In a perfect world, grid-connected energy storage plants might never make sense. The diversity and inherent flexibility of thousands of generators and loads in a large power system should provide all the flexibility that we could need to continuously match supply and demand at a very low cost, even with variable renewables dominating our generation resources. Storage should always be one of the more expensive resources, even if storage continues to become much cheaper.
But the world is far from perfect. In the real world, there are numerous inefficiencies that restrict resources from offering their capabilities, limit access by new resources, restrict compensation for providing services, and make the interconnection and participation process very difficult. Wouldn’t it be great if there was a standardized way to offer a broad suite of energy, ancillary services and reliability services to the system operator that made this easier?
There might be. As I discussed in a companion blog (“The Universal Market Participation Model”), FERC Order 841 requires electricity markets to create an energy storage participation model that allows storage to provide its full capabilities to the wholesale energy markets. But FERC could have gone further by using storage as the example for a general participation model to be used by all resources, simplifying the process for innovative resources to participate in the market in the future.
At first glance, Order 841 is a boon for storage but just an incremental step for other inverter-based or distributed energy resources to participate in wholesale energy markets. In practice, this new participation model for storage may help many other kinds of resources, even without moving toward a universal participation model. By embracing the participation of storage, which has capabilities far beyond conventional generation, FERC may have unintentionally created a new participation model for creative combinations of storage with high-voltage direct current (HVDC) transmission, wind, solar, and conventional generation.
Thinking beyond storage in Order 841
FERC defines an energy storage resource as “a resource capable of receiving electric energy from the grid and storing it for later injection of electric energy back to the grid… regardless of [its] storage medium.” Though battery storage systems are the predominant type of energy storage resource contemplated by Order 841, the order does not say that ALL of the energy must come from the grid and be returned back to that same grid. An energy storage resource, or something that looks similar to one, could be used as a standardized way to interconnect and participate in the ISO/RTO markets.
At its essence, a battery energy source system is an energy source behind an inverter. The inverter determines the electrical properties that are seen by the grid – the interconnection properties, reliability capabilities, response to grid disturbances, and other characteristics of the resource. When it comes to these electrical properties, all inverter-based resources have essentially the same characteristics regardless of whether the energy behind the inverter is from batteries, wind, solar, a microgrid or some other source.
But the energy source does matter when it comes to operation of the power system and the market system. In order to dispatch inverter-based resources, the dispatcher (e.g., an ISO/RTO) must consider the different parameters and restrictions around the resource. For example, someone must deal with the state of charge of the battery, the forecast and variability of the wind plant or solar plant, or the risk that distribution system needs may reduce services from a distributed resource. These considerations quickly become quite complicated, as how a resource is used in one time period, for example discharging a battery, can affect what it can do in future time periods. Someone must manage these interactions and performance risks.
Historically, it has been convenient to let the system operator deal with such things. In a world that was based on conventional power plants and passive loads, the resources have been relatively simple and not very smart. In a new world that increasingly has computer-controlled resources with their own optimization algorithms, including combinations and aggregations of storage with other energy sources or resources in different locations on the transmission and distribution system, it is not clear that the system operator is up to the task. They may prefer to simplify things and make new resources look more like conventional resources – forcing square pegs into round holes.
Rounding off the square pegs
If system operators don’t take on this challenge of welcoming intelligent resources in a general and non-discriminatory way, such as by embracing a universal participation model, then the energy industry will find ways to use the new technologies in very creative ways under the participation model FERC promulgated with Order 841. It should be possible to interconnect as an energy storage resource, perhaps with a battery storage system of large nameplate but limited duration, but to then supplement the battery system with a wide variety of other energy resources and offer products into the market by adjusting the bidding parameters of the energy storage participation model. As a market participant, this may entail taking on more forecasting, optimization and performance risk, but it also offers potential advantages.
In the long run, using transmission lines as part of the “energy source behind the inverter” could be particularly intriguing. This could be a privately-owned “tie line” that connects a wind or solar plant to the energy storage plant. Such lines are sometimes used today to connect remote wind plants to their point of interconnection with the grid, usually using AC transmission line technology.
Conceptually, this approach could also be used for HVDC transmission lines. The end points where a point-to-point HVDC line connects to the grid (the “terminals”) are energy sources behind inverters, just like large battery storage systems. At a given point in time, one terminal is absorbing power (like a battery charging) and the other is injecting power. Control software could allow the terminal to emulate a battery storage system, or if necessary, some storage could be added to qualify the terminal as an energy storage resource. This is not likely to be the ideal way to build a large HVDC transmission network, but it could offer a standardized way of interconnecting and participating in the ISO/RTO market system with point-to-point HVDC lines.
To the system operator, the terminal of the HVDC line looks like an energy storage system that is capable of providing very long, and potentially infinite, sustained duration. But because the line has two ends, the opportunities for connecting between congested areas and across ISO/RTO market seams could become very interesting. Because the inverters decouple the energy side from the grid (at both ends), the two terminals could even be in different interconnections.
In a perfect world, we would already have a robust national HVDC backbone transmission network. The DOE-funded Seams Study will show that the benefits to society from such a backbone transmission network are very significant. In the real world, we don’t have this network and there are many impediments to building it, but there may be ways for some of the benefits to be realized in an incremental fashion by private developers using this approach.
Admittedly, there are many costs, risks, complexities and operational issues that would be involved in making a “storage-plus” project work technically and financially via the Order 841 participation model. It might not be profitable in the near term with existing technologies, and system operators may need to create new market products to provide compensation for the attributes that they need. However, ensuring that the Order 841 market participation model can be generalized and used by other resources could provide an approach for building and interconnecting a wide variety of new energy resources in a more expedient way. It is critical that all ISO/RTO markets implement Order 841 in a complete and general way to support innovation and performance-based, technology-neutral use of all resources.
Mark Ahlstrom is President of the Energy Systems Integration Group (www.esig.energy), a non-profit engineering, resources and education association that holistically serves the energy industry.