Resource Review: Guide to Procurement of Flexible Peaking Capacity

I recently read a white paper by Chet Lyons of the Energy Strategies Group performing a cost-benefits analysis of utility companies purchasing battery storage systems vs. simple cycle gas-fired combustion turbines (CT). These CT systems are what are typically used to regulate peaking capacity. The article shows how storage systems can be a great solution for how utilities companies can keep up to date with the changing trends in energy in the US.

Lyons states that as we shift to using more and more renewable energy sources (such as solar PV), the electricity grid needs to be able to be more flexible to the fluctuations in supply of wind, solar, etc. In other words, we have to be able to better support the peaking capacity of the grid.

The paper makes the case for using energy storage systems as a way to meet the peaking resource needs of the grid from renewables, and also as a way for utilities to recoup some lost revenues. Lyons examined a new flow battery storage system by ViZn Energy and found it to be more effective, faster and more flexible than traditional CTs. Additionally, following solar PV’s trend of declining costs, he believes that in the next three years these battery storage systems will be cost competitive with CTs. 

In the paper, this graphic does a good job showing the benefits of battery storage vs. a CT.

There are several challenges Lyons outlines along the way. The biggest one being that the storage systems are only cost beneficial for “vertical utilities,” meaning those that own generation, transmission and distribution. Right now, less than half of the US population lives in these vertical utilities markets. The other markets will require policy changes to make it worthwhile for them to consider battery storage.

In summary, Lyons shows that in a few years battery storage will be a realistic solution for utility companies to meet the needs of peak load management for renewable energy resources on the grid while still providing cost benefits to the utility companies. He also believes that the shift to more renewables combined with using this type of peaking capacity system will cause a paradigm shift from the way utilities operate to a distributed power grid.

Who Should Read This and Why?

Last week, at the EDF Climate Corps Network Event, Cheryl Roberto, head of our Clean Energy team at EDF, mentioned that disruptions in energy delivery, especially short outages, cost the US billions of dollars each year. She also explained that the grid wasn’t designed for how we use and generate energy today. This article does a good job explaining how new technologies can help utility companies keep up with the changes in the energy market and overcome issues related to fluctuating peak capacity and demand.  

In addition to utility companies, this article would be a great resource for EDF Climate Corps fellows and host companies looking into onsite renewables and/or battery storage. It does a good and thorough job of making the business case for these storage units, and it’s grounded in analysis and facts.