THE ROLE OF STORAGE AND GREENING THE GRID

ENERGY STORAGE TECHNOLOGIES Energy AND APPLICATIONS Load Met Storage Electric is the set of technologies by Wind capable of storing generated at one Load Met by time and for use at a later time. Energy storage Flexible Generation technologies can be divided into two general

Load categories based on the amount of energy Surplus Wind stored [2]:

Demand Load Met by •• Technologies providing operating More Flexible Inflexible Generation Response reserves respond rapidly and discharge Generation within seconds to minutes, making them well suited to provide regulating and 0 6 12 18 24 contingency reserves. They typically can Hour provide energy for 15 minutes to about 1 Demand response and energy storage are sources of power system flexibility that increase hour depending on the specific application. the alignment between generation and demand. For example, demand Common storage technologies for provision response provides a means to shift demand to times of relatively high wind generation of operating reserves include flywheels and low load, while storage technologies can store excess wind generation for use in times of relatively low wind generation and high load. This figure also shows how more flexible (which store energy in a rotating mass), and generation could accommodate increased RE penetration and can provide an alternative or certain battery technologies. supplement to DR and storage. •• Technologies for energy management provide flexibility over longer timescales THE NEED FOR FLEXIBILITY high penetrations of wind and solar. To and require continuous discharge over Affordably integrating high levels of variable date, integration studies have found that several hours. These technologies also renewable energy (VRE) sources such as the grid can accommodate about 30% of often provide operating reserves as wind and solar requires a flexible grid. annual electricity demand from variable well as firm system capacity. Storage Numerous grid integration studies have generation largely with flexibility options technologies associated with energy identified two major categories of tools for that increase the instantaneous penetration management include high-energy (long- increasing grid flexibility: of VRE [1]. As a result, energy storage and duration) batteries, pumped hydro storage, demand response are not needed; instead, compressed air energy storage, and 1) Resources that allow VRE to be used integration of VRE requires changes in thermal energy storage. directly to offset demand and increase operational practices, which are expected instantaneous VRE penetration;1 and to be lower in cost than additional storage 2) Resources that improve the alignment deployment. can occur when very high penetrations of VRE supply and demand. of VRE lead to an excess of wind and At penetrations beyond 30%, integrating solar generation relative to demand. As Demand response and storage are among a VRE to the grid becomes more challenging curtailment increases, VRE offsets less limited set of options in the latter category of due to the limited alignment between wind fossil generation, decreasing its value. tools. Storage and demand response provide and solar generation and electricity demand, Demand response and storage are enabling means to better align wind and as well as the inflexibility of conventional technologies that can reduce curtailment supply with electricity demand patterns: generators to ramp up and down to balance and facilitate higher penetrations of VRE on storage shifts the timing of supply, and the system. Without a sufficiently flexible the grid. demand response shifts the timing of demand. grid, thermal plants cannot reduce output and wind and solar will need to be curtailed, 2 REDUCING CURTAILMENT AT which can add to system costs. However, ______HIGHER PENETRATIONS OF VRE even with a completely flexible grid in which 1For more information on this category, see a related fact thermal generation can be turned off during sheet, “Sources of Operational Flexibility.” The role of demand response and storage 2Curtailment refers to a reduction in the output of a becomes increasingly important at very periods of high VRE output, curtailment generator from what it could otherwise produce given available resources. THE ROLE OF STORAGE AND DEMAND RESPONSE

