Energy Partnerships – a New and Important Concept

With the rapid growth in intermittent generation and the decline in coal-fired, base-loaded generation, the need for storage is growing rapidly, and the demand for storage will almost certainly grow beyond the capability of many existing systems.

There has been outstanding progress on battery technology in recent years.  The cost per kWh has fallen dramatically, and these reductions are expected to continue for some time yet.  As we enter a time where tremendous growth in storage needs may be required, there also may be growing opportunities to utilize concepts that have previously not been considered as a means to meet these needs.

The electric system was built and has been operated for more than 100 years on a constraint requiring continuous balance. The power supply must equal the power demand, including all losses in real time.  The addition of large quantities of intermittent generation into a power network that must continuously operate in balance has presented many challenges for utilities.  Storage, however, has the capacity to unlock that restriction, enabling the system to generate at a different capacity than is demanded at any particular time.  Storage may be defined as a system that can shift the time at which generation is delivered or, alternately, the time at which capacity is required. Clearly, this will become very valuable as intermittent generation capacities increase.

This definition brings with it a mind shift in how storage is viewed.  The common view of storage revolves around a system that takes energy, puts it into storage and removes it from storage to be used at a later time.  A large form of storage that has often been ignored is hydro-electric storage, not to be confused with pumped hydro storage.  Hydro-electric storage does not utilize pumps, but rather simply delays generation.  The water flowing in a river into the forebay of a hydro plant simply fills the reservoir a little higher than normal, and the energy that was not generated is stored as water behind the dam.  A utility can purchase cheap energy to meet customer demand, while storing hydro capacity by reducing its own generation.  The stored energy behind the dam is then available to be sold at a high price a few hours later — during peak demand periods.

Hydro storage is likely the largest single source of storage in North America. Hydro Quebec claims to have more than 170 million MWH of storage capacity behind its large network of hydro dams and can purchase energy when it is very cheap to power domestic loads, while storing water that can be sold as energy a few hours later, during peak periods, at a much higher price.

But in addition to this traditional view of storage, there are numerous other systems used to provide storage, in very different ways.  Enbala has been a pioneer in the use of load devices to provide this type of storage, using water pumps that fill a reservoir, controlling water heaters, EV chargers or domestic battery systems used to support solar installations.  While most of these provide relatively small amounts of storage, the fact that they are based on the use of equipment that has been provided and paid for to meet another purpose means that this storage approach will have a very low cost.  With the amounts of storage that will be needed in future, this form of storage may play a very large role.

The opportunity for the energy system may have extremely high value.  It is clear that if the capacity of intermittent generation increases as expected, storage will play an ever-growing role.  The need for storage will be potentially very large and may require a broad demand for many different sources that can be cost effective. Some storage may be done by large hydro generators, while some may focus on home-based systems including EV chargers, domestic hot water tanks and backup home generators.

An Enbala customer in Australia has demonstrated this concept well. Many homes equipped with solar electric generation and storage batteries found that their battery systems were costly, and when all costs were considered, they would have been better off to purchase all electricity from the grid. A forward-thinking utility teamed with Enbala to find a way to partner with homeowners, enabling them to share their battery with the utility to reduce the utility peak demand at times when marginal electrical capacity was expensive and to give it back a few hours later after prices had declined. This allowed the homeowner to maintain ample storage for day/night and backup capacity, but it also provided a revenue stream that helped with the economics of the battery.

There will be other streams available over time. It is apparent that storage, in general, needs more than one source of revenue to be feasible, and this may be an important tool in managing the grid in future years. Many partnerships may evolve as we build a sustainable grid. The partnerships will span the system from basic supply to end use, and there will be value for all participants.

The future will look very different than the past. The total energy delivered by the grid will increase dramatically as we shift away from fossil fuels, and opportunities will exist for good benefits for all participants. The factor that may make the difference between success and failure may well come down to a partner structure that allows all participants fair access and the opportunity to influence overall outcomes that will benefit everyone. It is gratifying to see some utilities recognize this as a valuable opportunity, and Enbala is very proud to be able to support their initiatives.

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