Profitability of Merchant Investments in Battery Energy Storage Systems: Methods and Case Studies.
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Due to natural variability and uncertainty, the ever-increasing penetration of solar generation in Hawaii presents challenges to power grid operators to maintain reliable system operation. Demand response (DR) has the potential to be a cost-effective tool for Hawaii to reach its aggressive renewable energy goals while maintaining the reliability of power grids. The Hawaii Public Utilities Commission has approved the Hawaiian Electric Company's revised portfolio of DR programs. The companies have released a grid services purchase agreement and subscribed an initial tranche of load into their DR programs. This paper presents innovative analytical methods and comprehensive economic assessment for distributed photovoltaics (PV) paired with battery energy storage systems (BESSs) for two new DR programs, including fast frequency response and capacity grid service. Optimal dispatch and sizing methods are proposed for the paired system considering different tariff schedules and PV compensation programs across five islands. It was found that while the best resource configuration and potential economic benefits vary with tariff structure, a BESS paired with PV can be optimally dispatched to generate multiple value streams simultaneously. Compensation from DR programs is an important value stream to help increase the cost-effectiveness of the integrated system.
The power system faces a growing need for increased transmission capacity and reliability with the rising integration of renewable energy resources. To tackle this challenge, Battery Energy Storage Systems (BESSs) prove effective in enhancing grid capacity and relieving transmission congestion. This paper focuses on the PJM market, conducting a thorough revenue analysis to identify and characterize highly profitable nodes for BESS market participants. A comparison between stationary and transportable BESSs reveals that the transportable BESSs can generate higher potential revenue in energy and regulation markets. Based on these findings, we propose an optimal placement algorithm to support market participants in selecting strategic sites for BESS installation, validated with real PJM market data. This paper provides valuable insights for navigating market-based power system participants and promoting the effective integration of BESSs.
As shares of variable renewable energy (VRE) on the electric grid increase, sources of grid flexibility will become increasingly important for maintaining the reliability and affordability of electricity supply. Lithium-ion battery energy storage has been identified as an important and cost-effective source of flexibility, both by itself and when coupled with VRE technologies like solar photovoltaics (PV) and wind. In this study, we explored the current and future value of utility-scale hybrid energy systems comprising PV, wind, and lithium-ion battery technologies (PV-wind-battery systems). Using a price-taker model with simulated hourly energy and capacity prices, we simulated the revenue-maximizing dispatch of a range of PV-wind-battery configurations across Texas, from the present through 2050. Holding PV capacity and point-of-interconnection capacity constant, we modeled configurations with varying wind-to-PV capacity ratios and battery-to-PV capacity ratios. We found that coupling PV, wind, and battery technologies allows for more effective utilization of interconnection capacity by increasing capacity factors to 60%–80%+ and capacity credits to close to 100%, depending on battery capacity. We also compared the energy and capacity values of PV-wind and PV-wind-battery systems to the corresponding stability coefficient metric, which describes the location-and configuration-specific complementarity of PV and wind resources. Our results show that the stability coefficient effectively predicts the configuration-location combinations in which a smaller battery component can provide comparable economic performance in a PV-wind-battery system (compared to a PV-battery system). These PV-wind-battery hybrids can help integrate more VRE by providing smoother, more predictable generation and greater flexibility.
The Clean Energy Ministerial (CEM) is a global forum that promotes policies and programs that advance clean energy technology. The CEM's mission is to bring together a community of global leaders to scale clean energy, amplifying the impact to all the sectors of the economy and applying a whole-of-society approach to meet collective climate and clean energy goals. At COP28 in Dubai, United Arab Emirates, the CEM announced the Supercharging Battery Storage Initiative as a vehicle to accelerate battery storage deployment around the world. The initiative supports countries around the world in co-creating strategies that enhance policy, regulation, supply chain, manufacturing, and financing solutions for battery energy storage deployment. Additionally, the initiative seeks to reduce the cost of the technology and promote diversified, sustainable, and secure supply chains (CEM n.d.). Through international collaboration, the initiative supports the integration of renewable energy globally, while securing the stability and reliability of the electricity grid.
