Energy Storage has been getting a lot of attention lately – but why is it so important?
Anyone who has looked into battery systems at all knows that they can provide backup power when the grid fails, but that’s not why the grid needs them. In fact, few mandates or incentive programs even mention backup power. The real need has to do with the nature of solar energy and how the electric grid operates.
First, let’s look at how grid-tied PV has been integrated up to this point, an electrical billing practice known as Net Energy Metering.
Back in the days when few people expected customer-sited solar PV to ever become a significant contributor to our national energy supply, most utility regulators kept things simple by mandating that a PV system owner’s meter go backwards when power was exported to the grid. The utility would then simply bill for the net electricity consumption. This scheme allows grid-tied PV systems to leave out the battery and generator that is typically part of an off-grid system – the grid provides those functions at no additional charge. But is that sustainable as grid-tied solar PV scales up (on both sides of the meter)?
It is obvious that a solar power plant can only produce energy when the sun is out. This does not make solar energy unreliable, we can accurately predict production levels given good forecasting – but it does mean that solar by itself is intermittent, we can’t control when the sun shines. When solar is a small contributor to the grid, the intermittency is indistinguishable from typical loads that are turned on and off at effectively random intervals all the time – no big deal. However, when solar-generated power becomes a quarter to half of a local or regional grid, that intermittency can make it difficult for grid operators to match supply with demand.
In theory, a drop in solar production due to weather or planetary rotation could be offset by a corresponding decrease in demand. However, grid operators can realistically only control the supply side, so they usually deal with intermittency by activating dispatchable generators – most commonly natural gas-fired “peaker” plants, which come with additional emissions and operating costs. This is what leads to the argument from some utilities that more solar means more gas peaker plants are required to keep the grid stable. On the utility side of the meter, a meaningful discussion is underway as to whether the peaker plants can simply be replaced by large batteries. But even then, it really only solves the issue for utility-owned solar and wind plants.
Utilities also report that high local penetration of PV systems puts strain on neighborhood transformers and related equipment, which were not designed to support two-way power flow. Upgrading this equipment is obviously not free and the cost often gets put on the person whose PV system is expected to push the total export power beyond the limit – effectively capping PV penetration.
The combination of these problems led Hawaii’s largest utility to effectively ban solar PV systems from exporting any power to the grid. Customer-sited PV systems in most of Hawaii have to limit solar production whenever it exceeds their consumption. Since solar output peaks in mid-day while most of us are at the office and not at home using electricity, curtailment of the system’s output leaves a lot of watts on the roof (aka money on the table) since the owner still has to buy most of their power from the utility. By adding a battery to the system, surplus energy produced during the day can be stored and then consumed in the evening, much like an off-grid PV system, but with the grid in place of a backup generator. This approach, shown graphically below, is often referred to as self consumption.
The much larger California utilities took a more collectivist approach – exporting power to the grid is still allowed, but the price of the energy you buy changes throughout the day. Time-of-Use (ToU) electric rate structures have long been used by utilities to better align large commercial loads with generation and transmission costs that vary with grid-wide demand. Since utility PV plants are providing power during the day with virtually no marginal costs, it’s becoming relatively more expensive to supply power in the evening – corresponding with residential peak demand. San Diego Gas & Electric (SDG&E) recently began moving new solar PV system owners to a ToU rate schedule with the Summer weekday profile shown below.
Under SDG&E’s ToU rate structure, the cost of buying electricity goes up dramatically at 4PM, just as PV production begins to fall off for the evening. As with the self-consumption case, adding a battery to the system allows the owner to store surplus solar generation during the off-peak hours and use it during the peak hours when it costs twice as much to buy electricity from the grid. In this case, the focus is on not using grid power in the evening. Most homes in California will be subject to a similar rate structure by 2020, whether they have solar or not.
As more and more home and business owners deploy solar PV systems to reduce their electricity bills, simple net metering will increasingly be replaced by ToU and other billing mechanisms that effectively devalue electricity produced during mid-day. Utility and fossil-fuel company agendas aside, the economics of high penetration solar energy makes this inevitable. Fortunately, adding batteries to solar PV systems makes solar power dispatchable – putting PV system owners in charge of their energy. I personally expect that batteries will be incentivized or mandated for practically every new PV system across the USA by 2025.
Author : Paul Dailey, Director of Product Management at OutBack Power in Arlington, Washington, USA.
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