Hybrid Energy Systems: Opportunities for Coordinated Research DOE/GO-102021-5447 • April 2021 Disclaimer This report was prepared as an account of work sponsored by an agency of the United States government. Neither the United States government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States government. ii Acknowledgements The Hybrid Energy Systems: Opportunities for Coordinated Research report began as a purely voluntary, staff- driven effort to improve coordination across U.S. Department of Energy (DOE) program offices as it relates to hybrid energy systems research. The resulting DOE Hybrids Task Force, which is responsible for this report, consisted of representatives from the Office of Energy Efficiency and Renewable Energy (EERE), the Office of Electricity (OE), the Office of Nuclear Energy (NE), the Office of Fossil Energy (FE), and the Advanced Research Projects Agency–Energy (ARPA-E). Contributions were also made by a technical team at the DOE National Laboratories, namely individuals from Argonne National Laboratory, Idaho National Laboratory, Lawrence Berkeley National Laboratory, Oak Ridge National Laboratory, the National Energy Technology Laboratory, the National Renewable Energy Laboratory, the Pacific Northwest National Laboratory, the SLAC National Laboratory Accelerator, and Sandia National Laboratories. Thank you also to 3rdRail Inc. and the Electric Power Research Institute for their support. In particular, the DOE Hybrids Task Force would like to sincerely thank Caitlin Murphy of the National Renewable Energy Laboratory and Andrew Mills of Lawrence Berkeley National Laboratory for their leadership and significant contributions to this effort. Suggested Citation U.S. Department of Energy (DOE). 2021. Hybrid Energy Systems: Opportunities for Coordinated Research. Golden, CO: National Renewable Energy Laboratory. DOE/GO-102021-5447. https://www.nrel.gov/docs/fy21osti/77503.pdf. iii Executive Summary To meet the evolving demands of the 21st century, the U.S. power grid is undergoing transformational changes that defy its traditional design of large-scale generation remotely located far from consumers, centralized control structures with minimal feedback, limited energy storage, and passive loads. Over the last decade, the U.S. electric generation mix has changed dramatically, with increased generation from highly-flexible natural gas, rapid deployment and penetration of variable renewable resources, and decreased generation from traditional baseload resources. Other changes that are beginning now and expected to accelerate in the near term include increased deployment of energy storage technologies and greater use of digital and communication technologies in the control of power systems. The introduction of new sources of dispatchability, flexibility, and reliability offers the potential for a more optimized, cost-effective, and modern energy sector from fuel to generation to delivery to load. One key trend in the evolving U.S. energy sector is the emergence of hybrid energy systems (HES). We define HES in this report as systems involving multiple energy generation, storage, and/or conversion technologies that are integrated—through an overarching control framework or physically—to achieve cost savings and enhanced capabilities, value, efficiency, or environmental performance compared to the independent alternatives. This definition is consistent with—but broader than—industry definitions.1 And as defined here, HES are related to, but distinct from, colocated resources, which share some characteristics with HES but have more-limited opportunities for operational synergies. HES present an opportunity to optimize power plant designs to maximize the services that are useful to and valued by the electric and broader energy systems. They can vary in terms of their subcomponents, linkages (e.g., locational, physical, and operational), and application spaces (e.g., customer-sited or utility-scale). HES can also be configured to provide various electric and nonelectric products (e.g., fuels). For example, HES can have electricity as their only output, with common examples including various generation technologies combined with energy storage. In other cases, HES can consist of industrial processes that utilize generated heat or power to produce a commodity-scale product (e.g., using electrical or thermal energy to produce hydrogen from water or a methane source). Recent analysis, experimentation, and deployments of HES suggest advantages currently outweigh disadvantages for some technology combinations. They also indicate that hybridization could be an effective strategy for realizing net-economic benefits relative to independent plants by allowing multiple technologies to share costs and infrastructure; enabling the provision of more grid services (or the same grid services at a lower cost); and enhancing system reliability, flexibility, and resilience. Hybridization can also help mitigate 1 See, for example: CAISO, Hybrid Resources Draft Final Proposal (California ISO, August 3, 2020), http://www.caiso.com/InitiativeDocuments/DraftFinalProposal-HybridResources.pdf. Mark Ahlstrom, Andrew Gelston, Jeffrey Plew, and Lorenzo Kristov, Hybrid Power Plants: Flexible Resources to Simplify Markets and Support Grid Operations (Energy Systems Integration Group: October 21, 2019), https://www.esig.energy/wp-content/uploads/2019/10/Hybrid-Power-Plants.pdf. Caitlin Murphy, Anna Schleifer, and Kelly Eurek, “A Taxonomy of Systems that Combine Utility-Scale Renewable Energy and Energy Storage Technologies,” Renewable and Sustainable Energy Reviews 139 (April 2021): https://doi.org/10.1016/j.rser.2021.110711. iv financial penalties for variable resources (e.g., integration charges and imbalance penalties) and overcome suboptimal technical requirements or limited participation models for the provision of services (e.g., capacity or ancillary services). For example, if a utility or system operator imposes ramp-rate limits on variable renewable resources, or it disallows these resources from participating in ancillary services markets, then hybridizing can help resolve these market design limits. Similarly, a utility or system operator could impose energy requirements on certain market products that might limit the ability of independent energy storage to participate unless it is paired with another resource.2 Hybridization also poses challenges and uncertainties. To a large extent, wholesale electricity markets, electric utility regulation, and state energy policies were designed with the expectation that power generating facilities would consist of a single technology type. Furthermore, system operators have historically been able to optimize dispatch to minimize costs and maintain reliable operations across the full portfolio of available resources, rather than having some resources optimize their operations independently. The emergence of competitive HES is thus creating challenges for the design, operation, and regulation of wholesale electricity markets, for state regulation of electric utilities, and for the design and implementation of energy policies. Additionally, current data, methods, scenarios, and analysis tools—ranging from plant-level to capacity expansion to energy economic models—are insufficient for representing the costs, estimating the value, and evaluating system impacts of HES. Optimizing the design and operations of HES also requires development of controls, sensors, telemetry, metering, and other communications equipment to facilitate the coordinated operations of subcomponents with different objectives. Responding to growing industry interest in HES, the U.S. Department of Energy (DOE) has undertaken research and development (R&D) projects to address challenges and promote innovations in HES. The DOE Hybrids Task Force reviewed DOE’s HES R&D portfolio and found that technologies from four DOE program offices—the Office of Energy Efficiency and Renewable Energy (EERE)3, Office of Fossil Energy (FE)4, Office of Nuclear Energy (NE), and Office of Electricity (OE)—are the subject of state-of-the-art HES research. Moreover, our review confirmed that DOE has supported the development of HES research capabilities that are designed to explore hybrid-specific questions, span multiple research topics, and evaluate a diverse suite of subcomponent combinations and linkages. Finally, our review revealed that HES research is often housed in an individual office, particularly when it involves a single source of electricity generation linked with an energy storage or conversion technology. Detailed treatment of the nuances of each generation technology is important and relevant, but many aspects of HES are crosscutting and will be relevant to other generation technologies, including those that are the focus of other DOE program offices. Therefore, a key finding of our review is that there may be opportunities for additional or enhanced collaboration across EERE, FE, NE, and OE, as well as across suboffices that house 2 Will