Battery energy storage systems (BESS) are an important asset for power systems with high integration levels of renewable energy, and they can be controlled to provide various services to the grid. This paper presents the hardware demonstration and characterization of using a utility-scale BESS with grid-following (GFL) and grid-forming (GFM) controls and a run-of-river (ROR) hydropower plant to perform a bottom-up power system black start that enhances power systems' resiliency. ROR hydropower plants are generally not used for power system restoration due to their frequency instability during islanded operation; however, BESS with droop control can provide critical damping to convert a ROR hydropower generator into a black start- capable unit. To demonstrate this, we carry out hardware experiments at the megawatt-scale integrating a synchronous generator driven by a dynamometer, an actual GFL/GFM BESS, a medium-voltage impedance network, and a load bank. The demonstration shows the different roles of BESS with GFL and GFM control in power system restoration. GFL BESS can suffer from high-frequency oscillations, even instability, depending on the droop control gain and loading condition. The results provide further insights for system operators on how GFL- or GFM controlled BESS can enhance grid stability and how hydro-BESS hybrids can operate as a black-start-capable unit. The presented experimental results are also a valuable resource to understand the different stability characteristics of real-world BESS with different control modes.
This guide was created to empower Energy Storage for Social Equity (ES4SE) community members to learn more about power systems, energy distribution, renewable energy, and battery storage systems. It was developed in an accessible format for audiences of varied backgrounds and requires no previous experience in energy storage. It is intended to serve readers as both an educational and reference document as they consider, procure, and deploy power systems that include battery energy storage technologies and microgrids in their communities. By providing an introductory overview of the basics of electricity, power generation, and household energy consumption and loads, this guide prepares readers to learn even more about battery energy storage, microgrid systems, and the sizing of solar and battery systems.
This report is a part of the deliverables for technical assistance provided to Cat Creek Energy for the Coral Summit Trybrid (Triple Hybrid-Pumped Storage Hydropower, Battery Energy Storage System, and photovoltaic solar energy) energy project. This report explores the operational benefits and challenges of hybridizing an open loop PSH (200MW) located at Mackay, Custer County, Idaho with solar PV (Ground mount 300MW and floating 40MW) and battery (720MWhr). This document reports two activities performed as a part of the hybridization assessment task 1) optimal resource allocation and energy management strategy, and 2) power quality and reliability assessment. From optimal resource allocation and energy management strategy (activity 1), the following key findings can be observed: • Conventional PSH (CPSH) with two reversible pump turbines and separate penstocks can provide required flexibility equivalent to that from two ternary PSH with separate penstock. With single unit CPSH, upper reservoir head cannot be maintained accurately, the variation of water level is rapid and pump mode flexibility is not available. These disadvantages can be overcome by single unit TPSH. However, using two CPSH units with separate penstocks also overcome these disadvantages with the formation of the hydraulic short circuit between two conventional units. • Flooding of the lower reservoir is a severe concern when considering continuous operation for black start. This limits the duration of continuous operation from PSH alone to around 50 hours. Due to the complementary PV and battery action, the duration of continuous operation and smooth power output can be extended. • An optimization problem is framed that maximizes the power output on an hourly basis while minimizing constraint violations and respecting seasonal variations of solar PV and load profiles . Two value streams, arbitrage and baseload generation are served by this profile. It was uncovered that for smooth power output during regular operation, PV curtailment will be required, or the battery capacity needs to be increased above 90MW to accommodate additional PV. From power quality and reliability assessment (activity 2) the following takeaway points can be observed: • The Trybrid, when integrated at the Lost River bus, and limited to 250MW in generation mode and -150MW in the pump mode, causes no violation of voltage or flow.
