Distributed Energy Storage Systems

Energy storage systems are an essential enabling technology that allows for the increasing integration of renewable resources into the electric power system.

Whether interconnected behind or in front of the meter, utility-interactive energy storage systems can address grid integration issues associated with the increased deployment of variable renewable energy resources, while providing other benefits to both utility operators and consumers. Distribution system operators can use energy storage systems to improve grid resiliency and reliability. Electric customers can use these systems to manage their energy use in new and profitable ways.

Explosive growth characterizes the market for distributed energy storage systems. In the US Energy Storage Monitor, GTM Research and the Energy Storage Association estimate that energy storage deployments will increase from 62 MW in 2014 to 220 MW in 2015. The market is also growing in ways that will interest solar integrators. While behind-the-meter installations accounted for only about 10% of the energy storage market in 2014, analysts expect customer-sited storage to account for 45% of the market within the next 5 years.

Since the energy storage market is many things to many people, I interviewed stakeholders all across the value chain—technology companies, service providers, BOS companies and system integrators—to learn more about energy storage products, business models and integration challenges.

Jason Abiecunas
Project manager and microgrid business lead, Black & Veatch, bv.com

In April, Black & Veatch commissioned a microgrid at its world headquarters in Overland Park, Kansas. What power generation and energy storage resources are integrated into this microgrid?
This microgrid includes two 65 kW microturbines, 50 kW of PV technologies, a 100 kWh battery energy storage system and a custom central control system to operate these resources in unison. The PV component is segmented into a 1,000 V system, a traditional 600 V system and a system utilizing microinverters. The objective is to test many alternative microgrid technologies in a real environment to determine the best mix of resources for client projects. We are using our Asset360 platform to perform advanced analytics to monitor the condition of the equipment and the performance of the system. This platform provides both a technical dashboard for our operations personnel and an educational dashboard for the general public.

How much of the campus can the microgrid support in island mode? 
The microgrid is designed to operate the Rodman Innovation Pavilion as an island independent from the utility grid. The maximum load for the Innovation Pavilion is approximately 300 kW. The microgrid can export excess generation to the East Building of the Black & Veatch campus.

What were the most challenging aspects of implementing this microgrid?
The biggest technical challenges are integrating the controls for multiple generation sources with the building energy management system. This integration is critical to achieving the largest benefit from the system. Black & Veatch developed a custom controls system that provides the flexibility to operate the system as a living laboratory. We are in the early stages of implementing a testing program to analyze operating modes of the different system components, demonstrate advanced functionality and optimize system operation. Based on this effort, we will develop technical resources and white papers to support clients developing microgrid projects.

Do you think that microgrids and energy storage systems are a threat to or an opportunity for incumbent utilities?
Distributed resources, energy storage and microgrids will facilitate new means of delivering energy services. However, the best application for these technologies is not to create a new electricity delivery model but rather to incorporate them into the existing electric grid, as this results in the most reliable electric system. Utilities are best positioned to apply these new technologies through their networks and in partnership with their customers.

Darren Hammell
Cofounder and chief strategic officer, Princeton Power Systems, princetonpower.com

What types of solar-plus-storage microgrids can Princeton Power Systems support?
We focus on 10 kW–5 MW commercial and industrial systems, including interactive microgrids and islanded systems. We can accommodate dc-coupled PV arrays and ac-coupled microgrids, and we specialize in systems that use advanced batteries. Our power converters are UL-listed for on- or off-grid operation and enable rapid synchronization with generators.

What are your fastest-growing markets and business applications?
California, Hawaii, Texas, New York and New Jersey are the US states with the fastest-growing markets. These are primarily grid-interactive applications, which use energy storage for demand management or solar plus storage for resiliency. In the Caribbean and Africa, we are installing many independent island systems where solar replaces generators as the primary energy source to improve reliability, reduce emissions and lower costs.

What is the role of your Energy Management Operating System (EMOS)?
The EMOS is the software that ties the various components of the microgrid together. While every microgrid is different, the EMOS architecture allows us to configure each of the components for optimal operation. We can complete the initial programming and configuration in a matter of days, and we often provide an EMOS hub workstation that island operators can use to monitor and reprogram the system locally. EMOS is compatible with many cloud-based asset management services that can remotely monitor and dispatch the microgrid as needed to provide the host site, utility or regional grid operator with the maximum value and reliability.

