2020: The Year Storage Goes Big in New England
All together now…what are the reliability problems an evolving grid with a fuel mix increasingly featuring intermittent, renewable sources like wind and solar facing? Veterans and savvy followers of the New England energy market know the answer to this one knee-jerk. No need to join the chorus. The answer is as easy as picking the Patriots to make the playoffs.
Resource intermittency is a threat to grid reliability.
Solar PV panels can’t generate electricity when the sun isn’t shining. Wind turbines don’t turn without wind blowing. Simply put, solar and wind sources can suddenly find themselves in adverse conditions during which they can’t produce.
So what’s a grid to do?
In New England, as in other progressive deregulated markets in the US like California and New York, the answer is energy storage.
FERC ORDER 841: Let storage in
On February 18, 2018, the Federal Energy Regulatory Commission (FERC) issued Order 841, which directed regional grid operators to remove barriers to the participation of electric storage in wholesale markets.
Order 841 seeks to direct regional grid operators to establish rules that open capacity, energy, and ancillary services markets to energy storage. The Order affirms that storage resources must be compensated for all of the services provided and aims to level the playing field for storage with other energy resources.
In working to comply with FERC 841, ISO-NE now faces a host of challenges familiar to other markets seeking to properly value distributed energy resources in the marketplace. New England may not have the answer, but they have an answer. 2020 looks to be the year demand-side energy storage makes a significant impact in New England, albeit on the distribution side through utilities.
New England realizes the value energy storage can provide in offsetting wind and solar resources’ intermittency. While ISO-NE is working on market redesigns to allow energy storage resources to participate, electric utilities are jumping into the ring in 2020 with a new program that features energy storage in a starring role.
Beginning in 2020, electric utilities will offer a new demand response program that allows for storage to play a critical role in helping the grid maintain balance when demand for electricity threatens to exceed supply.
Introducing Daily Dispatch Demand Response
To help further reduce peaks on their distribution systems, New England utilities National Grid, Eversource, and Unitil have introduced a new demand response program called Daily Dispatch.
Daily Dispatch is designed to allow energy storage (batteries, thermal storage) to participate because of its ability to be dispatched frequently and quickly in response to rising peaks.
The Daily Dispatch program runs during the summer from June through September. The program is intended to be dispatched (as the name suggests) daily with anywhere from 30-60 events each year during the hot months of July and August. Each event is expected to last about two to three hours.
The new program has an attractive incentive of $200 per kW per summer. Customers’ compensation will be based on their average curtailment amount for all the events that are called during the summer.
For example, a customer that curtails an average of 500 kW for each of the Daily Dispatch events would gross $100,000 for their efforts.
The Daily Dispatch program appears to be an instance where we find electric utilities taking a leadership role in optimizing energy storage to reduce peak load by allowing commercial and industrial organizations to monetize the distributed generation assets in which they have invested.
Since it is at the utility level and not an ISO program, Daily Dispatch needn’t rely on the wholesale capacity market to settle payments. Instead, the program can offer a flat per kW rate, thereby allowing participating organizations to monetize their behind-the-meter storage in 2020 as opposed to waiting until ISO-NE establishes its DER valuation policies.
This post was excerpted from the 2020 State of Demand-Side Energy Management in North America, a market-by-market analysis of the issues and trends the experts at CPower feel organizations like yours need to know to make better decisions about your energy use and spend.
CPower has taken the pain out of painstaking detail, leaving a comprehensive but easy-to-understand bed of insights and ideas to help you make sense of demand-side energy’s quickly-evolving landscape.