BENEFITS AND TRADEOFFS OF least-cost flexibility option) is difficult to requires continued analysis, improved DEMAND RESPONSE AND STORAGE quantify, primarily because the availability data, and new techniques to evaluate the By shifting supply and demand patterns, and cost of grid flexibility options are not operation of a more dynamic and intelligent storage and demand response can not only well understood and vary by region. High grid of the future. significantly increase the penetration of penetrations of variable generation increase VRE, but also can provide other significant the need for all flexibility options and REFERENCES sources of value such as provision of create market opportunities for storage and [1] Denholm, P. and M. Hand. (2011). Grid firm capacity, which can eliminate the demand response technologies. Historically, Flexibility and Storage Required to Achieve need for conventional peaking capacity. storage has been difficult to justify, not only Very High Penetration of Variable Renewable This is particularly important at high VRE due to high costs, but also because of the Electricity. Energy Policy, Vol. 39(3):1817- penetrations when the marginal capacity difficulties associated with quantifying the 1830. value of solar and wind resources can drop value of the array of services it provides— 3 [2] Denholm, P., Ela, E., Kirby, B. and Milligan, significantly. Furthermore, in addition particularly the operational benefits M. (2010). The Role of Energy Storage with to providing load shifting, both storage such as ancillary services. The challenge and demand response can also provide Renewable . NREL/TP- of simulating energy storage in the grid, operational flexibility.4 For example, 6A2-47187. estimating its total value, and actually storage and demand response can provide recovering those value streams continues to [3] National Action Plan for Energy Efficiency. operating reserves to the system, which be a major barrier to implementation. VRE (2010). Coordination of Energy Efficiency and otherwise may require use of partially complicates this issue because variability Demand Response. Prepared by Goldman, G., loaded thermal generators that limit the adds additional analysis challenges. The Reid, M., Levy, R. and Silverstein, A. instantaneous penetration of VRE. ability to simulate the cost impacts of VRE Written by P. Denholm, National Renewable and benefits of storage is still limited by Power system operators can weigh the Energy Laboratory benefits of demand response and storage the methods and datasets available. It is against implementation costs. Many storage understood that VRE increases the need for technologies are still costly and somewhat flexible generation and operating reserves, Greening the Grid provides technical inefficient, because only 70–85% of stored which can be met by energy storage. assistance to energy system planners, energy is recoverable. Demand response However, the value of energy storage is best regulators, and grid operators to overcome programs typically do not incur such an captured when selling to the entire grid challenges associated with integrating efficiency penalty. However, demand instead of any single source. Evaluating the variable renewable energy into the grid. response programs do have significant role of storage and DR with VRE sources implementation costs, for example, to FOR MORE INFORMATION attract participants and manage their ______Jennifer Leisch electricity demand. 3For more information on capacity value, see a related USAID Office of Global fact sheet, “Using Wind and Solar to Reliably Meet Demand.” Tel: +1-202-712-0760 ANALYSIS CHALLENGES 4Load shifting refers to a grid management technique Email: [email protected] The point at which storage or demand that involves moving sources of electricity supply and demand to different times, e.g., from peak hours to off- response is economically needed (or the peak hours. Jaquelin Cochran National Renewable Energy Laboratory Tel: +1-303-275-3766 Email: [email protected] DEMAND RESPONSE MECHANISMS Greening the Grid is supported by the U.S. Demand response refers to voluntary (and compensated) load reduction used as a Government’s Enhancing Capacity for Low system reliability resource. Two broad categories of demand response mechanisms are Emission Development Strategies (EC-LEDS) available to power systems [3]: program, which is managed by the U.S. Agency for International Development (USAID) and •• Price-based demand response programs vary the price of electricity over time Department of State with support from the to encourage consumers to change their electricity usage patterns. Price-based U.S. Department of Energy, U.S. Environmental mechanisms include time-of-use pricing (which assigns prices for consumption during Protection Agency, U.S. Department of Agriculture different blocks of time), critical peak pricing (which specifies a very high rate for a and U.S. Forest Service limited number of hours), and real-time pricing (which varies rates in response to wholesale market prices, often on an hourly basis). •• Incentive- or event-based demand response programs provide financial compensation to customers who allow the program administrators to directly control certain electricity-consuming equipment and/or reduce their electricity demand upon request. Examples of incentive- and event-based mechanisms include demand bidding or buyback programs, emergency demand response programs, capacity markets, and greeningthegrid.org | ec-leds.org ancillary services markets. NREL/FS-6A20-63041 September 2015