NRSTOR CEO and Chair Annette Verschuren, in a phone conversation, commended the Ministry’s call for 50 MW of storage, and added some thoughts on the development of a market for it. It’s a “pretty significant and progressive” step in commercializing storage technologies, she said. The challenge will be the creation of a market for these services. “When the IESO put up the 10 MW RFP that NRSTOR responded to, it was a contractual arrangement. But there is a lot of thought on how these contracts need to be developed and how to find ways to pay for this market.
“Energy storage is one of the keys to unlocking a carbon-free future – an electricity system that is flexible, sustainable and affordable. Energy storage has been progressing amazingly fast over the last little while, and there are all sorts of energy storage technologies out there that are commercially viable today. The LTEP plan calling for 50 MW of energy storage by the end of 2014, tells me that Ontario is well on its way. I’m impressed with how the Minister developed a practical, balanced plan and went around to the communities and consulted with everyone.
“We need to accelerate innovation in Ontario, and the commercialization of the companies doing it, but we need to be realistic about costs, both hard and soft. What are the real costs of greenhouse gases? We need to make the business case, and that is difficult, because the benefits are across many stakeholders. The value of storage is often site- and technology-specific. It’s something the IESO is working on. But if we don’t get commercial deals for some of these companies’ we’ll lose them.”
On valuing the services storage can provide: the regulation services [like voltage and frequency regulation] that the IESO procures today come from traditional resources [like hydroelectric], but they don’t have the flexibility that storage does. NRStor’s 2MW flywheel facility in Minto is paid for providing ancillary services. The ancillary markets are well-defined with the IESO and others. “You’re providing a dedicated service to the IESO and they pay you for that. We see that continuing for the next while, in exchange for having dispatched traditional resources in an inefficient way.”
In addition to RFPs for storage, NRStor sees a lot of behind-the-meter opportunities with industrial consumers. “There’s a massive opportunity there to unlock the larger value for all of Ontario.”
Speaking in a session on system flexibility at APPrO’s recent conference in November, Elisabeth DeMarco, with Norton Rose Fulbright and counsel for the Advocacy Council of Energy Storage Ontario, made a number of related points regarding the need for a proper market for storage, in order to integrate the services that storage can provide fully into the functioning of the grid:
A key problem in implementing storage in Ontario is the current asymmetry in applicable rate structures, DeMarco argued. Storage providers, when they load power from the system, pay retail costs, including the Global Adjustment. When they supply power into the system they receive only wholesale prices. A new regulatory construct is needed, she says.
In the US, she noted, FERC has begun implementing some new rules for storage, such as pay-for-performance and market access rules. These could serve as a starting point for the regulator in Ontario.
Based on a comparison with California, which has about twice the supply and demand of Ontario and which has recently called for 1325 MW of storage, Ms. DeMarco suggested Ontario could use a proportionate 650 MW of storage. And in fact, given the expected increase in intermittent power and the limited ability of the nuclear plants to balance it, why not target 1500 MW of storage, she suggested.
Speaking at a workshop on storage in November 2012, Enbridge’s David Teichroeb made similar points:
“We need new contracting methods to test the potential value of these new technologies,” said Teichroeb. “The need is technical, but we also need to validate that contracts can provide value to consumers, investors and the system at large. Our present market structure makes it hard for storage to attract investment – we need to monetize the system benefits, rather than just relying on the basic commodity revenues to pay for storage.”
Robert Stasko, then at Science Concepts International, which organized the one-day conference, made the same point: “How our market is configured right now makes it impossible for anyone to do so in a business model that makes any sense. We have to change the market rules. We also have to look at regulations that encourage early adopters to put pilots in place, and not punish them for it.” In an update, Mr. Stasko notes that the IESO’s recent RFP resolves many of those issues.
As reported in the December 2012 issue of IPPSO FACTO, the PJM regional transmitter has taken such a step. It adapted the ancillary service it found most valuable for storage, frequency regulation, by factoring in response time. Facilities seeking to provide the service bid on two components, energy and response time. As the graph shows, near-instantaneous response technologies like batteries, flywheels and ultracapacitors, in addition to matching a rapidly changing load much more closely, can also provide much more of the energy balancing, up and down, than traditional load-following from generation that needs minutes to ramp up and down. Provisional service providers on PJM’s system need to pass a test and are measured on their performance.