Battery Storage as Virtual Transmission Receives a Boost Under the Biden Administration

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Ricardo Rodriguez's picture
Senior Consultant, Energy Technologies, Guidehouse

Ricardo Rodriguez is a research analyst with Guidehouse Insights leading the Utility-Scale Energy Storage and Energy Storage Systems Tracker solutions and supporting the Distributed Solar Plus...

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  • May 26, 2021

This item is part of the Grid Modernization - May 2021 SPECIAL ISSUE, click here for more

In his first joint address to Congress, President Biden outlined a clear vision for the country’s future, positioning decarbonization as a primary driver in his economic plans. The American Jobs Plan is in many ways rooted in climate action. The sweeping $2.3 trillion plan provides a blueprint designed to mobilize our workforce, rebuild our infrastructure, and reduce our greenhouse gas emissions while in tandem addressing social and environmental inequity. To achieve these ambitious goals, the Biden administration is prioritizing the deployment of clean generation technologies and upgrading and building out the nation’s aging and regionally siloed electric transmission system. 

Although there is little disagreement over the critical need for an upgrade to our existing power transmission grid, there are challenges. Among these challenges are the decade or more it takes to plan and build traditional transmission projects and a short-term mindset among local grid operators. As a result, stakeholders have begun looking to supplement or even replace the poles and wires that carry high voltage current from power plants to end users with battery energy storage systems (BESSs). The reason is simple: storage as a transmission asset is flexible, scalable, and relocatable. Despite these advantages, there are still many regional transmission organizations (RTOs) and independent system operators (ISOs) with planning and regulatory frameworks that prevent storage from being proposed or selected as a transmission solution.

Why Use BESSs as a Transmission Asset?

The increasing penetration of variable renewable power generation requires efficient management and the reinforcement of transmission and distribution networks to avoid congestion. Congestion is caused when increased demand for electricity during peak periods outpaces the available transmission capacity. This issue is frequently the result of generation facilities being located far from load centers, with limited bandwidth to transfer energy from generation to load centers. During peak demand periods (that is, when wires heat up), congestion on transmission lines can result in insufficient energy to serve load, instability on the transmission network, and increased costs for load-serving utilities.

As an alternative to upgrading or building additional poles and wires that have long served as the backbone of the electric power system, utilities are deploying non-wire alternatives, also known as virtual power lines (VPL), in several parts of the country. VPLs include BESSs connected at least at two locations in the grid: one BESS at the supply side, close to the renewable power generation source storing surplus electricity production that cannot be transmitted to the demand side due to grid congestions (and which would otherwise be curtailed); and another BESS placed at the load center, which would be charged whenever transmission capacity is available and demand is low.

In addition to enabling greater dispatchability of generation, BESSs can be deployed as much as 80% faster than transmission lines. The technology’s deployment is estimated at 1-2 years for assets 100 MW or larger, has a significantly smaller footprint and environmental impact, and are flexible—with the ability to scale in terms of size, operation, and application over varying time horizons. It also can be relocated to meet changing load or generation patterns. In addition, BESSs can provide other valuable services including frequency regulation, voltage support, spinning reserves, and reducing outage impacts. In the end, the multifaceted nature of BESSs result in less risk for network owners and should be considered in lieu of traditional transmission infrastructure where possible.

US Examples of BESSs as Transmission

Several real-world examples of how VPLs are used to solve reliability problems in the US are provided as follows:

  • APS Punkin Center: In 2017, Arizona Public Service (APS) contracted Fluence to deploy a 2 MW, 4-hour duration system for a lower cost than upgrading 20 miles of transmission and distribution lines. This system serves the town of Punkin Center, Arizona, and was required to address local needs in areas experiencing population and load growth. The Punkin Center battery provides benefits like local voltage regulation, system-level ramping management, and flexibility for incremental storage additions over time.
  • National Grid Nantucket Project: The island of Nantucket in Massachusetts traditionally receives its electricity from undersea supply cables from the mainland, but because of rapid growth on the island, summer energy demand has increased dramatically in recent years. To facilitate electric reliability for customers during peak summer months and defer the need for an additional expensive underwater supply cable to the island, National Grid installed a 6 MW/48 MWh Tesla battery—presently the largest BESS in New England.
  • OCEI Projects: In 2020, Pacific Gas and Electric entered two agreements for third-party-owned energy storage projects (totaling 43.25 MW and 173 MWh) as a part of the collaborative Oakland Clean Energy Initiative (OCEI). These OCEI projects offer an innovative solution for grid reliability, compared to traditional transmission wires solutions, and will replace fossil generation with clean energy in an area identified by the California Environmental Protection Agency as having one of the worst pollution problems in the Bay area.
  • NYPA Franklin County Project: In 2020, New York Power Authority (NYPA) announced the start of construction in the Chateauguay area of Franklin County on a 20 MW BESS project that will help alleviate transmission constraints and advance Governor Andrew Cuomo’s clean energy target of 3,000 MW of energy storage by 2030. This target is the equivalent of 40% of the homes in the state.

Important Policy Considerations

Several important issues must be addressed before BESSs are widely deployed as a transmission solution or VPL. First, market rules must be designed to enable BESSs to provide both transmission and generation functions. Second, BESSs must be included in the transmission planning process for both transmission-only purposes and multiple use purposes. Third, BESSs that deliver transmission services must be eligible for cost recovery, similar to how other traditional transmission assets are. Lastly, there are concerns regarding BESSs deployed as a transmission asset that later also become a generation asset. In such a case, a BESS could sidestep the generator interconnection queue process, putting the system owner at an unfair advantage over other market participants or complicating the interconnection of subsequent resources. BESS injections and withdrawals can impact energy market prices and several stakeholders have highlighted the issue of the potential for this to distort competitive electricity market prices since transmission owners’ activities are not allowed to have any effect on market prices on their transmission lines.  

The Future of BESSs as a Transmission Asset

What have largely been state-driven efforts to combat climate change and reduce power sector dependency on fossil fuel now has the backing of the federal government. Biden’s American Jobs Plan recognizes the importance of grid modernization and his support for the development of our country’s transmission networks and energy storage underscores the synergies between the industries. Though many unknowns lie before us it is clear that traditional, 10-15-year timeframes for network planning and deployment are no longer reasonable. Consequently, RTOs and ISOs must work quickly to develop the regulatory frameworks that will enable BESSs’ full participation in the generation and delivery of power.


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