Turning Energy Storage From an Idle Backup Into a Money-Making Asset
Battery energy storage systems (BESS) can be the key to tackling any number of issues your grid or business may be facing, such as a need to support more renewables, ensuring a resilient backup, or cutting energy costs. You may believe that a BESS will resolve your issues, but do you have full buy-in from your stakeholders for the upfront investment needed for an installation?
Making the economic case for a BESS becomes easier when you can demonstrate multiple value streams for a BESS beyond the initial rationale for its installation. Ensuring the battery can handle multiple use cases is one consideration but securing a management system or controller which will execute them is even more important. Often, the energy management system (EMS) that ships with the BESS is not designed to handle complex, multiple use-case scenarios. Selecting a sophisticated controller that handles such complexity is a critical aspect of the ROI equation. Such a controller can open multiple revenue streams, increasing your ROI and making storage an appealing investment for your stakeholders.
COMMENTARY
Beyond a Standard EMS
Utilities and building operators are often motivated to install energy storage to protect against disruptive outages. Another reason is to control energy costs by shifting electricity usage away from peak periods. Rather than keep a BESS narrowly focused on its primary initial purpose though, storage owners should consider how they can get the most value from their investment by ensuring the BESS can handle multiple use cases.
Ideally, the EMS that ships with the BESS can manage all use cases in a way that balances business requirements with the capabilities of the BESS. But what if those requirements change? A business that is interested in primarily having a source of backup power may also want a way to control rising electric bills. A utility that originally wants storage to reduce strain on a grid may decide to participate in wholesale energy markets. In other cases, storage operators may be interested in multiple, revenue-generating applications from the start, but run up against a default EMS that lacks the capabilities to balance these in an optimized manner.
Advanced control software goes beyond basic management tasks to handle multiple energy storage applications and can optimize them based on the needs of the operator. Intelligent controllers include the typical capabilities of an EMS but go beyond them to consider variables like weather, frequency, and load parameters. Such controllers are equipped to interact with all the connected energy assets plus receive external market signals, opening further possibilities for maximizing revenue.
A BESS requires an upfront investment, but an advanced controller with a built-in EMS can facilitate payback of the entire system within a few years, all while providing reliable backup power. Though a controller is a small part of the initial BESS investment, it can have a significant impact on improving the ROI of the entire system. The applications enabled by a controller differ for utility and commercial users, but for either customer, a controller helps enable greater value.
Utility-Scale Benefits
Electric utilities are increasingly turning to large-scale storage deployments to help reduce strain on their networks by storing excess power generation derived from renewables for use later in the day when demand is high, as well as to provide a source of backup power when generation sources are disrupted. With an advanced controller, storage can go beyond these limited use cases to take advantage of opportunities that ensure a BESS rarely sits idle.
One primary application for utility storage enabled by an advanced controller is to provide frequency response services including synthetic inertia, regulation, and spinning reserves. These become particularly valuable for grids that have a high concentration of renewables. Electrical grids traditionally depend on the inertia provided by spinning generators to help stabilize frequency during power fluctuations. An increased number of renewables can destabilize the grid in a couple of ways: one, through the intermittent fluctuation of power generation, and two, by not having a spinning mass to carry the generation through these fluctuations. To replace the balancing effect of a spinning mass, grid operators can use batteries which can instantaneously inject or absorb power from the grid to counteract a destabilizing event.
Enabling a battery to respond to frequency events in low inertia grids requires an advanced, high-speed controller that is aware of grid conditions and has purview over a BESS. The controller deploys the battery as a rapid reserve for a primary inertial frequency response to a destabilizing event, such as a surge or drop in solar generation. A controller not only enables this sort of immediate response but can also ensure the BESS provides small adjustments through regular operation. Common grid events, like a rise in A/C usage during a heat wave or a drop in demand during a planned outage can lead to a disruption in grid frequency. A sophisticated controller makes it possible for storage to help stabilize the grid in these situations.
Utilities can also turn to storage as a source of backup power for critical infrastructure. This may be for planned outages, such as public safety power shutoff (PSPS) events in response to wildfires or maintenance, or to mitigate the effects of disaster-induced damage to the grid. Battery storage only used for backup power sits as an idle resource much of the time. A grid controller can turn an otherwise idle battery into a productive asset by leveraging it for other use cases. This includes incremental revenue generation from participation in wholesale and ancillary services energy markets when it is not needed for backup.
Commercial BESS Benefits
Like utilities, commercial entities can also turn to storage for resiliency reasons, protecting business operations from disruption if grid power fails. However, a battery only used for backup power is one that during normal operation is not contributing to the payback of the system. An advanced controller opens the door to energy savings opportunities during times of normal grid operation.
One of the strongest use cases is electric bill savings facilitated by demand charge reductions by shifting energy usage away from peak demand periods. This can be managed simultaneously with time-of-use (TOU) rate optimization, discharging power from the BESS when TOU rates are the highest and recharging the BESS when TOU rates are the lowest. By autonomously helping a business reduce grid power when it is most expensive, a grid controller can help commercial and industrial entities reduce the time it takes to pay back the cost of the BESS.
For commercial entities, an advanced controller can also improve the cost-saving benefits of on-site solar, another distributed energy resource that can have a high upfront investment. In California, generous net metering helped drive the country’s largest solar production with significant growth in commercial solar PV. A recent change in net metering has reduced the rates utilities will pay for customer solar energy added to the grid, which has changed the ROI equation. Adding storage brings back the ROI of installing solar PV, as instead of relying on low net metering prices, the BESS can absorb PV generation during periods of peak production and shift energy to when it is most valuable for reduction of demand charges and TOU rates. An advanced controller can manage PV energy shifting while also managing the storage as a source of backup power.
In markets that support it, commercial BESS can also generate revenue by offering ancillary services. These services, such as frequency response, are reimbursed by market operators as they help harden the grid against disruptions.
Underscoring the Case for Pairing Your BESS With a Sophisticated Controller
Energy storage is a crucial step for utilities and commercial businesses looking to have more control over their energy resiliency and costs, but it requires a large upfront cost. An advanced controller is a small part of that overall investment, but it pays for itself by maximizing the BESS’ ROI through cost-avoidance and revenue generation opportunities. Setting up your BESS to take part in multiple value streams makes a compelling case for investing in battery energy storage. Why leave money on the table—or in this case, the storage container?
—Andy Miller is head of Commercial Development at PXiSE Energy Solutions.