Grid-Scale Battery Storage for Variable Renewable Electricity in Sweden
Total Page:16
File Type:pdf, Size:1020Kb
IIIEE Theses 2015:17 Grid-Scale Battery Storage for Variable Renewable Electricity in Sweden A Study of Market Drivers and Barriers for Grid-Scale Battery Energy Storage Applications for the Integration of Wind Power in Sweden Sandro Benz Supervisors Philip Peck, IIIEE Johanna Lakso, Swedish Energy Agency Thesis for the fulfilment of the Master of Science in Environmental Management and Policy Lund, Sweden, September 2015 © You may use the contents of the IIIEE publications for informational purposes only. You may not copy, lend, hire, transmit or redistribute these materials for commercial purposes or for compensation of any kind without written permission from IIIEE. When using IIIEE material you must include the following copyright notice: ‘Copyright © Sandro Benz, IIIEE, Lund University. All rights reserved’ in any copy that you make in a clearly visible position. You may not modify the materials without the permission of the author. Published in 2015 by IIIEE, Lund University, P.O. Box 196, S-221 00 LUND, Sweden, Tel: +46 – 46 222 02 00, Fax: +46 – 46 222 02 10, e-mail: [email protected]. ISSN 1401-9191 Grid-Scale Battery Storage for Variable Renewable Electricity in Sweden Acknowledgements I would like to express my appreciation and gratitude and give a tremendous thank you To Philip, my supervisor at the IIIEE, for your helpful and valuable feedbacks, and for your insightful and instructive support throughout the thesis period. To Johanna, my contact at the Swedish Energy Agency, for making this enriching and worthwhile collaboration possible, and for your trust in my abilities and skills, as well as for your instructive support. To Carro, for being the best and most beautiful person in the world, for enabling this thesis setting, for your endless support and true love throughout this summer, your caring and encouragement in periods of despair and stress, and your cheering up and enthusiasm in situations of hope and optimisms, for laughing with me, for suffering with me, for telling me to take breaks, and spending these hours of respite with me, for just being who you are what you stand for, without you this emotional rollercoaster would not have been possible, I love you!! To everyone in B20, especially those who were always around during the thesis period and suffered the same fate, for your mental support, for sharing and exchanging ideas and opinions, for all the funny moments, the mutual meals and fikas, and the parties, and the trips, and most importantly for being the most important part of this incredible and educational journey during the last year, for just being the best batch in the whole world, I will miss you all!! To Birgitta Olofsson, for your endless support and help throughout this programme, no matter in what situation. To everyone else at institute who made this exceptional and challenging programme possible. And last but not least, to my wonderful family, my mam, my dad, my sister, my grandma, for your eternal believe and trust in me and my abilities, for your support and encouragement, for giving me this extraordinary prospect, and for letting me explore this beautiful world, your are simply the best and I would not be here without you! I Sandro Benz, IIIEE, Lund University Abstract This thesis explores how a market for grid-scale battery energy storage systems (BESS) can become reality in Sweden. Higher penetration levels of distributed, variable renewable energy (VRE) from wind power challenge the incumbent energy regime and require new solutions for the grid integration of renewables. As a consequence, a more flexible power system is needed in order to deal with the induced supply-side variability. Batteries, as one flexibility solution among several other options, have shown promising technological development and are a versatile electricity storage option. BESS can provide multiple benefits for different application areas on the grid at various scales. The emergence of grid-scale BESS in Sweden was analysed using the multi-level perspective (MLP) framework on socio-technical transitions. Despite the great potential and the rapid technological progress of BESS, it was found that regulatory factors, both in Sweden and the EU, currently constitute a major barrier for the deployment of large-scale electricity storage. Moreover, Sweden looks set to continue to increase the uptake of VRE from wind power, whilst a gradual phase out of nuclear power over the next decades is also likely. Whereas this would normally have negative implications for the power system, the ample hydropower capacity and sufficient interconnection to the neighbouring Nordic countries provide, at least for the near future, enough system flexibility and therefore reducing the need for the installation of BESS. However, the uneven geographic distribution of electricity consumption and generation across Sweden might give rise to flexibility solutions for enhancing local distribution networks in the future in order to eliminate potential regional bottlenecks. Keywords: Sweden, battery energy storage, variable renewable energy, wind power, transition, multi-level perspective. II Grid-Scale Battery Storage for Variable Renewable Electricity in Sweden Executive Summary This study set out to examine the uncertainties and opportunities in connection to grid-scale electricity storage through batteries in Sweden in order to accommodate increased volumes of VRE from wind power and provide additional power system flexibility. Higher penetration levels of distributed, variable renewable energy (VRE) from wind power challenge the incumbent energy regime and require new solutions. As a consequence of the grid integration of VRE from wind power, a more flexible power system is required in order to manage the induced supply-side variability. BESS, as a versatile electricity storage option, are one of several other solutions to enhance system flexibility by providing multiple benefits for different application areas at various scales. Batteries have shown promising technological improvements in recent years, mainly driven by the development in the automobile industry and the emergence of electronic vehicles (EVs), and are now becoming competitive with other flexibility solutions, such as more flexible generation assets, grid reinforcement and interconnection, or demand-side management. In 2014, the Swedish electricity power mix consisted of approximately 42 % (or 64 TWh) generation stemming from hydropower and another 41 % (62 TWh) from nuclear power, while about 8 % (11.5 TWh) came from wind power. The latest projections from the Swedish Energy Agency (2015a) estimate a annual wind power production of 17 TWh by 2017. This development is mainly driven by the joint electricity certificate scheme between Sweden and Norway. Whilst the electricity system is characterised by ample interconnection to its neighbouring Nordic countries (at least for the near future), the weak economic outlook for nuclear makes a gradual phase-out over the coming decades seem likely. Hence, the uncertainties related the increased penetration level of VRE from wind power and the possible decommissioning of other disptachable power generation capacity might give rise to the utilisation of power system flexibility enhancing solutions, such as BESS. Against this background, the guiding research question was formulated as follows: How is the market for grid-scale BESS for integrating larger volumes of VRE from wind power becoming a reality in Sweden? The two sub-questions In which ways can BESS be integrated into the Swedish electricity grid? and What are the perceived drivers and barriers for the future investment and deployment of BESS in Sweden? were stated to better operationalise the overarching question. The research was guided by several tasks and objectives to further delineate the study and provide information that contributes to answer the research questions. Therefore, an in-depth study on the electricity market development and configurations in Sweden with respect to its connection to the broader Nordic and European context was required. The thesis is exploratory in nature. First, an extensive literature review on the various application areas and benefits of grid-scale BESS as one of several other solutions to enhance power system flexibility (e.g. more flexible generation assets, grid reinforcement and interconnection, or demand-side management) was conducted. This then supported the identification of a relevant and suitable conceptual framework and the formation of certain assumptions, which helped to refine the research problem and structure the study. Backed by this more theoretical base, it was possible to outline potential interview targets for collecting primary data. The multi-level perspective (MLP) framework on socio-technical transitions by Geels (2002a; Geels & Schot, 2007) and institutional theory was used for structuring and then analysing the observations. This approach helped to identify why certain patterns are prevalent and whether they can be seen as drivers or barriers for the future deployment of BESS in Sweden. In general, it was found that that BESS are most suitable for quick-responding and short-term power services rather than bulk energy storage over longer time periods. Examples of grid III Sandro Benz, IIIEE, Lund University application areas are: frequency response, voltage control, inertia support and other ancillary services, ramp control and smoothing of VRE, T&D network congestion management and grid investment deferral.