Energy Storage for Demand Response


With new projects emerging domestically and globally, battery energy storage is becoming an increasingly economical and effective solution for addressing demand management.

“The future of battery energy storage is at the local level,” notes Gary Dannar, founder and CEO of DANNAR.

Dannar says that as battery manufacturing capacity ramps up to meet exponential worldwide growth in demand, costs are rapidly coming down. He points out that in the automotive sector, the manufacturing of battery electric cars is poised to replace combustion engine-powered cars in Europe and parts of Asia.

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The same holds true for technologies such as DANNAR’s Mobile Power Station (MPS), says Dannar.

“Two years ago, our ability to source domestic batteries that were reliable and carried significant power was negligible,” says Dannar.

Today, DANNAR’s MPS is “extremely affordable compared to similar heavy-duty, off-road work equipment, but with the added benefit of battery energy storage and export power nearing 250 kWh per machine,” says Dannar.

The year 2016 was an inflection point in the growth of utility-scale battery energy storage capacity, notes Dannar. According to the Energy Storage Association (ESA), battery energy storage grew that year by 221 MW compared to 2015 and was matched correspondingly by a drop in cost. The strong growth in the amount of MWh of utility-scale battery capacity has reinforced the confidence that large energy storage facilities can help manage peak demand, says Dannar.

At the micro level, deployment of new technology systems such as the DANNAR Mobile Power Station provides export power and battery energy storage, moderating the demand for energy in a neighborhood, in a building, at an event, or even to replace a diesel-powered genset sitting ready to go when grid power is disrupted, Dannar says, adding the system is a new distributed energy resource (DER) for a range of commercial and governmental users.

Case in point: for the military, energy resilience is paramount, and the MPS provides increased reliability and security.

When coupled to electrical systems via quick-synchronizing inverters, batteries are very effective, as evidenced by their widespread use in uninterruptible power supply (UPS) systems, notes Dr. Steve Hung, DANNAR product development and technology director.

While a UPS is not intended to handle regular peak shaving/load leveling, “the fact that battery-based UPS systems have been sized to handle cellular communication towers and large computer server farms speaks to their capabilities to both provide seamless power and power at substantial power levels,” says Hung.

Hung notes that in comparing battery-based technology to systems based on generators, the US Marine Corps reported in 2012 that low loads on generators lead to three main problems: poor fuel efficiency, increased maintenance, and decreased system lifetime.

Additionally, the “most effective solution to this problem is to add energy storage in the form of batteries. By adding batteries to a generator, the generator can run at peak performance at all times,” according to the report.

By 2013, the Marines noted that batteries showed themselves to be effective functional augmentations to generators that were primary power sources and that a combination of right-sized generators and batteries offer the best combination of performance and package.

The future of battery storage is exemplified in California where batteries—rushed online in the last two years to supplant power grid needs resulting from the closure of the Aliso Canyon natural gas storage facility—represent 60 MW of the 221 MW added in 2016, says Dannar, citing an ESA report.

Dannar notes that with a four-hour duration battery, a 20-MW energy storage system can deliver 80 MW of capacity to meet a peak demand spike.

Dannar sees the same trend occurring at the municipal level. In a new project within Muncie, IN’s city limits called the Kitselman Pure Energy Park, battery energy storage capacity will be supplied using multiple DANNAR Mobile Power Stations married to a new 5-MW solar power plant.

According to a recent ESA report for the fourth quarter of 2017, “energy storage, particularly battery and thermal storage, was not on the radar for many utilities in the last set of Integrated Resource Planning cycles ending as recently as 2015,” notes Dannar.

Change has been swift, he says. “The US storage market is forecast to grow almost nine times between 2017 and 2022. The annual market is projected to hit the 1-GW deployment threshold in 2019 as procurement programs and improved economics come to the fore,” says Dannar, citing the ESA report.

The cost-effectiveness of battery energy storage is highly dependent on local utility generation and distribution, as well as those local utilities’ incentive programs, says Dannar.

Hung points out that according to the US Department of Energy’s National Renewable Energy Laboratory, “installing a lithium-ion system yielded a positive Net Positive Value for all battery sizes considered. The installation of a lithium-ion battery system in Los Angeles, while using the automatic peak-shaving strategy, yielded a positive Net Positive Value for most system sizes, illustrating that battery energy storage may prove valuable with specific utility rates, ideal dispatch control, long cycle life, and favorable battery costs.”

