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Future Grid - Sun, Wind and BESS

1.Introduction

The last paper I posted was on large battery energy storage systems (BESS). This is linked below, as BESS will play a major role in this paper.

https://www.energycentral.com/c/cp/large-battery-energy-storage-systems

An earlier survey delved deeply into all types of storage. This is linked below.

https://www.energycentral.com/c/iu/energy-storage-survey

We live in a capitalistic economy. Among other things this means that the most efficient way of providing a given product, or performing a given function is determined by the lowest long-term price of the deliverable. Note the italics – this is key.

When it comes to producing power, the best way to determine this is via a power purchase agreement (PPA). Briefly, this is a contract whereby the owner/developer of a generation project finances the project, pays any expenses, and delivers power to the user at a fixed cost (more or less) per kWh over a period ranging from 5 years to 25 years. These agreements are very complex, potentially with many clauses that can change the energy cost, so we will look at these somewhat deeper in section 2.

A PPA avoids all discussion of which technology or design is better, and allows different solutions to compete based on one thing – cost per kWh.

There is also the question of credibility – does the owner/developer have the necessary experience and financial resources to carry out the contracted agreement. That should be an important part of a prequalification process prior to the responses to the request for proposals (RFP), but we will not delve into the intricacies of these processes herein.

2.Power Purchase Agreements

As I researched PPAs, I found that the terms of this agreement frequently depended on the consumer (entity consuming the delivered kWh). Thus the subsections below each are for a different class of consumer, although the information is somewhat applicable to all classes of customers.

2.1.Federal Government

The federal government buys a huge amount of power. Until recently they were also pushing hard for renewable power - not sure this still applies, but it will not matter in a few more years. The advantages of a PPA for federal organizations include:[1]

  • Renewable developer (or partner) is eligible for tax incentives, accelerated depreciation and this could lower the energy price. Federal agency cannot take advantage of these.
  • No agency up-front capital is required.
  • Renewable owner provides operation and maintenance
  • Minimal risk to government agency
  • Known long-term electricity price for the portion of site-load furnished by PPA
  • On-site projects are encouraged for meeting federal renewable goal. PPAs can be sited at federal facility using power.
  • Good alternative to purchasing renewable energy certificates (RECs)
  • PPAs can help with energy resilience goals by siting power generation on facility.

Potential downsides:

  • Each state has different PPA rules for facilities.
  • Net metering standards vary by state. Net metering allows facilities to feed surplus generation into the grid to offset consumption at other times.

2.2.Utility or Aggregator

In California we seem to be moving towards using an open bidding process with limited constraints of what is proposed. Since the state is moving to a carbon-free economy ASAP, new generation capacity is (greatly) preferred to be renewable. If renewable technologies will not work or is too expensive, clean gas-fueled generation is an acceptable alternative. Many smaller utilities and community choice aggregators will only accept proposals for renewable capacity.

Recently utilities that were in the process of issuing a request for proposals for gas peakers had legal actions filed against them to consider renewables, and the outcome of these seems to be that renewables and/or storage will provide the required capacity.

The following table is from the referenced source, and describes the types of renewables that might be bid in response to a RFP (with an attached draft PPA):[2]

Energy Delivery Profile

Delivery Characteristics

Representative Fuel Type

Peak

Under normal operating conditions, 90 percent or more of daily electric generating output is produced and delivered between the hours of 6:00 A.M. and 10:00 P.M. (generally described as “On-Peak Hours”)

Photovoltaic Solar and Solar Thermal

Baseload

Under normal operating conditions, the annual capacity factor for the generator typically exceeds 75 percent, inclusive of planned outages (maintenance)

Landfill Gas, Biomass, Fuel Cell

Intermittent

Delivery characteristics are not consistent with either of the described Peak or Baseload Energy Delivery Profiles

Wind

Note that storage is not mentioned in the above table (not a "fuel type"), but would probably be necessary to mitigate variability and allow photovoltaic (PV) generation to reliably provide peak power.

Some other terms in a utility/aggregator PPA might include.

  • Capacity (or range of capacities) to be bid
  • Delivery point of generated power
  • The term of the PPA (5 to 25 years)
  • Generation certification, qualification and other progress requirements to be met in order to demonstrate progress towards future start-of-delivery (of power)
  • Contract price per kWh (or MWh), and limitations or incentives effecting price. This can be a fixed price (throughout the term) or have an escalation clause.
  • Performance clauses define availability and circumstances and remedy for the inability to deliver.
  • Conditions for termination of the contract before the full term (for convenience and for cause). Contracts can also include a buyout provision, typically after the sixth year because of tax recapture issues related to the Investment Tax Credit.
  • Disposition of "green attributes". These are external credits, benefits, emissions reductions, offsets, and allowances, and include Eligible Renewable Energy Resources Credits and Renewable Energy Credits, Renewable Energy Certificates (a.k.a. Green tags), Renewable Electricity Certificates, and Tradable Renewable Certificates. These will either transfer to the purchaser or remain with the owner/developer of the generation. These have values and the disposition will impact the pricing.
  • Metering requirements

2.3.State or Municipal Government

Contracting laws vary for different states and municipalities, so the following are things to look out for. Note that the referenced document is a really good reference and goes into many more details on PV PPAs for this class of customer, however it is a bit old (most of its links to other sources are invalid).[3]

  • Contract tenor statutes (maximum term of payment for a loan), may limit PPA term to ten or fifteen years.
  • There may be conflicts between statutes and the ability to buy/sell green attributes (see prior subsection). Many statues predate these types of assets.
  • Public bidding laws may preclude RFP process.
  • Public purpose of lending statutes may limit the ability to prepay for electricity.