Do you think distributed energy storage is a threat to incumbent utilities?
If we define an incumbent as a utility that is not willing and able to adapt its business model, then distributed energy storage could be a death sentence. However, utility companies are in a great position to take advantage of these technological advancements by adopting and deploying distributed energy storage.

What can utility regulators do to improve cost recovery for microgrids and distributed energy storage solutions?
Several utilities have recently published findings about the tremendous value that distributed storage has to their operations. Generally speaking, the closer storage is to the end user, the more valuable it is. However, the value of storage accrues to various parties. For example, a business owner can get backup power from the same battery bank that helps the utility offset peak demand. Regulators need to ensure fair compensation to all parties for these services. There are many ways to accomplish this, most of which involve unconventional models of sharing assets, such as lease buyback programs and other financial tools.

John Jung
Chief executive officer, Greensmith, greensmithenergy.com

What energy storage products and services does Greensmith offer?
Greensmith is a provider of grid-scale energy storage software, as well as an integrator of grid-scale storage systems. Our GEMS software platform optimizes the performance of grid-scale energy storage systems, including batteries, inverters and other hardware. Our software customers include utilities, independent power producers and renewable energy facility owners. As an integrator, we delivered one-third of the energy storage capacity installed in the US in 2014, as well as the single largest battery-based power system deployed globally last year.

How can software address grid integration issues for variable renewable energy resources and distributed energy storage systems?
Energy storage software is positioned to address resource intermittency, the CA-ISO “duck-curve” graph, backfeed issues, curtailment of renewable energy generation and grid instability. Software facilitates application stacking by allowing owners to program their systems to perform multiple applications. It also enables fleet management by allowing operators to manage geographically dispersed energy storage assets via SCADA [supervisory control and data acquisition] systems.

What are the biggest challenges to the increased deployment and commercialization of energy storage solutions?
First, the energy storage industry needs to continue to drive down costs—not only battery costs, but also hardware costs and soft costs. Second, the industry needs to move beyond the battery and recognize that other energy storage technologies—particularly software—play a key role in energy storage system performance and return on investment. Third, the industry needs to avoid adopting a cookie-cutter approach to grid-scale energy storage. These are complex systems, and a simplistic approach is likely to result in system failures or suboptimal deployments. Finally, the industry needs to continue to advocate for common-sense regulations and incentives that encourage energy storage deployment. In spite of these challenges, we believe the energy storage industry is heading for a period of strong and extended growth.

What can technology or service providers do to improve the value of energy storage systems for independent system operators and distribution system operators?
Technology and service providers can improve the value of energy storage systems by developing systems that can perform multiple applications, allowing their owners to use a single energy storage asset to access multiple value streams. For example, owners may want to program their systems so that they can be used for renewable smoothing during one part of the day and for grid balancing or electric vehicle charging later in the day.

Chris Larsen
Energy management business development leader, Dynapower, dynapower.com

What products and services does Dynapower offer for solar-plus-storage applications?
Dynapower has deployed more than 230 MW of grid-tied storage inverters in North America and Europe. Nearly half of that installed base is storage plus renewable resources, either PV or wind. We employ multiport inverters, which allow storage and renewables to connect to a single inverter. Compared to a solar-plus-storage system deployed with two single-port inverters, a multiport inverter system uses fewer BOS components, takes up less space and costs less.

What are the primary behind-the-meter applications for Dynapower’s inverter-based energy management solutions?
Solar Grid Storage, which SunEdison acquired in March of this year, was a pioneer in using our solar-plus-storage solutions to provide frequency regulation services in behind-the-meter applications. This approach allows a single project to capitalize on more than one revenue stream. The industry needs to quickly move in this direction in advance of the reduction in the commercial investment tax credit for solar property, which is scheduled to drop from 30% to 10% in 2017. Our solar storage systems are also used in microgrid applications to provide emergency power along with frequency regulation and solar generation. This approach is particularly useful in public buildings that are designated as emergency shelter locations, such as police stations, fire stations and schools. Massachusetts recently awarded several grid resiliency projects, some of which will follow this model.

What battery technologies are you using in your energy storage systems?
We deploy most of our systems using lithium-ion batteries with battery management systems. However, some chemistries are better than others for certain applications. At the highest level, you need to distinguish between power applications, such as frequency regulation, and energy applications, such as load shifting. On a couple projects, we have used our multiport inverters in conjunction with two different battery types, such as lead-acid and lithium-ion. This allows us to use an energy-type battery to participate in energy markets and a power-type battery to participate in the power market, which provides attractive improvements for the project’s internal rate of return.

