This article was written by Nick Stumo-Langer, the Institute for Local Self-Reliance’s Communications Manager. He runs all of ILSR’s social media channels and previously was an Energy Democracy initiative Research Associate. Originally published at ilsr.org.
Storage Already in Practice
In Minster, Ohio, a solar plus energy storage system significantly reduces energy costs for the city’s municipal electric utility in a number of ways, including: “deferring transmission and distribution costs, improving power quality, and shaving peak demand.” In the graphic below, we can see the way battery storage combined with solar can shave peak energy use.
Islands are particularly good candidates for these renewable energy plus storage systems, simply by necessity. Islands are “constrained electricity systems” that would (and do) have to import coal or natural gas, but are greatly benefited by renewable energy systems that include storage. Constructing solar energy arrays plus storage keeps excess energy production local and usable in these geographically remote areas.
It’s not just solar and storage arrays that could potentially take advantage of these tax credits. Electric vehicles (and their owners) can also benefit from storing energy during low demand periods. The “batteries charge on low-cost electricity, and they can later sell that power back to the grid when prices rise during periods of high demand, making a profit” on their vehicles’ energy usage and shifting the energy load to cut peaks and troughs. Even if an electric vehicle never sells any electricity back to the grid, simply being able to charge at nighttime when prices are low (and absorbing excess power production) is a valuable grid service.
Energy storage systems are poised to become crucial pieces of any renewable energy system, whether it’s Minster’s renewable energy system or any number of microgrid systems across the country.
In May of 2016, the US Representative from Silicon Valley, Mike Honda (D), introduced the Energy Storage for Grid Resilience and Modernization Act (H.R. 5350). In short, this bill extends the current 30% Renewable Energy Tax Credit (which was just extended last year) to energy storage technologies, not just the wind, solar, and geothermal power plants that feed electricity into the grid.
This bill would help accelerate deployment of energy storage that’s already underway, and that can play a pivotal role in the expansion of renewable energy.
Here are a few ways energy storage can help.
Balancing Supply and Demand
The big change wrought by renewables is flipping the grid, from a focus on providing electricity to match demand to making both supply and demand flexible. The following graphic illustrates. Among other technologies (like pumped hydro storage, or even fast-response natural gas power plants) batteries can respond instantly to gaps in supply or demand.
Providing Reliable, Quality Power
Batteries also provide an important service called “reactive power” that maintains the grid’s constant voltage. Since the motors and devices we use depend on a consistent voltage, and traditional power plants struggle to do this over long distances, distributed energy storage means higher quality and more reliable power.
For electric customers with their own storage system, it can help them reduce costs, sometimes significantly. For many customers, electricity prices are higher at certain times of day, and charging the battery when power is cheap and tapping into it when power is expensive — called arbitrage — can reduce the cost of electricity.
For commercial customers, it’s even more beneficial, since a portion of their electric bill is based upon their highest use in any hour of the month. If the battery (typically in concert with a solar array) can shave that peak, it can substantially reduce costs.
The graphic below, from an energy management company, shows how the battery storage system was able to change the company’s electricity use. The green line with the peaks was the old usage, the blue line represents the new usage with the storage system.
Photo Credit: Public Domain Pictures, Pixabay via CC 2.0.
SolarReserve Bids 24-Hour Solar At 6.3 Cents In Chile – By Susan Kraemer on Clean Technica, 13 March 2017
In Chile’s last auction for power, SolarReserve bid a world-record-breaking low price at just 6.3 cents per kWh ($63/MWh) for dispatchable 24-hour solar.
SolarReserve’s CSP technology with integrated thermal storage provides 24-hour solar power, and is ideally suited for Chile’s grid with round-the-clock power needs due to its huge mining industry. To bid 24-hour solar at 6.3 cents per kWh is a world record for CSP (Concentrated Solar Power), a form of solar utilizing heat from the sun that can be stored thermally. Chile has open auctions for both fossil energy and renewables, and no subsidies.
CleanTechnica spoke today with SolarReserve CEO Kevin Smith about the firm’s next Chilean bids:
SK: You bid Crescent Dunes in Nevada at 13.5 cents, then Redstone in South Africa at 12 cents. Your bid in Chile was 6.3 cents. How are you able to come down so low for solar that includes thermal storage so it can be dispatched any time — 24-hour solar for just 6.3 cents/kWh?
KS: SolarReserve has made substantial advances in our technology that has increased efficiencies and brought down capital costs since our first project in Nevada.
But there are a number of other factors that influence power prices and the Chilean market appears to be ideally suited for solar thermal with storage. In addition to the best solar resource in the world, the country’s stable financial status along with US dollar denominated power contracts results in excellent financing and investment terms
Interestingly, our thermal solar bids were lower than all but one new-build natural gas project bid into the last tender. Chile has no indigenous fuels, so natural gas needs to be imported in the form of LNG, which is much more expensive than natural gas costs in the US, and is susceptible to spikes in supply pricing in the world markets.
SK: How do you ensure that you can deliver solar power around the clock? Does that require operating at something less than full capacity? [Background explainer: How CSP works: CSP with integrated thermal storage makes solar dispatchable at any hour 24 hours a day.]
