Evaluating Benefits of Utility-Scale Battery Storage
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- Oct 28, 2020 3:36 pm GMTOct 26, 2020 3:58 pm GMT
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Electric utilities routinely prepare studies to evaluate a variety of infrastructure expansion plan alternatives and select their ‘preferred’ option to reliably serve customers’ power requirements. Utility costs have traditionally been the driving force in choosing a ‘preferred’ expansion plan for implementation. Battery energy system storage (‘BESS’) is emerging as a new option or alternative being considered by utilities alongside their traditional planning of new transmission, substation, and distribution projects. In addition, BESS is emerging as part of utilities’ broader grid modernization strategy. This article will explore some of the benefits associated with BESS and the overall value proposition of stacking or layering customer and utility benefits.
A variety of tangible benefits are commonly attributed to BESS. For example, BESS may be dispatched to meet demand and energy requirements during peak load periods to defer plant upgrades or reduce power costs. Some BESS applications are tailored specifically for transmission operations associated with rapid-spinning reserves, reducing congestion costs, and ancillary services that provide voltage stability, frequency regulation, and reactive power support. Closely related with meeting peak demand, other BESS applications are tailored to deferring planned investments to expand transmission, substation or distribution capacity. (Demand-side load management is unlikely to defer local capacity requirements unless benefits can be concentrated to a specific area.)
Of course, realizing these tangible benefits will depend on a utility’s individual circumstances, loads, application of objective planning criteria, BESS size and capacity, and BESS location on the grid. To be considered as a viable alternative, BESS must be cost competitive with conventional transmission, substation, and distribution upgrades. Even if BESS appears competitive, a business case evaluation is recommended to include all time-phased capital costs, O&M expenses and other financial considerations to confirm BESS is indeed the preferred alternative.
In addition to dispatching BESS capacity for economic reasons to support transmission operations or defer grid investments, BESS has an emerging role in distribution grid modernization programs. Many utilities are planning to deploy fault location, isolation, and service restoration (‘FLISR’) technology to improve distribution reliability as part of their grid modernization initiative. FLISR improves reliability by detecting faults and automatically switching and reconfiguring interconnected feeders to restore service to un-faulted sections and minimize outages to the fewest number of customers practical. After repairs are completed the affected feeders can be switched back to their normal operating configuration.
Utilities are justifying proposed FLISR deployments to regulatory commissions by creating the value proposition that the anticipated benefits of improved reliability outweigh FLISR costs. The approach and methodology developed by Lawrence Berkley National Laboratory (‘LBNL’) provides a common framework for monetizing the benefits of improved service reliability from the perspective of customers. These monetized reliability benefits and the estimated costs to achieve them may be evaluated in a business case analysis to compare and prioritize proposed FLISR deployments. A properly designed FLISR business case must include the cost of any distribution system improvements required to achieve the anticipated reliability benefits. These costs include system improvements or upgrades required for normal and contingency operations within allowed voltage level, ampacity, or thermal constraints. Otherwise, FLISR business cases must assume distribution capacity is adequate among all FLISR circuit candidates under consideration.
The value proposition for including BESS in a distribution grid modernization program is it enables the stacking or layering of a variety of customer and utility benefits. Conventional FLISR deployments may be more difficult to justify if distribution back feed capacity is limited. Deploying BESS and FLISR to improve distribution reliability and resilience may be justified where reliability is poor, capacity is limited, and upgrades are costly or require years to complete. (Reliability and resilience are interrelated, but distinguishable features of electric distribution systems to be explored in a future article.) BESS enables value stacking in this example by delivering to customers the monetized value of reliability improvements based on the LBNL approach and deferring utility cash flows otherwise required for distribution upgrades. In some cases, utility cash flows associated with transmission and substation improvements may also be deferred. Finally, depending on an individual utility’s circumstances and BESS size, capacity, and location, BESS may be economically dispatched as a resource to reduce peak load generation or deliver transmission benefits previously identified in this article.