Welcome Holger Wolfschmidt, New Expert in the Generation Professionals Group- [an Energy Central Power Perspectives™ Interview]
- Sep 1, 2021 11:50 am GMT
The power grid is rapidly evolving more than it ever has before. It is changing from the conventional way the utility sector had in the past – with new types of energy generation, distributed locations, and new ways of assuring the grid´s stability. Key to these changes is the rapidly improving energy storage technology. It allows renewables to be tapped into more freely, provides opportunity for more efficient markets, and creates improved resilience for customers across the grid.
One of the most important elements of this vision will be energy storage, allowing steady energy flow, grid stability and 24/7 availability of renewable power. That’s why it’s critical to talk to experts in this space. One of these is Holger Wolfschmidt, Senior Portfolio Manager of Storage at Siemens Energy. We welcome him as a new member of the Energy Central Network of Experts with a focus on the Generation Group, as well as Clean Power, Grid Professionals , Utility Management, and The Energy Collective.
Holger has separated himself as a key expert in these areas through his years of background in electrochemical energy storage systems, market applications of energy storage, regulatory issues, and his PhD in Physical Chemistry to go along with over 100 patent applications related to energy storage. To highlight the value he’ll surely bring our community, Holger was gracious enough to participates in our Energy Central Power Perspective ‘Welcome New Expert Interview Series’ – explaining how energy storage is like a Swiss army knife providing multi-functionality to the grid.
Matt Chester: As an expert in energy storage solutions, what drives your interest these days?
Holger Wolfschmidt: In my current role as Portfolio Manager at Siemens Energy I really like the combination of commercial aspects of energy storage paired with the technological capabilities. By having a clear understanding of the technology and what’s possible, you can then drive the solutions to the market. It’s a continuation of what I did until recently as Market Applications Director at Fluence. In that role, I already became well acquainted with business development, customer interactions, and R&D for small and large systems, all incorporating storage solutions.
MC: What is the main reason you think energy storage is key for our future changing energy system?
HW: Flexibility. It’s key on the whole electricity grid. Without flexibility, you have no chance of running a grid resiliently. To run a quick stable, safe operation, to ensure the lights don’t switch off, you need to focus on flexibility. And the common comparison is a Swiss army knife that provides multi-functionality. Energy storage accomplishes this for the grid.
Another point is that renewable generation like solar and wind are not very plannable. They bring volatility, and so energy storage brings a kind of flexibility to those assets. And that’s not blaming renewables, as they are totally key to the future of the utility sector, but since they are not fully plannable you need the flexibility offered by energy storage.
With batteries, you have an opportunity to smooth the output from wind generation, creating a smart generation asset. You also have the chance to enhance fossil or thermal power plants, which could be a capacity market participant in the United States.
Lastly, energy storage presents ancillary services. Frequency regulation and the capacity market, for example, are perfect fits for batteries and other electrochemical storage systems. These opportunities could be for a few minutes or up to a half hour or even an hour. Batteries are the perfect fit for this type of flexibility need. Even consumer flexibility comes with batteries in the ability to reduce grid fees by smoothing out consumption peaks.
MC: And what challenges do you foresee energy storage and batteries solving in the next 5-10 years?
HW: Challenges come via fixed revenue streams. Energy storage is a technology which is proven to work, but it’s not mature enough to provide fixed revenue streams on the commercial side. With the regulations and laws only partially in place addressing and supporting energy storage, it’s a bit like the necessary framework is only semi-present. There’s really a need to get this sorted out and get storage established and recognized as a fixed asset.
MC: We do see regular announcements of storage projects as so called “stand-alone” or “hybrid” systems. What is your view on their respective benefits?
HW: Both methods are present and valid approaches because they exactly fit the needs of where they’re located. If you have a standalone storage solution, as we talked about in these capacity markets, then they are typically standalone replacements for traditional assets that are only needed for a short time.
If you go to a hybrid approach, then that’s where we talk about smoothing the output of wind generation, for example. You have the chance to really create major benefits for generation assets. So, depending on the specific needs, I think it’s totally important to tap into both, and the market will decide what’s the best solution.