The Austin SHINES project and solution is a software management platform, for an electric grid with a high penetration of dispersed photovoltaic (PV) solar generation sites, which maintains the traditional power quality and reliability associated with grid service. This project developed and deployed the platform as a Distributed Energy Resource Management System (DERMS), engaging multiple advanced controls, to evaluate operation and optimization of a fleet of diverse DER assets, installed at several locations among Austin Energy’s customers and distribution system. The project also produced a methodology to create a replicable DERMS template, adaptable to other regions and market structures. Last, Austin SHINES aimed to demonstrate the solution’s methodology would enable the DER grid ecosystem to serve load at a technical cost (System Levelized Cost of Electricity, or System LCOE) of less than the U.S. Department of Energy SHINES program metric of $0.14/kWh, in a defined boundary, while enabling a high penetration of distributed PV. Research was categorized in 6 reports (Final Deliverables = FD) listed below, with titles and descriptions indicating which area of understanding was investigated: FD-1: System Levelized Cost of Electricity (System LCOE) Methodology The creation and use of the System LCOE to Serve Load metric that encompasses the holistic, system-level costs and benefits of all resources, and enables them to be evaluated based on their ability to support an efficient and low-cost integrated grid ecosystem. FD-2: Software Platform Product Description The creation of new DER control methodologies deployable within a utility-grade software platform that enable DER's to maximize their benefit within a grid, that is capable of serving load enabling a high penetration of distributed PV generation. FD-3: Optimal Design Methodology Optimal design methodologies for individual DER installations that enable utilities to determine the optimal combinations and sizing for individual DER sites. FD-4: Austin SHINES Ownership and Operation Models for DER System Performance A comparison of multiple DER aggregation and ownership methodologies including direct utility control, third-party aggregator, and autonomous. FD-5: Economic Modeling & Optimization A comparison of multiple DER technology mixes and configurations within the distribution system, providing insight into an optimal blend of technologies that best enable the distribution system to serve load at the lowest cost at high penetrations of solar. FD-6: Fielded Assets Deployed DER assets within the Austin Energy SHINES circuits. Austin SHINES provided an opening for state-of-the-art technology products to be deployed, providing a rich opportunity for improving how each of the products perform as stand-alone products, and in concert with other complementary products. The Austin SHINES project comprised of two key metrics for System LCOE: SystemLCOE_SHINES<$0.14/kWh Modeled ΔSystemLCOE_SHINES/ΔSystemLCOE_Base≥20% at same solar penetration The System LCOE calculation uses the costs of the utility-owned infrastructure as it exists today, the cost of the DERs that exist in the system today, and the cost of the purchase of energy from ERCOT wholesale markets over the course of the calendar year. All costs are on an annualized basis. The capital and operating costs are derived from the rate case, which produces a yearly cost. The net cost of energy and services imported to the system is integrated over the test year, as is the load served and solar penetration. The first metric was easily achieved by every scenario considered. The goal was set when the Department of Energy’s SHINES Funding Opportunity Announcement was written in 2015 and was a more difficult target at the time. Due mostly to rapidly declining costs for DERs and the significant decrease in the Electric Reliability Council of Texas (ERCOT) energy market prices, which results in lower net cost of energy purchases, the System LCOE is well below this target for all scenarios considered. A fleet of DERs can assume different mixtures, each of which serves the load at a different LCOE. The optimal mixture of DERs serves load at the smallest System LCOE. The second metric (hereinafter %delta