Toronto: Distributed energy storage holds great potential for Ontario but significant efforts are required before those benefits can be realized. These were among the conclusions of a conference on distributed energy storage convened last November in Toronto. The proceedings of the conference have recently been released and provide significant insight into the development of this promising set of technologies.
Among the highlights of the conference were the following observations made by participants, and recorded in the proceedings:
“There are a number of major benefits to having additional energy storage resources on the grid. However, the current value proposition of various storage technologies needs to be clarified for each target beneficiary (or customer).
• Energy arbitrage is not the key benefit – and possibly the least valuable to the system. Best practices for developing the value proposition from other electricity markets should be explored and adopted as needed. An example of a best practice would be the ... approach that allows for compensation based on performance. Part of the success of the approach was attributed to the (Electricity Storage Association) tailoring their data, analysis and recommendations to areas of activity to which FERC had the ability to take action.
• The value proposition for storage technologies in Ontario will be a product of the industry’s ability to engage key customers, such as LDCs, and key market authorities such as the IESO, OEB and the relevant policy makers in the province in the value creation process.
• There are transformational opportunities to move energy storage technologies into a larger national and regional framework for management of energy resources and assets. For example, with power-to-gas technologies, inexpensive off-peak electricity from low emission sources can be used to produce hydrogen, which can then be added to the natural gas mix as a form of storing energy from electricity ...
• Both energy storage and demand management technologies are valuable tools to provide needed frequency and capacity support services to grid system operators now and in future. The evidence suggests that both are complementary and that neither is totally sufficient by itself to provide the optimal technical support services that will be needed as smart grid systems are developed and deployed ...
• The multiple values provided by energy storage are distributed throughout the electricity system in such a way as to make it difficult to collect them into an uncomplicated business case. Often the least value is provided to the highest investor – often the LDCs.
• LDCs are given few incentives to invest in storage technologies, and have no mandate to participate in local technology development. Allowance to include the capital investment in the rate base is often not granted until well after the fact – and often not at all. ...
• There are also several Ontario electricity agencies that can – through regulation, legislation, market design or RFP/contract mechanisms – enhance and accelerate the adoption of economically promising DES technologies. These would include the OEB, the OPA, the IESO, Hydro One (and other progressive LDCs) and to some extent the Smart Grid Forum.”
Of course there are concerns that the cost of storage technology can be high relative to the economic value of the service it can provide. By definition storage does not add any energy to the system – it can only make existing energy more valuable. In Ontario this kind of arbitrage opportunity is limited. Storage accrues additional value primarily because it can avoid the need for capacity and because it can provide ramping capability, voltage support and improved power quality. Storage can deliver some of these services better and more effectively than some traditional alternatives. With large amounts of reasonably priced gas available for the foreseeable future, and cost-effective traditional options in Ontario for most of the other services, storage is likely to face some challenges in demonstrating its economic value for Ontario. The conference discussions highlighted that there is optimism that this will be achieved.
Not surprisingly, increased funding for encouraging Ontario-based commercialization of storage technology was advocated by conference participants. Other recommendations coming out of the conference included the following:
• That government decision makers determine the importance of encouraging the emergence of this new technology as an energy technology sub-sector of smart grid in Ontario – and work collectively with the key agencies on removing barriers to optimal economic deployment.
• That the agencies – primarily the OEB, the OPA and the IESO – work to establish electricity market mechanisms that capture the system benefits of energy storage, which could be used to justify the capital investments by developers and implementers of such systems.
• That the multiple benefits of commercializing energy storage be identified, both for local deployments and for export to other electricity markets.
The report concluded, “[B]arriers to successful development, demonstration and deployment of storage technologies have been identified and will require specific attention by all parties.” For more information a copies of the report are available from Science Concepts International at http://scienceconceptsinternational.wordpress.com/.