And generally speaking, for energy storage, lithium-ion batteries are just one of a wide range of technologies available, particularly at Siemens Energy. The technology side is adding new opportunities all the time.
MC: What are the best markets highlighting the potential of batteries today?
HW: It’s very hard to say whether you have a good or bad market. Fortunately, a lot of markets are doing great that have some highlights for the field of storage, and what’s learned there can be transferred to other markets. In Germany, for example, the primary frequency regulation market was covered within four to five years with 60 to 70% coming from batteries. At a total volume of 400 megawatts, this initiative was a success.
Another example are the UK and Ireland with its liberal and open markets. The UK has already reached a gigawatt, Ireland is following with some 100 megawatts. And for the ancillary services, in a fully open market to investors, it created a rush of people trying out the new technology.
The U.S. market is also great, to be honest, though it has a little different of an approach. The U.S. has taken a top-down approach, setting targets and objectives as supported by FERC rules, such as FERC 871 and FERC 2222. And is now a market in the gigawatt scale.
Those markets are the highlights, in my opinion. They all took different approaches but still succeeded in pushing the technology forward. Generally, I think a market should be open and should allow storage to be a part of the market. It should also be fast adapting. Storage is not a generation asset, but it is also not simply a consumer. Energy storage must have the capability to enter the market and be supported by the rules and regulations.
MC: As you’ve dived into the world of batteries as an expert, is there anything that’s surprised you the most?
HW: What I really like about this field is the excitement from a lot of different segments and sectors, including the utilities, the TSOs or DSOs, from end customers, from industries, from suppliers, or even from traditional industries. The excitement at the whole value chain of energy storage is terrific to see, from production to recycling, from single use case to multi-use cases, and from simple controls to fully digitally equipped storage asset with diagnostics, virtual power plant operation and automatic trading. And that excitement has certainly driven interest in the last year.
Different companies are investing in new companies, investing in startups, and this trend shows that you’re fundamentally going in the right direction. I’m not sure if I can count the announcements that have been coming through at a great speed. Whether it’s regarding technology, digitalization, recycling, sustainability, or otherwise, the coverage of all these different topics is driving up interest, especially compared with five or ten years ago.
MC: If you could provide one piece of insight into the world of energy storage that utility leaders would hear and accept, what would it be?
HW: The first piece of advice would be to note that the technology is ready, especially lithium-ion. It’s ready for deployment as a service with guarantees across its lifetime. This technology is available to be utilized, so stakeholders should be open and stress to regulators and lawmakers the need to push energy storage. They should be open to talk to their technology suppliers about finding the best solution, because the technology is ready. Maybe it’s not completely easy to implement, but you should be open to utilize it moving forward.
MC: For political leaders and regulators moving forward, what should be the top priority in order to get energy storage solutions on the fast track?
HW: My answer here would be similar: open up the market. Treat energy storage as a normal asset or generate an asset class specifically for storage. Because, again, the technology is ready. That may make regulators a little nervous, but if you’re not paving the way for storage as of now, then you’re late in the game. The issue is not with the technology side, it simply needs to be made to work from the regulatory perspective.
So, for anyone thinking or wondering about whether now is the right time for energy storage, recognize that the technology is there so it is a good time to ask your technology provider about it. They know what’s feasible for you. And again, from the policy side, push regulators for open markets.
MC: As a final question, how do you envision the future?
HW: I don´t have a crystal ball but we have ambitious goals. We envision the decarbonization of the whole economy to come about within the next decades. That means not just renewables reaching 100 percent of energy generation, but also using that to decarbonize other sectors of the economy. That should happen especially with the help of green hydrogen, which, despite efficiency losses, is the best long-term storage solution for renewable energy. Which is not to say that other storage solutions – such as thermal storage, thermo-mechanical storage, or batteries – won’t continue to play their part. They’re all building blocks for a new energy system.
Thanks to Holger Wolfschmidt for joining me for this interview and for providing a wealth of insights an expertise to the Energy Central Community. You can trust that Holger Wolfschmidt will be available for you to reach out and connect, ask questions, and more as an Energy Central member, so be sure to make him feel welcome when you see him across the platform.
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