metric) asks that the holistic DERMS controls reduce the incremental cost above the baseline of going to a high solar penetration future by at least 20% as compared to the case of a DER deployment with no sophisticated controls (autonomous). Many comparison sets were created throughout this project. Physical technology was installed for informing utility engineering and testing several types of operational control schemes, through the DERMS. The types of operational control which were compared for valuation of the System LCOE Metric were: Holistic control = using the full suite of the DERMS platform to decide and optimize how/why the systems operate depending on weather, market, and reliability signal input. Autonomous control = a local mode at the asset site, wherein a schedule operates the asset, with visibility into performance only No control = the baseline for comparing value against the other two types of control The types of ownership control included: Direct Utility control = the utility dispatches a signal to each asset Third-Party Aggregator = a third party aggregates a fleet of assets and the utility dispatches one signal for all Autonomous = a local mode is set for operation at the asset site, wherein a schedule operates the asset, with visibility into performance only The types of control methodologies deployable within a utility-grade software platform included: Utility Peak Load Reduction = Lower transmission cost obligation Day-Ahead Energy Arbitrage = Realize economic value through price differential Real-Time Price Dispatch = Realize economic value from real-time price spikes Voltage support = Reduce losses and increase solar generation Distribution Congestion Management = Increase local grid reliability Demand Charge Reduction = Lower customer bills and realize system benefit The fielded assets deployed for the project were: Utility Scale Kingsbery Energy Storage System: 1.5 MW / 3 MWh Li-Ion battery storage Mueller Energy Storage System: 1.75 MW / 3.2 MWh Li-Ion battery storage, 7 Energy Storage Units (250 kW each) La Loma Community Solar: 2.6 MW Commercial Scale Aggregated storage installations at 3 sites, with existing solar (300+ kW): One 18 kW / 36 kWh Li-Ion battery storage Two 72 kW / 144 kWh Li-Ion battery storage Residential Scale Aggregated storage installations: -Six stationary battery storage systems (10 kWh each) at homes with existing solar -One Electric Vehicle installed as Vehicle-to-Grid (V2G) Utility-Controlled Solar via Smart Inverters at 12 homes Autonomously-Controlled Smart Inverters at 6 homes Over the course of the project, Austin SHINES undertook installing more than 3 MW of distributed battery energy storage, smart PV inverters, a DER control platform, and other enabling technologies utilizing customer and utility locations and aggregation models. All of these resources were to be integrated and optimized at the utility level. DER assets and control methodologies were designed to achieve a credible pathway to a System LCOE for energy delivered to load of $0.14//kWh or less by 2020, while maximizing distributed solar generation and maintaining acceptable standards of power quality. The project also established a template for other regions to follow, to maximize the adoption of distributed solar PV in support of an economic and efficient grid. In total, the Austin SHINES project added value to the DER subject area in each layer of integration. From utility, to commercial to residential scales, the sheer hierarchy of communication and coordination was a significant accomplishment in addition to learnings from what these communications revealed was unique to each. Economically, the most effective method demonstrated was the criticality of planning phases. Contingencies and multiple projection scenarios helped guide the project to deploy optimal design as close as feasible, in real world conditions. The project and reports will serve public benefit by outlining specific areas of DER strategy and installation where many stakeholders and needs can be addressed with improved efficiency. Overall, communities and utilities should use the results to guide the increasing options available for powering the grid with DER, renewables, and carbon considerate energy.