2.4.Private (Non-Utility) Facility-Owners

Like the prior subsections this will be a short one, as most PPA issues have been covered in the earlier sections. Also like in the prior section, I have identified a good reference for the information below (and more) as referenced.[4] The following are additional issues for this class of customer.

Physical vs. Virtual PPA: A physical PPA is as described above - an owner/developer of a generation project finances the project, pays any expenses, and delivers power to the consumer at a fixed cost (more or less) per kWh over a period ranging from 5 years to 25 years. In this case there is a delivery point where the owner/developer relinquishes ownership of the power, and the consumer accepts ownership.

With a virtual PPA the consumer agrees to a fixed price for renewable energy delivered to a specific point irrespective of the floating market price. The seller generates and sells a project’s energy at market pricing. When the floating market price exceeds the fixed virtual PPA price, the owner/developer passes the positive difference to the consumer. When the market price is below the virtual PPA fixed price, the consumers pays the developer the difference. The consumer can retain all of the green attributes associated with the delivered energy (if so specified in the contract). Virtual PPAs are typically only available in organized markets administered by a regional transmission organization or independent system operator (for independent validation of delivery and market pricing).

Image: PPAs are well-understood and provide a record of the commitment to renewables. They also help to achieve corporate environmental goals while also potentially saving money. Because the consumer owns the green attributes these can be used for environmental information.

3.Future Economically Driven Renewables

PV + storage projects and prices per kWh are currently starting to cross-over the boundary to where they are competitive with conventional generation with incentives. Within a few years they will start to become less expensive than conventional generation, but the amount of time they spend on this plateau will depend on how quickly the incentives disappear. As the cost of renewables and storage continue to rapidly decrease, at some point the displacement of conventional generation will be inevitable.

The following two subsections cover two renewable technologies: PV + storage and wind + storage. Several caveats are added below.

These two technologies, are not the only renewable technologies, but they will become the dominant portion of new generation projects in the next ten to twenty years. PV + storage has already started to rapidly increase its market share (see the paper on large projects linked at the beginning of this paper). Wind + storage has a tougher pathway because of wind's unpredictable long-term variability, but it does have a pathway (actually two pathways), as we will explore below.

Also there are the other renewable technologies. Both hydroelectric (including, large, small and pumped storage) and geothermal are well established and growing slowly. At some point in the future (see the paper linked below), biomass / biogas based generation with carbon sequestration will play an important part in climate-change mitigation. Other technologies are relatively unproven.

https://www.energycentral.com/c/pip/climate-and-energy-mitigating-climate-change

Solar-thermal can have intrinsic storage (with working-fluid storage), but the economics are not pervasive compared to PV (or PV plus storage), and I haven't seen any recent activity from this technology.

I have recently discovered a new technology for concentrated solar power + high-efficiency multi-junction PV + thermal storage. This has a great degree of flexibility, and I'm considering a future paper exploring this.

The final solution is PV and/or wind with variability mitigated by fast-responding conventional generation (primarily combined-cycle and peakers with a few BESS), which is where we are today. In the future more BESS will enter the mix, displacing conventional generation.

3.1.PV + Storage

As the table in section 2.2 above indicates. PV plus storage is currently well-suited for providing peak-capacity. Many of the large projects in my last paper (linked at the start of this paper) where BESS was integrated into PV, the BESS energy-to-power ratio seemed to be 4:1 (four-times more kWh than kW peak capacity). This is close to the normal economic limit for lithium-ion technology.

In PG&E's service territory, the main large customer tariff (E-20) has three tiers, and these are peak: 12:00 noon to 6:00pm M-F; partial-peak: 8:30am to 12:00 noon and 6:00 pm to 9:30 pm, M-F, off-peak: all other days and times. With this subsection title's "peaker" design, the BESS will probably charge in the morning, and decrease charging in the afternoon to allow the PV to supply the target capacity until the PV output drops below the target capacity. At that point the BESS will discharge to maintain the target capacity at least until the end of the above peak period.

Using PV plus storage for base-load, may not be economically justified now, but if the market starts supporting such a requirement in the future, it might use the storage technology mentioned in the next subsection to support this.

3.2.Wind + Storage

Wind-power depends on the wind. I will use my local area (Northern California) as the basis for discussing wind variability. However, I expect that these will be similar to conditions elsewhere.

