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As renewable penetration increases, transmission and
distribution (T&D) infrastructure will require significant
reinforcement. Battery energy storage is becoming a
keyalternative to traditional ways of reinforcing
network infrastructure because it is fast to deploy, can provide
multiple services, and often comes at a lower capital
cost.
Countries across the globe are at various stages of
transitioning from a predominately dispatchable, spinning thermal
generation which has naturally provided grids with inertia, to
renewable generation which provides an inherently variable output.
This variability creates challenges in pairing peak generation with
peak demand and ensuring reliable power at all times. At a local
level, when an area becomes saturated with behind-the-meter solar
there can be issues with power back-feeding to local substations,
which can damage the network infrastructure. In addition, lines can
become congested, limiting the amount of power that can be exported
and often leading to energy being curtailed.
Energy storage can solve many of these issues, however,
balancing power generation with demand and balancing frequency are
managed through system wide services procured on an ongoing basis,
rather than being addressed by network infrastructure. Instead, a
network operator or utility is most commonly interested in
utilizing energy storage for managing congestion, helping to
mitigate outages and providing voltage support. Deferring network
investment is certainly a potential benefit to network operators
but is not a service that a battery provides on an ongoing basis.
Also, to note, providing capacity is not considered a network
enhancement service but rather a generation support service so is
not considered here.
According to the latest forecasts, IHS Markit predicts that 5.4
GW of battery energy storage will be installed for T&D
enhancement between 2020 and 2025, however the services that a
T&D enhancing ESS will provide is influenced by location of the
system, local regulation and conditions of the network.
Figure 1: Global energy storage forecast for T&D
enhancement
As early as 2008, utilities in the United States utilized energy
storage as a non-wire alternative (NWA) to traditional network
reinforcement. Utilities are increasingly recognising the economic
benefits of using ESS to manage congestion, mitigate outages, shave
peaks and these same systems are increasingly being able to trade
energy in wholesale markets and providing frequency regulation, in
order to generate additional revenues.
Historically, ESS providing T&D enhancement in Europe has
been dominated by demonstration projects. Terna - the TSO for Italy
- in 2014 and currently RTE - TSO for France - are testing three
10-12 MW projects in their respective countries are just some of
the more prominent examples. The requirement to unbundle vertically
integrated energy services (requested by Directive 2009/72/EC and
2009/73/EC of the European Union) restricts the ability of both
transmission and distribution system operators (TSOs and DSOs) from
owning and operating ESS in Europe. Network operators can seek
exemption when specific criteria is met, however, such exemptions
often come with limitations on what the systems can do and for how
long. Instead, network operators are creating new markets for third
party operators of ESS to bid into to provide these system
services.
A growing market for T&D enhancement is Australia as a
result of its dispersed population, a harsh environment and an
aging infrastructure that is installing renewable generation at a
rapid pace. Western Power - a network operator in Western Australia
- is leading the way in utilising ESS in fringe-of-the-grid
locations in place of traditional network infrastructure. Not only
is it installing solar plus storage systems behind-the-meter (BTM)
in place of new lines but also pioneering innovative community
battery storage systems that provide local residents the
opportunity to purchase space in the system to store their solar
power.
Energy storage is a critical asset for supporting
network reinforcement, but will rely on additional value
streams
Globally, there is a trend towards network operators outsourcing
the operations of the energy storage system (ESS) to a third party.
In some markets this will be to comply with unbundling
requirements, for vertically integrated utilities it will be in
order to make use of the expertise of a third party. Additionally,
these T&D enhancement services are increasingly becoming only a
part of the value stack, providing frequency regulation or
arbitraging energy in wholesale markets is commonly provided by the
same system. The portion of the cost that the network operator or
utility, therefore, has to cover reduces, which makes these systems
highly cost efficient for network operators. It is also important
to not forget that behind-the-meter (BTM) ESS can also support the
grid by participating in demand management programs and local
flexibility markets.
