Energy storage group says storage a key capacity market component

The Electricity Storage Association (ESA) told the Federal Energy Regulatory Commission that energy storage can play a key role in centralized capacity markets in the future.

The ESA is an international trade association that was established over 20 years ago to foster development and commercialization of electricity storage technologies. ESA members include electric utilities, energy service companies, independent power producers, plus technology developers involved with advanced batteries, flywheels, compressed air energy storage, pumped hydro and supercapacitors.

The ESA’s Advocacy Council engages in regulatory, legislative and policy advocacy efforts on behalf of the ESA. Council members include: A123 Systems LLC; AES Energy Storage; Aquion Energy; Beacon Power LLC; East Penn Manufacturing; FIAMM; NextEra Energy; S&C Electric; Saft America; and Temporal Power.

FERC currently has an open docket where it is taking input on centralized capacity markets in Regional Transmission Organizations and Independent System Operators.

“Energy Storage resources have the ability to play a valuable and increasing role in meeting the needs of the power grid by providing operators with the necessary tools to adapt to changes in energy generation and utilization profiles resulting from public policy objectives and environmental regulations, among other factors,” said a Sept. 10 ESA filing in that docket. “The primary drivers of benefits provided by energy storage resources are their capacity and flexibility characteristics.”

Among other things, the use of storage unlocks latent economic value system-wide by relieving constraints that allow further optimization of thermal and renewable energy dispatch. Specifically, energy storage resources avoid or reduce:

  • thermal unit start/stop costs because the use of “peakers” is reduced;
  • costs associated with “must run” minimum generation from thermal units because storage 
is withdrawing energy during off-peak; and
  • renewable energy curtailments or negative pricing because storage is withdrawing energy during off-peak.

To date rules have not been developed in the Eastern U.S. markets to enable the participation of storage in capacity markets, ESA added. “Integrating storage resources into the existing capacity markets by the development of rules specific to these resources, as has been done for other alternative resources such as demand response, will send the right market signals for investment,” it said.

Current capacity markets are designed with the narrow focus of ensuring that there is adequate peak energy during high load conditions. Growing demand, environmental restrictions, and high penetration of variable energy resources (VERs) into the market are expected to create a need for other resource attributes in order to reliably maintain the system. The California ISO, for example, has found that among the challenges for integrating 33% renewable resources is ensuring that there is sufficient flexible capacity to address the added variability and uncertainty of VERs.

Storage resources have fast, accurate ramping capability making them ideally suited to provide system flexibility, the association said. As FERC found in Order No. 755, the use of fast-ramping storage technologies to provide frequency regulation had the potential to reduce the total amount of regulation that needs to be procured by the ISO to meet its reliability requirements, i.e. 1 MW of storage has the potential to offset 2-4 MW of traditional fossil generation providing frequency regulation. Moreover, these generation MWs displaced from providing regulation can be used to provide more efficient energy at peak periods by operating at their preferred output and at lower heat rates, ESA noted.

“Furthermore, unlike generators that experience higher rates of fuel consumption and air pollutant emissions when they provide ramping and regulation services, storage resources recycle existing power without burning fossil fuel or producing any direct air emissions, thereby lowering total system operating costs and air pollutant emissions,” the association wrote. “A study by Carnegie Mellon in October 2008 estimated that 20% of the CO2 emission reduction and up to 100% of the NOX emission reduction expected from introducing wind and solar power will be lost because of the extra ramping requirements they impose on traditional generation. Continued reliance on thermal generating units to meet increased ramping requirements could actually increase emissions of CO2, NOX and other pollutants.”

Many advanced energy storage resources are designed to be modular with many independent units running in parallel, which improves overall system reliability through redundancy. On the other hand, most conventional generation facilities are comprised of a few large units, ESA pointed out. The “shaft risk,” a capacity resource’s contribution to loss of load probability from the failure of a single unit or piece of equipment, is lower for storage under the modular architecture, it said. A modular architecture with many parallel units also allows maintenance of those units to be performed in sequence, reducing outage rates and improving the resource’s availability.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.