The wind-speed varies depending on the specific weather pattern, but the lowest long-term speed (5 to 7 mph) is when a high pressure area is parked near the Pacific Coast. Normally these conditions only persist for a day or two, but during our "drought" patterns, these conditions can persist for close to a week. During normal conditions, the wind in the Altamont Pass (our largest wind resource area) is in the 10 to 15 mph range. Since the amount of energy in wind (all other things being equal) is proportional to the third-power (cube) of the wind-speed, the difference between low-speed (5 to 7 mph) and normal (10 to 15 mph) wind-energy is roughly 1:9. Thus a turbine that was designed to produce 1,500 kW at normal wind-speed could only produce about 170 kW at low speeds. During normal weather patterns, long-term low wind speed conditions could be for a day or two, but during exceptional patterns, this could be for nearly a week. This is the long-term variability problem with wind-power.

The next question is, what is the design-goal: (1) mitigate the variability such that a portion of the wind generation can be offered as peaking capacity, or (2) mitigate the variability such that a portion of the wind generation can be offered as base-load? The cost of mitigation compared with the increased profit realized from a PPA offering each service, evaluated at some point in the future will decide which service is supported.

Another point is that PV + storage is a really good fit for peaking capacity, and will likely capture this market in future years. The playing-field for baseload, may be somewhat more level. All we can do at this point is to look at the different options for mitigation, as done the remainder of this subsection.

Below are three potential solutions:

Low wind-speed designs for on-shore turbines: This is probably a mitigating strategy rather than a complete solution, and it's already being put in place. Since I live next to the Altamont pass, I frequently see the wind turbines operating. NextEra replaced the (ancient) turbines in the Golden Hills Wind project (nearest to Livermore) a year or two ago with the latest GE designs. When the winds are strong, they are spinning at a high speed; when the winds are weak, they are spinning at a low speed, but they are almost always spinning. The bad news is: when the winds are weak, the weather is hot inland, and demand for energy is highest.

When I researched wind turbines, I noted that they have increased the swept area for a given wind-speed over the last 5 or 10 years, and the major manufacturers generally offer a range of rotor diameters for a given rating. Below are the ratings and rotor diameters for GE's and Siemens-Gamesa's current smallest on-shore models.

Manufacturer

Model

Rotor Diameters

GE

2 MW Platform

116- or 127-meters

Siemens-Gamesa

SG 2.1-114, SG 2.1-122

114- or 122-meters

The larger rotor diameters will operate at a higher capacity-factor at lower wind speeds. Also, the designs of blades, gearboxes and controls have improved dramatically in the last 10 years, and support a wider range of wind-speeds, and more efficient use of wind-energy.

Off-shore turbines with BESS: In writing several recent papers on wind-power, I noted three wind farms have or have contracted for added storage. One of these is the Tesla project in South Australia, where the storage was added to solve several issues, which were destabilizing the grid, including intermittency from an existing large wind-farm adjacent to Tesla's BESS. The other two were planned from the beginning to add BESS to enhance the economics of new offshore projects. These are Equinor's (formerly Statoil) recently completed Hywind Scotland Project and the future Ørsted and Eversource's Bay State Wind offshore (off the coast of Massachusetts). Both of these projects have selected a BESS supplier and plan to add these systems in the future.

The fact that the above two wind plus storage projects are off-shore reflects the fact that offshore wind is generally stronger and more consistent than onshore wind. Thus, the long-term variability is not as severe offshore, and thus the value added by storage is probably more reasonable.

Wind and flow battery BESS: Five or ten years ago, LiIon batteries and flow batteries were fighting to become the dominant technology in BESS. LiIon batteries quickly gained volume through their use in cars, and their price quickly fell. This provided a substantial price advantage for LiIon and allowed an end-run around flow batteries before the latter could gain the volume necessary to compete.

Some flow battery projects are still being implemented, and their design does have one major advantage. In a flow battery the electro-active materials are in solution in electrolytes at all times. The electrolytes are stored in tanks outside of the cell, and flow through the cell to provide energy. Thus increasing the energy is simply a matter of increasing the total volume of the electrolyte tanks. Go to the Energy Storage Survey linked at the beginning of this paper for more information. The sweet spot for flow batteries are in applications that require large amounts of energy. Typically LiIon designs are not cost effective beyond a ratio of 4:1, energy to power. Flow batteries can go well above this ratio by using large electrolyte storage tanks, and this may make them cost-effective for mitigating long-term variability in wind projects.

 

[1] Chandra Shah, NREL, Presentation on PPAs for DOE EERE clients, 2011, https://www1.eere.energy.gov/femp/pdfs/afo_ppa_pres.pdf

[2] Marin Clean Energy (a community choice aggregator), "Small Renewable Generator Power Purchase Agreement", https://www.mcecleanenergy.org/wp-content/uploads/FIT_PPA_10.15.15_FINAL.pdf

[3] Cory, K.;  Canavan, B.;  Koenig, R, NREL, "Power Purchase Agreement Checklist for State and Local Governments", October, 2009, https://www.nrel.gov/docs/fy10osti/46668.pdf

[4] Sarah Penndorf, 3Degrees, "Renewable energy power purchase agreements", February 2018, https://3degreesinc.com/ppas-power-purchase-agreements/

John Benson's picture

Thank John for the Post!

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