Orcas Power & Light Cooperative (OPALCO) is a member-owned, nonprofit cooperative utility that provides energy services to approximately 11,200 customers across 20 islands in San Juan County, Washington. OPALCO’s mostly hydroelectric power is generated by Bonneville Power Administration and delivered to the islands by submarine cables. In 2016, as part of the second round of funding from the Washington state Clean Energy Fund, OPALCO received a $1 million matching grant to support a project that deployed a 504-kW LG community photovoltaic (PV) system in combination with a 1 MW/2 MWh lithium-iron-phosphate battery energy storage system (BESS) on Decatur Island, Washington. The Decatur Island Substation is essential to ensuring reliable energy for the residents of the San Juan Islands as it is the point of interconnection with the mainland transmission system. The BESS, in combination with the community solar array, will deliver an innovative method to both defer the costly upgrade of the transmission system and allow for other high-value applications intended to benefit the utility and its customers. In 2018, Pacific Northwest National Laboratory (PNNL) completed a preliminary economic assessment for several identified use cases in collaboration with OPALCO. Between August 2021 and May 2022, extensive testing was conducted, and the results were used to assess the technical performance of the BESS subjected to actual field operations. Both reference performance and use case tests were performed: (a) Reference performance tests assess the general technical capabilities of the BESS, such as energy capacity, round-trip efficiency (RTE), ramp rate, and signal tracking capability. These are the first tests performed (baseline) and are repeated after use case tests (post cycle). A standardized U.S. Department of Energy (DOE) energy storage performance protocol was used to characterize the BESS, including representative duty cycle profiles, test procedure guidance, and calculation guidance for determining key characteristics. (b) Use case tests examine the performance of the BESS for specific use cases using duty cycles developed by PNNL in collaboration with OPALCO. Four use cases were selected for testing: 1) demand charge reduction, 2) load shaping, 3) outage mitigation, and 4) transmission deferral. The use case duty cycles were developed based on utility and site-specific characteristics in addition to the technical characteristics and physical capabilities of the BESS. Use case tests were performed between the baseline and post cycle tests. This report describes the BESS and its components, presents testing and performance analysis results, and shares key insights and lessons learned from this project. Outcomes of the tests and analyses will help OPALCO understand the performance of the Decatur Island BESS in its current state and design appropriate operational strategies for this and other BESSs over the long term.
Today, consumer battery installations are isolated, physical devices. Virtual power plants (VPPs) allow consumer devices to aggregate for grid services, but they are are vertically integrated, vendor controlled systems (e.g., Tesla’s VPP). Consumer batteries are therefore unable to participate in energy markets or other grid services outside what their vendor provides. We describe a software system that provides software control of multiple, networked battery energy storage systems in the electric grid. The system introduces two new ideas that enable flexible and dependable management of energy storage. The first is a virtual battery, which can either partition a battery or aggregate multiple batteries. The second is a reservation-based API which allows asynchronous control of batteries to meet contractual guarantees in a safe and dependable manner. Virtual batteries and a reservation-based API address the unique challenges of achieving high and efficient utilization of energy storage systems, including heterogeneity of battery systems such as varying C-rates, participation in energy markets, utility bill management systems, community resource sharing, and reliability. Using a testbed comprised of sonnen Inc. storage units installed in several homes and a lab, we demonstrate that virtualized batteries can seamlessly replace physical batteries, flexibly manage energy storage resources, isolate multiple clients using a shared battery, and create new energy storage applications.
We report Battery Asset Management problem determines the minimum cost replacement schedules for each individual asset in a group of battery assets that operate in parallel. Battery cycle life varies under different operating conditions including temperature, depth of discharge (DOD), charge rate, etc., and a battery deteriorates due to usage, which cannot be handled by current asset management models. This paper presents a new battery asset management methodology where battery cycle life prognosis is integrated with parallel asset management to reduce lifecycle cost of the Battery Energy Storage Systems (BESS). For the battery failure time prognosis, a nonlinear physics-based battery capacity fade model is developed and incorporated in parallel asset management model to update battery capacity over time. Experiment results have shown that the developed battery asset management methodology can be conveniently used to facilitate BESS asset management decision making thereby decreasing asset lifecycle costs.
Deep decarbonization of power system operations requires the maximal utilization of available renewable resources. At distribution-level operations, however, grid operators can face numerous challenges in integrating renewables at scale owing to the inherent intermittence of renewable energy resources. These include phenomena such as voltage fluctuations, which are typically mitigated through control actuators such as on-load tap changers (OLTC) as well as energy storage devices, such as battery energy storage systems (BESS). On the one hand, high intermittence of the available renewable portfolio may require increasingly aggressive control of actuators, thereby accelerating the probability of equipment failure. On the other hand, integrating BESS operations and having a diverse renewable generation portfolio can typically help stagger power/energy flow to mitigate the aforementioned adverse impacts. In this paper, we employ a Bayesian framework for equipment lifetime estimation to understand the impact of including tidal energy resources and BESS in distribution system operations for feeders having substantial distribution photovoltaic generation. Our results indicate that while tidal energy alone may slightly decrease equipment reliability, the adverse impact on reliability is significantly magnified by a generation portfolio consisting of tidal generation and photovoltaic generation. Here, we also study the tidal and photovoltaic hosting capacity problem with and without energy storage systems using equipment reliability as an added constraint. We conclude that energy storage increases the reliability-constrained hosting capacity of the distribution system.
