. The rules governing these non generating technologies are still being set. It should be noted that utilities are notably conservative when it comes to new technologies and that many of these have not proven themselves. In a follow up I’ll discuss the relative merits of the alternative storage options and the potential for storage in other areas. Investors in these storage companies should, however, not assume that storage is needed for renewables integration. Comments to the contrary are welcomed.

    Disclosure: No positions
    Themes: Alternative Energy, Storage, Renewables, Wind, Solar, Carbon, Global Warming, Flywheels, Batteries Stocks: ABAT, ALTI, AXPW.OB, HEV, ENS, ZBB, VLNC, ULBI, ACPW, BCON
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This post has 9 comments:

  •  
    thanks.
    This is interesting stuff which goes against the conventional wisdom.
    Aug 27 06:36 PM | Link | Reply
  •  
    Tim, for most people it makes intuitive sense that because wind and solar are unreliable we should store them. In reality it's not required.
    Aug 28 05:21 AM | Link | Reply
  •  
    engstudent, there are a lot of people, particularly Imre Gyuk and the EPRI staff who would disagree with your conclusion. Based on the discussions at Storage Week, the storage issue is much broader than smoothing input from renewables. The prevailing consensus is that storage on the grid should be at least 5% of generating capacity, regardless of what the source is. One of those "interesting but useless" tidbits was that Japan has gone way overboard and maintains storage at about the 30% level.

    The California Energy Storage Alliance did an impressive presentation at Storage Week on how the integration of solar and storage resulted in a higher investment yield than either technology as stand-alone. In the case of wind, short-term storage to move off-peak production to peak hours also significantly improves the overall economics.

    The big thing that utilities and others keep beating on is getting to five-nines, 99.999% reliability, because 2 to 30 second power disruptions in the U.S. cost something on the order of $200 billion a year in damaged equipment and lost productivity. When the reliability issues are coupled with the antiquated structure of the grid that results in significant congestion bottlenecks, the need for widely distributed storage resources to support the weak points is immense.
    Aug 28 07:12 AM | Link | Reply
  •  
    John, I'm more persuaded by NREL's quantitative studies than by Imre Gyuk's arguments. EPRI published a report this month on storage ($10,000!) the abstract of which stated:

    "To achieve commercialization, both distributed generation and energy storage must address several key issues such as lower installed costs, increased lifetime, and low maintenance costs."

    my.epri.com/portal/ser...

    That doesn't sound like a ringing endorsement but you may have heard differently. Is there anything online you could point me towards?

    BTW, I came across a PHEV battery report ($10k) published this week which you may be aware of: "Evaluation of Emerging Battery Technologies for Plug-in Hybrid Vehicles". It states:

    "The cost of lithium batteries remains high ($500-1000 /kWh) when purchased in relative small quantities, but detailed cost modeling of batteries done at Argonne National Laboratory for the various chemistries indicate that in high production volume (greater than 100,000 packs per year), the costs to the OEMs of all chemistries can be in the range of $250-400/kWh depending on the battery size (kWh energy stored). The lithium titanate chemistry is projected to have the highest cost, but it also will have the longest cycle life."
    Aug 28 12:14 PM | Link | Reply
  •  
    rd.edf.com/fichiers/fc...

    what would the Japanese know? they seem to pretty aggressive in deployed energy storage (pumped hydro) and in research for large scale battery technology (NAS)

    ie Tokyo electric power company supplies 11% of it total power during peak from off peak stored energy. and that without stress placed on the system by intermittent wind or solar
    Aug 29 07:12 PM | Link | Reply
  •  
    The question of whether we 'need' storage to integrate wind covers a multitude of issues. As John pointed out, certainly CESA showed the the economic model of storage integration. The question is not whether we 'can' integrate wind without storage, but what the costs of this integration is, and whether energy storage will be competitive in solving the problem.

    Certainly, battery storage costs would have to decrease, and with a new potential exceptions (A123 or Altair Nano), lithium plate batteries will not be part of the solution. We complain that people don't understand the difference between MW and MWh, but with batteries you have to include cyclability. What good is a battery at $200,000/MWh if you can only cycle it 1000 times to 80% DOD? A better metric might be $/MWh/Cycle.

    Now, NGK Insulators (our NaS) friends have supposedly sold 880MWh in FY2009 at their incredible $600K+/MWh.. what are we missing?
    Oct 01 02:07 PM | Link | Reply
  •  
    Good comments, Victor. The point I was trying to get across was that storage is not NEEDED.

    The question of whether storage is desirable NOW is subtle. If storage negates the need to build a new power line for a long time, then the time that saves from having to deal with NIMBYs is certainly worth considering. A further wrinkle comes from the fact that if extra backup plants are required for renewables then the emissions of these plants, with 20+ year lifetimes, may be considered to be locked in.

    I don't think the economics are there for storage. If large scale storage becomes viable, though, then that would certainly accelerate the process of integrating renewables.

    The main purpose of the article was to address the received wisdom that renewables need storage for integration because they are 'unreliable' and 'intermittent'. The same terms can be applied to conventional power plants if you actually look at today's system.

    Many utilities dismiss renewables through the rhetoric that they are unreliable. Getting to 20% is a huge undertaking and can be done without storage so let's proceed down this path and then if storage presents itself economically, all the better.

    You are correct to state the metric should be cents/kWh/cycle, oftentimes all you hear is cents/kWh. A great paper with up to date info on costs and technology may be found here: (www.sciencedirect.com/...)
    Oct 01 07:09 PM | Link | Reply
  •  
    In small isolated systems, short-term storage is extremely useful to minimize diesel fuel burn for spinning reserve. Longer term storage can permit better use of solar or wind resources in hybrid systems. Yes the cost are high at the moment but so is the cost of trucking diesel fuel long distances and the environmental impact when you do burn it. When the luxury of a large grid and power interchange is not available, storage seems to make more sense.
    Oct 15 02:59 AM | Link | Reply
  •  
    Hi, Bushy. I agree, that's a caveat I should have added. Places like Hawaii and other small islands have different economics than larger systems. Seekingalpha is fairly US-centric so that's what I focused on.
    Oct 15 06:35 PM | Link | Reply
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