Distributive generation or storage asset? Or both?
The changing world of power delivery continues to present challenges and opportunities for market participants. Adapting to these changes evolves as technologies address inefficiencies. Demand Side Management began with demand response functions proffered by an emerging sector that charged as much as 50% of revenue. New technologies often begin with exaggerated income that diminish as markets mature and streamline. Companies created to provide DR services have changed their models in response to narrowing margins. Loads (end users) have historically been short until procurement netted out their position. Through various techniques, loads are now able to be long.
The changing landscape moves fast, as do the projected revenue streams. The models that justified innovations can change as rapidly. DR is a good example. As provisions were made to enable cutting back on usage or substituting on site generation for grid-supplied power, loads rushed to participate. The result has been to change how opportunities (grid demand spike, scarcity pricing) present themselves by length and income of episode. Where spikes use to last longer, they now are usually dampened almost immediately. Capturing opportunity has become competitive and this competition has squeezed margins, requiring a recalculation of models.
Power generation is immediate and heretofore had to be used immediately. Time shifting of usage and other ploys to reduce cost have had a narrow range of utilization. The ability to extend the time that loads have to manage assets has seen thermal storage as an answer. Freezing water at night and running a fan over the ice has been around for literally decades, reducing HVAC demand during peak hours. It had limitations but worked. The point is that storage in some form expanded options.
What if one could generate power inexpensively, store excess somehow, and sell it when prices rose? Gravity storage is an economic vehicle where one pumps water uphill during inexpensive power prices, flowing it downhill through turbines when prices are higher or otherwise needed. There are variations of this strategy that likewise work but usually due to the unique opportunity of the specific application. A better mouse trap is some kind of battery storage system. Cost has been the hurdle to this but economic application and friendly regulator rules are changing this.
Tesla is at the forefront of battery innovation as evidenced by the 100 MW Australia battery brought online at the start of 2018. (See – https://www.ecowatch.com/tesla-australia-battery-2568719032.html ). Results were immediate and continue to provide good results (some say too good – https://www.greentechmedia.com/articles/read/has-teslas-big-australian-battery-killed-the-business-case-for-more#gs.SHPy_Eg ). With this kind of impact, folks in search of a storage answer seem to be near, combining DR, distributive generation, and storage to such a degree that the times, again, are changing. An expression of that change is the FERC order 841 that embraces this change (See – https://www.greentechmedia.com/articles/read/why-storage-might-solve-big-grid-problems-but-not-ones-you-think#gs.yPRmTEc ).
This ability to incorporate available technologies is evolving. The consequences are likewise evolving. It will impact decisions directly and indirectly. For example, ERCOT West Zone and South Zone are notorious for erratic and volatile basis swings (differential between Trade Hub and Load Zone pricing). Given a reserve of power stored in a battery supplied by a variety of sources (lower off peak pricing capture from the grid, onsite generation, to begin a growing list), would you lock what today is considered a cheap basis cost or wait, expecting history to not be repeated? If considering installing onsite generation, what assumptions are used for modeling purposes? Times are changing and the way things are done is changing as well. Do your homework. Solar generation occurs during daylight. Wind generation occurs when the wind blows. Fossil fuel gen occurs when you run the asset. Battery storage can be filled by all of these sources plus off the grid, a combination of same appears advantageous…is it economic, now or in the future?