Battery storage systems now and increasingly in the future “compete directly against natural gas-fired turbines on price and are beginning to replace them in Western states to address and modulate peak demand,” says Dannar.

An entire community in Sterling, MA, is deriving multiple benefits from battery storage, allowing the municipality to control how and when it buys electric services from the independent service operator (ISO). Thus, it reduced purchases during times of regional peak demand and saves money for the town’s utility and its ratepayers.

Sterling utilizes NEC Energy’s GSS Grid Storage Solution to provide economic and resiliency benefits such as peak shaving, resiliency for backup power in the event of an extended power outage, and grid stability, with the ability to use the energy storage to provide local voltage support to electricity networks to improve efficiency and power quality and provide services back to the larger transmission network by performing frequency regulation or response.

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DANNAR MPS allows onsite operators to maintain safe distance with remote control features.

The project was the first utility-scale energy storage facility in New England and was the largest battery of its kind in the region at the time of installation.

Sterling Municipal Light Department (SMLD) is the municipal utility serving the town. In 2013, SMLD led the US in solar watts per customer with the installation of 3.2 MW of solar PV, notes Roger Lin, senior director of products and marketing for NEC Energy Solutions.

While solar currently accounts for approximately 30% of SMLD’s peak load and was used to offset the increasing costs of electricity for the town, it was not always available due to snow, cloud cover, or grid outages.

With the costs of Regional Network Service (RNS) and Forward Capacity Market charges in ISO New England more than doubling from 2010 to 2017, the town’s electricity continued to grow more expensive due to the variable availability of solar during peak demand hours.

Sterling deployed a 2-MW/3.9-MWh GSS Grid Storage Solution to ensure demand reduction during peak hours, store low-cost solar electricity not consumed during the day, and purchase electricity from the grid during evening low-demand times.

By using cheaper stored electricity from the GSS system to reduce electricity needs when grid power is most expensive, SMLD reduces the cost of electricity, transmission, and capacity payments to the grid operator, lowering electricity bills for everyone in the town, says Lin.

Since the energy storage system is able to isolate from the main grid in the event of a power outage, it can power the town’s police and dispatch center for about two weeks in the event of a grid outage or disaster. The project was completed in four months.

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DANNAR MPS performs
routine maintenance.

In 2017, the town derived an RNS charge savings of $163,000, a Forward Capacity Market savings of $241,000, and $13,000 savings from arbitrage.

Other potential revenue streams per year include a frequency regulation under 4,000 hours of $120,000, an arbitrage opportunity of $26,000, and a maximum RNS savings of $197,000.

“Energy storage is a really good tool to manage demand for different types of loads in the commercial and industrial space,” notes Lin. “When the electricity is the most expensive, you use the battery to serve the load and to provide the power for whatever is running for that period of time instead of taking it from the grid, which is more expensive, thereby saving money on the overall use of electricity.”

Battery storage is most effective when a facility knows its load, says Lin. “You have to understand what the cost of electricity is, which is usually predetermined by the electricity rates or tariff that your system is operating on,” says Lin. “Knowledge of that, combined with some knowledge of the load you’re using, can make that battery source become more effective or less effective.”

The dispatch algorithm plays a significant role in how much money can be saved, he adds.

NEC Energy Solutions sells entire storage systems such as the GSS Grid Storage Solution for projects that are a megawatt or above in size for some of the much larger commercial and industrial facilities, or the DSS Distributed Storage Solution which is sized for the hundreds of kilowatts range, covering a broader base of commercial and industrial end-users, says Lin.

While saving money on demand management is one aspect of battery storage, there are certain places where the use of battery storage can enable a facility to generate revenues by providing services back into the grid, he points out.

“It’s a combination of values here. One is saving money on your utility bill but the other is making money by selling services from that battery,” says Lin, adding that many end-users want to take advantage of as many opportunities as they can to get the optimal return on investment.

There are parts of the US in which this idea has gained much traction, says Lin, adding that the versatility of battery energy storage helps.

