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Using Battery Energy Storage to Replace Gas Peakers: Updates on the Tech, Policy, and Market Fronts

PV Magazine

When looking at developments in the world of energy, I often like to break hurdles, accomplishments, and developments in three key areas: what’s happening with the tech, what’s the relevant public policy, and how are the markets responding? All important power sector stories will fall into one (or multiple) of these three pillars—so when I was reading this week about the opportunity for battery storage technology to potentially displace gas peakers, in terms of providing an influx of energy needed during hours of peak demand, I got curious what some of the recent developments were in the tech, the policy, and the markets.

To provide a sweep snapshot of this potential development into utility load management and how flexibility might look for the utilities of tomorrow, let’s grab an overview of one story in each of these areas:

 

Technology: AES starts building largest battery peaker, highlighting technology’s potential

In the beginning of July, a story came out about a coming battery energy storage installation that would be over twice the size of the current largest operating system in the United States. The AES Alamitos Energy Battery Storage Array in Long Beach, California, is being touted of a preview of how grid-level energy storage might look in the coming decades as utilities and grid participants adapt the increasingly advancing technology.

The AES storage projected is a demonstration of the overall modernization strategy from the sector and will eventually provide 300 MW, the first step of which is an 100 MW/400 MWh phase, over the course of a 20-year contract with Southern California Edison Co., starting at the end of 2020.

This project is only one of a number that are in the works and expected to come online in the coming years. As the story notes:

Planned to come online at the same time and in the same place is the PG&E Corp. subsidiary's 182.5-MW Tesla Moss Landing Battery Energy Storage Project (Elkhorn), an approved utility-owned project to be supplied by Tesla Inc. Other major utility-scale battery projects, some coupled with solar farms, are planned around the country, including in Arizona, Colorado, Florida, Hawaii, Nevada, New York and Utah.

 

Policy: Minnesota to consider using energy storage for peaker plants

Just this week, Associated Press noted that a provision in an omnibus jobs and energy bill being debated in Minnesota would seek to “put energy storage on a level playing field with natural gas plants and other resources.” The legislation would, among other things, allow utilities to recover costs associated with energy storage pilots as a way to encourage otherwise risk-averse utilities to bet more on the emerging technology.

In the debate of these policies there are, as always, to sides to the debate. On the pro-energy storage side, a 2017 study commissioned by the Energy Transition Lab dictated that gas peaker plants are:

A marginal resource for meeting capacity needs and that storage, and solar-plus-storage, are becoming increasingly cost competitive. By 2023, the report predicts, the cost of storage becomes less than building new peaker plants.

On the other hand, the same report warns that:

The current state of battery storage technology does not have the ability to match the duration of such events without significant (and very expensive) over-build of those resources,” the report states in an executive summary.

 

The goal of replacing gas peaker plants, which only come online during periods of high demand that the baseload energy mix cannot alone handle, with energy storage would theoretically allow more of that peak demand to be met via clean energy resources that aren’t otherwise dispatchable, but the policy debate on the issue underscores how that transition is anything but a consensus at the moment.

That said, the markets are another area completely, where money being spent on energy storage as a replacement for peaker plants is coming into focus…

Image result for energy storage peaker

Markets: The Potential for Battery Energy Storage to Provide Peaking Capacity in the United States

One of the more authoritative voices on this matter has come from the National Renewable Energy Laboratory (NREL), a lab in the U.S. Department of Energy’s national lab system, who put out a report this June analyzing the market potential for battery storage to take on this important role. Any story you read on energy storage for peaker plants is likely to reference this study, but some notable quotes to paint a picture of the current and future markets for such a switch in technology include the following:

 

  • The fleet of conventional generators that provide most U.S. peak capacity today is aging, and future retirements will provide opportunities for substantial amounts of battery storage to enter this market
  • The results show significant potential for energy storage to replace peaking capacity, and that this potential grows as a function of [solar] deployment
  • We demonstrate the opportunity for utility-scale battery storage to satisfy a substantial portion of U.S. peak capacity needs and thus expand beyond its current role in the relatively small ancillary services market. This analysis demonstrates roughly 28 GW of practical potential for 4-hour storage providing peaking capacity, assuming current grid conditions and demand patterns. This deployment could help decrease storage costs—and storage deployed primarily to provide peaking capacity can provide additional benefits, such as a sink for low- or zero-value PV generation during non-peak periods. This in turn can enable greater PV deployment, which then increases the potential of 4-hour storage.