What are the biggest challenges to the increased deployment and commercialization of distributed energy storage solutions and microgrids?
Financing is probably the largest barrier, just as it was at one point with PV. It will take a while for the financial community to get comfortable with bid-in markets for frequency regulation. Investors also have questions about the capacity degradation associated with some new battery technologies. Battery costs are trending downward, which will have a positive effect on deployment rates. However, the bigger challenges are unlocking multiple revenue streams and overcoming concerns about bankability.

Carl Mansfield
General manager of energy systems and services group, Sharp Electronics, sharpsmartstorage.com

What products and services does Sharp offer for solar-plus-storage applications?
Sharp offers the SmartStorage energy storage solution, which is designed to reduce peak demand. SmartStorage uses software to provide continuous remote monitoring of a building’s energy demand. Peak demand charges are the fastest-growing part of utility bills for commercial and industrial entities, and in some cases they can represent up to 50% of a company’s monthly utility bill. Our system uses predictive controls to limit a facility’s electricity demand by selectively releasing stored energy, offsetting spikes in demand. The SmartStorage system predicts where those peaks are going to occur, along with their magnitude. We discharge the battery during those peaks so that the actual net consumption is much lower than it would be otherwise.

What is the ideal physical and economic environment for Sharp’s SmartStorage solution?
We target commercial and industrial customers who are paying high demand charges—typically above $20/kW per month—in California, New York, New Jersey, Massachusetts and Hawaii. We don’t find specific property types are always good or always bad targets for our product; it depends on the individual energy usage profile, which the site’s operations dictate. However, schools tend to be good targets because their set daily cycle usually results in a narrow peak load from early morning to about lunchtime.

What makes energy storage systems ideal for demand reduction applications?
Battery solutions can achieve demand reduction without requiring changes in a site’s operations. Further, lithium-ion battery–based systems do not require substantial space. Our system can work as a hybrid solution deployed with PV, or as a stand-alone storage solution. We find that hybrid installations generally provide better returns. PV tends to narrow the width of the peak load and storage will lower its height.

What are the primary deployment challenges associated with demand reduction solutions?
This is a new technology and requires that we educate customers, who typically do not have a good understanding of rate structures that bill separately for demand and energy. We also have to provide a performance guarantee to create a bankable product. It is also challenging to predict future utility rates. While the prospect of rate redesign potentially risks future savings, our system is fully upgradable after deployment. We can easily and remotely adjust operating parameters to account for tariff changes.

Dean Middleton
Senior sales director for renewable energy, Trojan Battery, trojanbattery.com

What product platforms does Trojan Battery offer for solar storage systems in the US?
Trojan is the largest battery manufacturer that focuses on deep-cycle energy storage. We offer a range of deep-cycle products, including flooded and maintenance-free VRLA [valve-regulated lead acid] technologies. Our products have a long history in the global off-grid market and are also used in both residential grid-tied and backup systems in the US.

Which of these products are best suited for stand-alone microgrid or nanogrid applications?
Trojan products are designed to support stand-alone microgrid or nanogrid deep-cycle applications. The product line or model selected will depend on the application, system loads and customer expectations. In some parts of the world, we see a culture of maintenance and a willingness to care for a flooded battery to ensure maximum life. In others, the priority is on ease of use, which will favor maintenance-free AGM [absorbed glass mat] batteries. While price is a concern, it must be balanced with long-term value. Trojan’s Smart Carbon batteries are a good choice for situations where batteries operate frequently at a partial state of charge, which can quickly diminish the overall life of a lead acid battery, resulting in frequent and costly battery replacements. With batteries now one of the most expensive components of these systems, it is critical to maximize the life of the battery bank to reduce total cost of ownership.

What are the biggest challenges to the increased deployment and commercialization of distributed energy storage solutions and microgrids?
Accurately defining the load profile, or system sizing, remains one of the biggest challenges. Whether a system is off-grid or grid-interactive, it’s important to accurately define the role of energy storage, how it will function and what needs it will serve, to manage customer expectations and design a system that will deliver value over the long term. A one-size-fits-all approach to storage will result in either an oversized or an undersized system. Another issue is the rapid development of new energy storage technologies. New technologies need to prove their technical viability and cost effectiveness. Many companies that entered the energy storage space a few years ago are no longer around.

