Commonwealth 245 West Michigan Avenue,
Jackson, MI 49201

Feb 17, 2020

Many people are talking about bulk electric solar and batteries these days, and yes, it is happening now.

Utility-scale solar is growing big and only gaining momentum, with both environmental and regulatory attractiveness, as well as lower and lower costs. Many utility-scale battery applications are also included in solar applications, which makes practical sense. Bulk power storage can help allow renewable technologies such as solar to be less like typical intermittent resources, which is true. However, the true value of Battery Energy Storage Systems (BESS) is being overlooked.  And that is the area of capital deferment.

Currently, we see a lot of variation in load on the power grid, which is true just about anywhere you look.

You typically see demand curves that vary widely, and the weather and time of day are significant factors. This shows up in pricing on the important independent system operator locational margin prices (LMPs) bulk power energy markets, with price swings that can be ten times greater during high demand.

A recent example occurred in the Mid-continent Independent SystemOperator (MISO) territory on 1/31/2019. A combination of the loss of a gas compressor station in Monroe, MI, plus unusually lower temperatures drove up demand, resulting in energy price spikes over ten times typical prices at LMPs across Michigan.

Could this have been avoided, or at least mitigated, with BESS?

The thing that often drives these higher prices is transmission constraints and demand peaks. The issue is that there is enough generation, but the grid cannot move the power due to a lack of network capacity along that transmission path. This happens on both a macro and micro scale at the transmission and distribution levels.

BESS systems have significantly increased in size and lowered in cost in recent years.

The technology is developing rapidly. BESS has dramatically increased the length of operation, with many commercially available products capable of peak or near peak power output for multiple hours of operation.

The key to using BESS is not to try to store energy for intermittent sources per se but rather to address the issue of peak demand. The power grid is built in a way where the equipment is sized to deal with the few but severe conditions that happen very infrequently. This might mean a hot summer day in July when peak power demand is excellent or a cold winter day with the loss of a piece of equipment. The rest of the time, the power system circuit is vastly underutilized.

By intelligent use and placement of a BESS, we can address this problem, which the power industry calls the demand curve (see graphic above).

The flatter we can make this curve, the less we have to spend on expensive grid upgrades, which likely would be upgrades to the transmission lines themselves and expensive bulk electric system transformers.

We could, instead, use a BESS approach to level the loading by using a BESS to supply power during peak conditions and store power when demand is low.

By using smart controls that take into account day-ahead energy market pricing, demand, and weather conditions, this method would reduce bulk power market swings and result in more stable and lower energy costs paid by purchasers in this market. The goal is to keep costs down in your monthly utility bill.

While BESS systems appear costly, the comparison is typically made against other generation assets, particularly peaker plants. The better comparison is to look at these systems against infrastructure upgrade costs. A typical BESS based on today’s technology would be competitively priced vs. a large infrastructure project such as a transmission or distribution line reconductor or a transformer upgrade. An added strength of BESS is that we can also use the difference in time-of-day wholesale market pricing as an economic benefit.

I see a bright future for BESS, with applications today at distribution levels with current technology but moving into electric transmission (>69kV) applications. With higher system penetration, BESS also helps address the issue of renewable intermittent sources. The trick will be finding those “sweet spots” areas where the BESS will have the most impact for the least installed cost. The area of system analysis is critical here, including a detailed analysis of system transmission, distribution, and pricing models.

BESS, the future of the grid of tomorrow. Are they part of your future portfolio?

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