 

So there you have it, a brief tour of the tech, policy, and markets influencing energy storage as peaker replacements. You see that there’s a bit of a push and a pull and a long road to go, and without any of these three legs the stool will end up tipping over. Watching the next 5-10 years will be incredibly telling as to whether this strategy will be able to sink or swim.

Matt Chester's picture

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Discussions

Richard Brooks's picture
Richard Brooks on Jul 16, 2019 6:30 pm GMT

Well done, Matt. It seems that Tesla and AES are the major suppliers of these Battery Storage Devices for the Grid. I've also seen reference to Powin Energy supplying devices in Texas. Do you know of any other suppliers of this key technology?

Matt Chester's picture
Matt Chester on Jul 16, 2019 7:14 pm GMT

You've named the major ones, for sure, but you can also add HyundaiMitsubishi, and Greensmith as a few more. 

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Bob Meinetz's picture
Bob Meinetz on Jul 16, 2019 9:03 pm GMT

As expected, no acknowledgement storage increases emissions, or whether it isn't even worse than gas peakers which meet peak demand in real time.

Increased gas consumption will help AES profits - for them, the more gas burned the merrier. And let's face it: saving the environment is important and everything, but there's no money in it.

Matt Chester's picture
Matt Chester on Jul 16, 2019 9:50 pm GMT

When EVs were first sold, there was a valid argument to be made that they were increasing overall emissions because of the dirty grid they were powering off of. But because of those early efforts and infrastructure/policies enacted at that time, the charging of an EV is cleaner than running of an ICE car in all regions of the country. Does that mean the investment in EVs initially was faulty because of short term emission reductions? I would argue they were a net positive because they were necessary to get the technology and the market to emissions-reducing level they're at today.

Grid-scale energy storage will follow a similar path. It's a technology and infrastructure that requires notable lead time and is still undergoing rapid and continuous improvements in efficiency and cost. Any individual installation today that might increase emissions accounted for because gas is partially used to charge them up is paving the road for the more flexible and dynamic grid of the coming years that will increasingly shift away from peaker gas. 

Bob Meinetz's picture
Bob Meinetz on Jul 17, 2019 1:07 am GMT

Matt, there's no evidence grid-scale energy storage will follow a similar path, and there are many fundamental reasons why it won't (there isn't one physicist or grid engineer who supports the idea of powering a grid with batteries - there are fundamental reasons for that, too).

The only people supporting grid-scale batteries charged by solar panels and wind turbines are 1) the people who sell batteries, solar panels, and wind turbines, and 2) gas producers who can use batteries to shave off a sliver from peak generation to forestall the construction of more gas plants, and 3) physics-challenged dreamers.

Power a grid with them? Never. We might as well invest $billions in kite technology, so that one day huge kites will be able to fly us across the country at supersonic speeds without any emissions at all. The technology and infrastructure requires notable lead time, but we'll be paving the road for more flexible and dynamic cross-country travel of the coming years that will increasingly shift away from commercial jets. Why not?

We're multiple orders of magnitude away from it ever being practical, that's why not.

Bill Gates Slams Unreliable Wind and Solar Energy

Matt Chester's picture
Matt Chester on Jul 17, 2019 11:17 am GMT

There isn't one physicist or grid engineer who supports the idea of powering a grid with batteries

I guess we can just dismiss those know-nothings from NREL, Physics World, Ohio State University, PNNL, Princeton, MIT...

Look, large-scale storage for the grid is not without immense challenges and well-reasoned arguments for how difficult it will be, I'm not denying that. But to claim it's an open and shut case that energy storage technology is not worth following as a part of the evolving grid is ignoring the immense potential that the investments can and will bring. 

Bob Meinetz's picture
Bob Meinetz on Aug 2, 2019 11:55 pm GMT

Matt, none of your links support powering a grid with batteries. They support "energy storage on the nation's power grid" - already a done deal.

Batteries are being used by producers of gas-fired electricity to shave a sliver from peak generation, and forestall the construction of more gas plants. That's all. If wasting energy so AES can save capital investment has "immense potential" for AES stockholders, it's at the expense of ratepayers and the environment.

Pumped storage is a different matter. In California, the Helms Pumped Storage facility is being used, on sunny days, to deliberately waste unneeded solar generation to avoid paying Arizona, Nevada, and Oregon negative prices.

Only in California can both energy efficiency and energy inefficiency be easy ways to make a buck.

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