Peter Nortman
Chief technical officer and chief operating officer, CODA Energy, codaenergy.com

What is CODA Energy’s area of expertise?
Our expertise is in complete life-cycle management of sophisticated, distributed and networked energy storage systems. CODA Energy has created and developed a UL-listed and -certified energy storage appliance that we deploy behind the meter in commercial and industrial businesses using a fully financed, zero–up-front cost, 50/50 shared savings model.

Where are your primary geographical markets?
Our commercial and industrial customer base is global. However, not every location offers an incentive program for implementing energy storage to alleviate heavy grid congestion and growing demand, as in California or the US Northeast. Cost savings are the primary market driver for behind-the-meter applications of energy storage, so California’s high commercial demand costs combined with the state’s robust incentive program make it our primary focus today.

What battery technologies are you using in your energy storage systems?
Our current products use lithium iron phosphate battery cells, which offer an excellent combination of safety, cycle life, reliability and operating efficiency. We source our batteries from a variety of vendors, thoroughly vetting each technology in our certified battery testing facility. This allows us to take advantage of declining cell prices and focus on battery management systems and energy management software.

What are the biggest challenges to the increased deployment and commercialization of distributed energy storage solutions?
The industry needs to develop and implement technical standards to transform energy storage from a nascent technology into a safe, plug-and-play appliance. Permitting and interconnection requirements vary greatly from jurisdiction to jurisdiction and utility to utility. This lack of standardization is a challenge. Getting our product UL listed for safety, reliability and performance has helped a great deal in expediting the permitting and interconnection process. We also sell to commercial and industrial customers directly, which streamlines communications with authorities having jurisdiction over installation locations.

How do you think the energy storage market will evolve over the next 3–5 years?
Utilities are becoming more progressive as they consider how they can use energy storage and renewable generation to meet growing demand, regulatory requirements and infrastructure upgrade requirements. I expect to see more interplay and interdependency between the solar and storage markets, even if the assets are not colocated.

Ryan O’Keefe
Senior vice president of business development, Ideal Power, idealpower.com

What products does Ideal Power offer for distributed utility-interactive energy storage?
We offer microgrid-forming 30 kW and 125 kW power conversion systems, which are available in both two-port and multiport models. Whereas two-port models have one dc and one ac port, our multiport models have two dc ports in addition to one ac port. These software-driven transformerless power conversion systems enable the integration of multiple energy sources and also provide grid support and enhance grid resiliency. Our systems reduce material costs by eliminating the need for a transformer, and they eliminate double-conversion power losses in bidirectional applications.

How are customers using Ideal Power’s products?
Most of our customers are integrators serving the commercial and industrial market for behind-the-meter peak shaving and demand management applications. Our systems can scale from 30 kW peak to 240 kW peak using one to eight of our 30 kW converters. By the end of the year, our systems will scale from 125 kW to 1+ MW using one to eight of our 125 kW converters.

What battery technologies are compatible with Ideal Power converters?
Our power conversion systems are compatible with and can be optimized for any battery. We have partnered with integrators who use various chemistries, and we have tested the performance of our systems with a number of companies’ batteries. Battery storage systems generally operate 1–4 hours, depending on the application. Integrators typically use lithium-ion batteries in these energy storage systems.

What are the biggest challenges to the increased deployment and commercialization of solar-plus-storage microgrids and distributed energy storage?
Utility integration is, by far, the biggest barrier. Utilities are not yet comfortable with or educated about how to approve interconnect applications. However, this situation is improving. While demand management systems in California have a payback period of 3–5 years—due to high demand rates and local incentives—cost recovery is still an issue in many markets. Codes and standards are also an issue. The interoperability of components that are compatible with diverse utility grids will be important to increasing the deployment of energy storage systems.

What can utility regulators do to improve cost recovery for microgrids and distributed energy storage solutions?
Given their current business model, it is generally not in their best interest for utility regulators to improve cost recovery for these assets. However, programs such as PJM’s frequency regulation market provide appropriate incentives and payback.

Daniel Sherwood
Director of product management, SolarBOS, solarbos.com

What products or services does SolarBOS offer for solar-plus-storage microgrids or distributed energy storage systems?
Until recently our focus was on the battery connection panels used to connect multiple storage batteries in parallel prior to an inverter. These connection panels are like giant combiner boxes, except instead of 15 A inputs they might have 1,500 A inputs. We are getting our feet wet with a few lithium storage battery projects where we integrate the battery cells, battery management system and a NEMA-rated enclosure for our customers. Recently, we built a 500 kWh storage battery that we installed in a 40-foot sea container and paired with a 1 MW grid-interactive inverter. That project was completed in partnership with Amperex Technology Limited (ATL), a global battery supplier entering the North American market.