“It can do many different things and is changing rules to accommodate that kind of a resource when in the past all of the rules were designed around a very different set of resources and a different flow of electricity,” he adds.

Another option comes from Fluence, a global energy storage technology and services company that combines the engineering, product development, implementation, and services capabilities of its predecessor organizations: AES Energy Storage and Siemens’ energy storage team.

Fluence builds on more than a decade of grid-scale energy storage installations and nearly 500 MW of battery-based energy storage systems deployed or awarded across 15 countries, notes company spokesperson Steven Goldman.

The company recently announced that it will be the supplier for the world’s largest lithium-ion battery storage installation, a 100-MW/400-MWh (four-hour duration) storage system that will be part of AES’ Alamitos Energy Center in Long Beach, CA, serving Southern California Edison and the western Los Angeles area.

Fluence terms what is traditionally called “demand management” as energy cost control for commercial and industrial end-users, notes Goldman.

The company’s energy storage applications serve transmission and distribution enhancement, frequency regulation, capacity peak power, critical power, generation enhancement, renewable integration, and microgrids and islands.

A Fluence project in Finland illustrates those benefits where a Siestorage installation is helping a shopping center maximize its solar output and allow center managers to time-shift energy to reduce grid charges.

Siemens Osakeyhtiö and Kiinteistö Oy Kauppakeskus Sello shopping center signed a contract for construction of a smart energy system at the shopping center as the first step toward connecting properties to the virtual power plants (VPP) of the future where they become operators comparable in function to backup power plants. The project is expected to be completed this autumn.

A smart power microgrid is being built at the Sello shopping center and will be connected to the broader energy system. A storage battery system will be constructed within the premises to enable smart electricity storage and usage. It will serve as the largest in northern Europe, and is designed to reduce the country’s need to invest in backup power plants as well as assist the Finnish electricity grid to develop and secure the self-sufficiency of its energy production.

“To optimize the use of Sello’s energy, we have now built a digital platform to which more properties can be added effectively and efficiently,” notes Ville Stenius, director of building performance and sustainability for Siemens in Finland and the Baltic countries. “The platform increases the benefits for property owners and for society at large.”

The Siemens’ solution is designed to make it possible for a property to produce energy itself through solar panels with the energy consumption of the property automatically regulated by purchasing, storing, and consuming energy according to the need at any given time.

The shopping center is the first significant property complex in Finland to be part of the electricity reserve market offered by Fingrid, the national electricity transmission grid operator.

The existing building technology of the shopping center is being developed into a microgrid while at the same time the largest integrated electricity storage facility in Northern Europe is being implemented, giving it a power capacity of 1.68 MW and a storage capacity of 2 MWh.

Unit manager Anssi Laaksonen from Siemens notes that due to the storage system, it will be possible to affordably purchase the amount of electricity needed to supply 20 electrically heated homes for a winter day and to use it when the price of electricity is high.

The 500 kWp solar energy system installed on the premises will be used in the shopping center to its full extent. If more solar energy is produced than what is consumed, the surplus will be kept in storage batteries, says Laaksonen.

The smart energy solution halves the repayment for investments in renewable energy production, says Siemens’ head of sales, Mikko Aalto.

“The continual challenge facing any electricity system is to balance production and consumption in real time,” adds business development manager Veikka Pirhonen from Siemens. “Loads that can adapt at a rapid pace are essential for grid reliability. In the future, shopping centers and other properties can constitute entities that participate in the market as virtual power plants.”

The effectiveness of battery energy storage depends on a location, notes Bill Becker, director of business development, Spirae.

“From a facility point of view where you have high demand charges and a spread between different time-of-use rates, energy storage can definitely make a good economical return on investment,” he says.

Spirae provides energy storage for various distributed energy resources. Becker notes that energy storage is one in a number of resources that might be in a given portfolio. While it may be the only resource in a building, “it’s more effective if we could start to integrate energy storage with other resources such as any sort of flexible loads or onsite generation, coordination with things like electric vehicles, or any sort of charging going on at the facility.

“We look to energy storage as one of many resources,” says Becker. “It’s one in our portfolio. It’s got good characteristics, but it’s not the only thing in the arsenal.”