KS: Our bulk storage capabilities utilizing molten salt give us tremendous flexibility, without having to consider the degradation issues associated with batteries or the replacement cost issues.
We’re designing the projects in Chile for full capacity 24 hours a day. To do that we put in about 14 hours of storage. That will give us the full capacity of the project essentially 24 hours a day.
We could design it for three times the power for 8 hours a day or twice the output for 12 hours a day, but since Chile’s load is really a 24-hour load we design the storage to handle that.
It really comes down to the design of the steam cycle and turbine capacity, the storage tank capacity, and the size of the heliostat field, which dictates how much additional power you can store when its sunny.
SK: You seem to do all the permitting before you bid, not just in South Africa which requires it, but even in the US and Chile that do not — why? [SolarReserve just received the environmental permitting for its 450 MW Tamarugal CSP; the second of three thermal solar projects it is developing in Chile. Copiapó was permitted in 2015. A new CSP project, Likana is in development.]
KS: I think we’re a bit out front in the way we operate. We like to move forward on permits and make sure we have a fully developed project that’s ready to go. That provides confidence to the offtaker, that the project will be built on the time frame expected in the bid.
For SolarReserve, obtaining the permits certainly minimizes the development risks of the project. So the fact that we’ve got two of our main projects fully permitted we think is an advantage to us, certainly for a risk standpoint for SolarReserve.
SK: Yes, I’d think that must also help the offtaker, by making it more likely that new generation it contracts for really will happen.
KS: Right. I believe in the last round some of the winning bids didn’t have fully permitted sites and I think they’re still selecting sites. We actually think the Chilean government should take the development risks of the selected projects more into account — how developed a project is — because that will impact the ability of the developer to get the project done. We think it should come into play in their analysis.
[South Africa’s success in speeding renewables growth was because the REIPPPP limited bidders to those with fully permitted projects and likely financing. By contrast, the US allowed a disorganized rush to simultaneous permitting, financing and contract negotiation, so that many of the big California solar projects listed by the Department of the Interior failed to materialize, while “using up” places in the interconnection queue.]
SK: Chile has open auctions with competing bidding from both renewable and legacy generation. So why is coal not winning any bids?
KS: There are two blocks of power that the government was asking for: the majority was for 24-hours per day supply, and then there was a block that was allocated for daytime only supply only, which is more geared towards PV.
New coal just isn’t competitive with renewable energy any more in addition to the pollution issues related to coal. Some of the utilities do have existing generation from coal that isn’t fully contracted and we expect some of those projects will continue to be bid into the tenders.
It’s highly unlikely that new coal projects will be built in Chile. New coal projects have been turned down for permitting, so to bid a coal project that isn’t permitted yet and assume that “well I’ll get it permitted” would be a high-risk strategy.
Our view is that our advanced storage technology is suited for 24-hours a day generation as opposed to wind and PV which aren’t. PV with battery storage can supply short term storage or ramping capabilities, but isn’t a good fit for true bulk energy storage, due to the degradation and replacement cost issues associated with batteries. We think Chile’s 24-hour block a good fit for us, so we’re going to bid what we believe is the right way for the system to operate – which is adding true capacity into the market.
SK: Did any other renewables bid into the 24-hours block?
KS: It was interesting and surprising that one of the winning bids in the last round for the 24-hour block was a wind project developer that bid wind plus “spot” electricity supply. Their strategy is to operate their wind project for its expected capacity, say a 30 capacity factor when the wind blows, and then when they can’t supply from their wind facility, they would purchase excess power from the grid in order to meet their contract obligations.
Our view is that that is very difficult to manage and finance, and for the most part, that doesn’t really help the Chilean power system. Chile needs real 24-hour a day power, and are not looking for companies that are in some sense just putting together a financial bid that really takes flexibility out of the grid.
While this might be a reasonable short term strategy since there is modest additional capacity in the system, on a medium or long term basis it could result in substantial power price spikes during low supply periods. It’s interesting that the bid requirements, as structured, didn’t actual have real capacity requirements in order to bid 24-hour blocks of energy.
Take that strategy to the next step: if everybody did that, there would be limited new power projects built in the near term. Spot prices rices would quickly rise and they would have shortages on the market.
SK: Might you bid a Hybrid PV/CSP like Copiapó in Chile’s Next Round?
KS: We permitted Copiapó for PV as well as CSP, but actually in the current situation, we’re not sure of the value of adding PV into the mix, because daytime power prices are low. We can take the PV out as we’re not required to include it. We could always come in later and add the PV in the future if it makes economic sense, but we think it has limited value in the Chilean sector right now: there has been an oversupply during the day because of all the PV.
The spot prices when PV is available are coming down and so it’s less valuable, and some of the merchant projects that were built are not performing very well because of these lower power prices.
So in the last round we bid Copiapó purely as CSP with SolarReserve’s tower and molten salt storage technology. We had already made that decision that the PV wasn’t adding any value to the bid, so we did not include the PV, and we bid that at $63/MWh. [Ed: 6.3 cents per kWh]