What kind of battery technologies are you specifying in your energy storage systems?
Lithium iron phosphate is our chemistry of choice. We like the improved safety features: The battery won’t catch fire if you overcharge it or if a cell gets damaged in shipping.

What are the biggest challenges to the increased deployment and commercialization of distributed energy storage solutions?
The biggest hurdle is sticker shock. Our customers are used to the price of lead acid batteries, which are comparatively inexpensive—or at least seem to be at first. What customers need to realize is that lead acid batteries don’t hold up well if you deep-cycle them or if you allow them to sit at less than 100% state of charge. Lead acid batteries are also inefficient. If you put 10 kWh of energy into a lead acid battery, you get only about 7 kWh back out. Lithium batteries are more cost-effective than lead acid batteries over the life of a microgrid project, once you factor in efficiency improvements, dramatically longer battery life and reduced maintenance.

What can industry stakeholders do to improve cost recovery for distributed energy storage solutions?
Like PV projects, energy storage systems require a large up-front cash outlay that you recover over time. Part of the solution is to make storage batteries more bankable, which will increase financing availability and reduce financing costs. Independent system operators also need to open up more markets for grid services. Right now, unless I’m a large industrial user of power, I will pay about the same for 1 kWh at 4pm as I do at 4am. Energy costs should be higher when the grid is constrained, to create an incentive to reduce peak demand.

Phil Undercuffler
Director of strategic platforms, OutBack Power, outbackpower.com

How is the solar-plus-storage market in the US evolving?
We are entering the third wave of solar plus storage. In the first wave, systems were primarily off-grid, which constituted the majority of the market. The second wave consisted of grid-connected systems where the customer was willing to make the additional investment beyond the solar one to ensure reliability of service and resiliency; in effect, storage served as an insurance policy. In today’s third wave, storage is actively engaged in the daily energy cycle of the home or facility. Storage works to increase self-supply or decrease grid charges by addressing demand charges or other tariff-related levers, or it provides income streams via participation in demand response or other peak pricing programs. It may also provide ancillary grid services, such as frequency regulation and capacity markets.

What are the biggest challenges to the increased deployment and commercialization of utility-interactive distributed solar-plus-storage applications?
The primary challenge at the moment is not technical, but rather policy related. The many benefits of distributed storage are well understood, but leading states such as California, New York and Hawaii are still refining the tariff and interconnection structures to unlock its full potential. In addition, system integrators and designers do not yet fully understand storage. Unlike solar inverters, which convert photons to electrons based on the arc of the sun, storage systems need some level of market intelligence to determine when energy is most valuable and leverage storage energy to the best effect. The industry needs to develop tools and business models that will unlock the maximum value of energy storage systems.

Do you think that distributed solar plus storage is a threat to or an opportunity for utilities?
We stand at a fork in the road. Down one path, we have distributed energy storage working as a powerful asset for utilities—relieving congestion, balancing circuit loading, regulating voltage—and providing broad societal benefits. In this scenario, grid operators reward and encourage energy storage. We have true grid resiliency as a side benefit, in the same way the Internet is resilient by virtue of its distributed architecture. Down the other path, we have load defection and eventual grid defection as home and business owners realize that having their own power resource is less expensive and more reliable than buying energy. In this scenario, negative load growth coupled with the eventual impact of long-deferred infrastructure investments catches up with the utilities and creates the so-called utility death spiral. Utilities increase electric rates, assess meter fees and access charges for distributed generation, which exacerbates the negative load growth by increasing grid defection rates.

What can utility regulators do to improve interconnection of and cost recovery for solar plus storage?
One watt of non-exporting stand-alone storage faces greater fees and interconnection hassles than a megawatt of exporting PV. Regulatory bodies can clear the path to interconnection and provide cost certainty for developers and system owners, much as they have done for solar. Solar plus storage decreases circuit loading. It shouldn’t be held to a higher standard than solar, especially when it can address some of the negative issues stand-alone solar can present.

CONTACT:

David Brearley / SolarPro / Ashland, OR / solarprofessional.com

RESOURCES

Stanfield, Sky, and Amanda Vanega, “Deploying Distributed Energy Storage,” IREC, February 2015

US Energy Storage Monitor, GTM Research and the Energy Storage Association, February 2015

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