Spirae Wave is designed to give project developers, aggregators, IPPs, and utilities the ability to reliably operate microgrids with portfolios of renewable and distributed energy resources.

The microgrids leverage new business models based on energy arbitrage, fuel offset, VPP operations, market participation, energy independence, and system resiliency.

Wave is a control platform combining industrial controls for advanced power control algorithms with a flexible, scalable, and adaptable software architecture for managing dynamic DER portfolios.

It is also designed to enable end-users to implement customizable business logic to tap a variety of value streams. The Spirae Wave Microgrid’s standard capabilities include asset monitoring and control, scheduling and dispatch, active and reactive power import and export control, islanding and resynchronization, frequency control, voltage control, and spinning reserves management.

Its standard application programming interface also can be extended to implement custom economic and optimization logic to meet various customer and market requirements.

Microgrids are applicable in situations where a collection of energy resources such as generation, storage, and demand assets within a defined boundary may be operated as a cohesive system to cost-effectively meet facility or corporate energy goals.

Those goals may include reduced energy costs in a grid-connected situation, resiliency in an operation mode that is grid-connected but capable of independence during emergencies or grid failure, and fuel offset and carbon reduction in a grid-independent situation, among others.

In helping an end-user create the best setup, Spirae’s team looks at load profiles, a tariff structure, and any renewable generation.

“We would put all of those things together and look at where we can shift energy for demand management as well as time-of-use energy shifting and then run that through and see where the optimal point is on the return on the investment,” says Becker.

The company utilizes off-the-shelf tools and will sometimes perform a customer analysis for a particularly complex set of data or set of resources, he adds.

“There is an optimal point if you’re trying to save the most amount of money,” says Becker. “If you’re trying to achieve the highest level of renewables while still being reliable and economically responsible, that leads us to a different conclusion.”

As a control system supplier, the company works with partner companies that are integrators or service providers, he says. Becker points out that while energy storage is sometimes viewed as the “Holy Grail” and is important, he believes good building management, using flexible loads, and energy efficiency are all part of the equation.

To balance energy supply and demand in real time, increase the productivity and value of energy assets, and deliver new energy services to end-users, AutoGrid has designed software to integrate distributed energy resources and produce new revenue streams through flexibility management by mining data to extract flexible capacity from distributed energy resources.

“AutoGrid can leverage its software for energy storage to provide benefits both to the utility grid as well as the end-users,” notes Kyle Garton, principal product manager at AutoGrid.

AutoGrid Flex provides a software solution for managing the analytics and optimizations of distributed energy resources, says Garton. In partnership with that product line is the customer portal AutoGrid Engage, enabling end-users to view the performance of their system and see how well it is doing in saving demand charges, he adds.

Some end-users have a predictable and regular peaking load while others may not due to such factors as the impact of weather patterns in driving differences in load, says Garton.

The company’s analytics of big data coming off of smart meters has offered a track record in understanding the complexity of building loads and weather patterns, leading to accurate forecasts and optimization of distributed energy resources for multiple value streams as well as demand charge management for large commercial and industrial facilities, notes Garton.

At facilities where the load is flat, there is not going to be much peak to shave, “but at any facility with a lot of volatility where a high percentage of the bill is demand charges, the energy storage can be very effective at doing that, but only when paired with a sophisticated software solution to make sure the analytics are done right and done in real time,” says Garton.

Setting a battery to discharge during peak hours isn’t sufficient, Garton adds. AutoGrid products are designed to forecast a month ahead at a facility’s billing cycle, refreshing forecasts throughout the day based on updated weather conditions as well as updated load from the building feeding back into algorithms, says Garton.

With an updated forecast, the battery can be reoptimized to save demand charges as well as other features of the tariff in the most optimal way, he adds.

AutoGrid ESM (Energy Storage Management System) is designed to maximize the value of energy storage by predicting and controlling flexible capacity from any storage device anywhere on the grid.

In addition to providing value for the grid and energy providers, AutoGrid ESMS enables asset owners to integrate energy storage solutions to allow them to optimally stack up the value of energy storage and properly size an energy storage system to maximize all value streams.

It also is designed to enable asset owners to participate in energy markets, dynamic pricing, and demand response programs, and maximize demand response participation without impacting business operations. 

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