Rising global temperatures and increasing energy demands pose significant challenges for energy management, particularly in institutional and commercial settings. As cooling needs grow, campuses must balance operational efficiency, cost control, and grid stability. Energy storage solutions, such as thermal energy storage (TES) systems, offer a promising approach to shifting energy consumption from peak to off-peak periods, alleviating peak demand, reducing utility costs, and enhancing grid resilience. When integrated with existing battery energy storage systems (BESS), TES can further optimize load management and improve energy savings, especially in buildings with diverse energy needs. This article presents a techno-economic analysis of integrating a chilled water TES system into the central plant at California State University, Dominguez Hills, which already operates a BESS. We assess three TES sizing strategies—full storage, load leveling, and peak demand limiting—by modeling and simulations based on historical energy loads. Our findings show that we can control TES systems to complement BESS operation, with campus-level load leveling providing the greatest cost savings by reducing peak demands. Furthermore, the study also evaluates the long-term economic viability of TES, considering installation costs, energy savings, and payback periods under varying tariffs. This research offers practical guidance for institutions seeking to enhance energy resilience and reduce operational costs through energy storage solutions.
Highlights Battery energy storage may improve energy efficiency and reliability of hybrid energy systems composed by diesel and solar photovoltaic power generators serving isolated communities. In projects aiming update of power plants serving electrically isolated communities with redundant diesel generation, battery energy storage can improve overall economic performance of power supply system by reducing fuel usage, decreasing capital costs by replacing redundant diesel generation units, and increasing generator system life by shortening yearly runtime. Fast-acting battery energy storage systems with grid-forming inverters might have potential for improving drastically the reliability indices of isolated communities currently supplied by diesel generation. Abstract This paper will highlight unique challenges and opportunities with regard to energy storage utilization in remote, self-sustaining communities. The energy management of such areas has unique concerns. Diesel generation is often the go-to power source in these scenarios, but these systems are not devoid of issues. Without dedicated maintenance crews as in large, interconnected network areas, minor interruptions can be frequent and invasive not only for those who lose power, but also for those in the community that must then correct any faults. Although the immediate financial benefits are perhaps not readily apparent, energy storage could be used to address concerns related to reliability, automation, fuel supply concerns, generator degradation, solar utilization, and, yes, fuel costs to name a few. These ideas are shown through a case study of the Levelock Village of Alaska. Currently, the community is faced with high diesel prices and a difficult supply chain, which makes temporary loss of power very common and reductions in fuel consumption very impactful. This study will investigate the benefits that an energy storage system could bring to the overall system life, fuel costs, and reliability of the power supply. The variable efficiency of the generators, impact of startup/shutdown process, and low-load operation concerns are considered. The technological benefits of the combined system will be explored for various scenarios of future diesel prices and technology maintenance/replacement costs as well as for the avoidance of power interruptions that are so common in the community currently. Graphic abstract Discussion In several cases, energy storage can provide a means to promote energy equity by improving remote communities’ power supply reliability to levels closer to what the average urban consumer experiences at a reduced cost compared to transmission buildout. Furthermore, energy equity represents a hard-to-quantify benefit achieved by the integration of energy storage to isolated power systems of under-served communities, which suggests that the financial aspects of such projects should be questioned as the main performance criterion. To improve battery energy storage system valuation for diesel-based power systems, integration analysis must be holistic and go beyond fuel savings to capture every value stream possible.
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