IEEE Power & Energy Magazine - November/December 2017 - 37

Technological innovation, decreasing costs, and
increased renewable penetration have helped battery
energy storage proliferate around the world.
Once storage becomes cost competitive for peaking applications, its deployment would result in a natural sink for renewable
energy during periods of low demand, increasing system load
and prices-thus, also increasing the economic deployment of
renewables. This could then create a positive feedback loop,
wherein renewables increase the market potential for storage,
which in turn increases opportunities for renewables to avoid
curtailment and production of very low-value energy.
Increasing penetration of variable renewable energy will
then increase the need for other services that can be provided by battery energy storage. For example, the following
grid services will be affected by increasing renewables, most
of which can be mitigated with energy storage (along with
other technologies):
✔ Regulation reserves will need to increase to balance
the variability inherent in wind and solar resources.
✔ Fast frequency response may be required to replace
system inertia as conventional synchronous generators
are less utilized or retired.
✔ Voltage (volt-var) support needs to be managed across
the system, especially as renewable resources are
added to more remote locations.
✔ Energy shifting and opportunities for price arbitrage
will increase to balance periods of high renewable energy penetration (sunny and windy days) and periods
of low penetration (cloudy and calm days). This is especially true for solar-centric renewable energy grids,
which are characterized by a diurnal pattern and shorter
periods of renewable energy availability.
Battery energy storage is only one form of power system
flexibility available to renewable energy generators, utilities,
and grid operators. It should be noted that the first three services detailed in the previous list can also be provided by
state-of-the-art wind and solar power plants themselves.
In addition, while growing renewable penetration will
increase the amount of required ancillary services (such as
regulation), that increase is small relative to the amount of wind
and solar generation added to the system. For example, recent
renewable integration studies suggest that, when adding significant levels of wind capacity to a grid, just 0.3-1 MW of reserves
is needed to balance variability from 100 MW of additional
wind. Therefore, market saturation for ancillary services happens quickly, and the market size of regulation and other ancillary services may not grow to a level required to scale energy
storage applications.
Eventually, the economics of battery energy storage will
likely accelerate deployment across the grid; however, other
november/december 2017

technologies are providing this flexibility as well. Demand
response, advanced inverter functionality, flexible ac transmission systems, and improved flexibility from the thermal generating fleet and renewable energy plants will also
provide some of the previously listed services. As a result,
it is unclear whether or not the economic value of providing ancillary services will increase along with the need for
new services.

Looking to the Future:
Obstacles and Opportunities
The Role of Policy, Regulation,
and Markets in the Energy Storage Industry
As the previous sections have highlighted, technological innovation, decreasing costs, and increased renewable penetration have helped battery energy storage proliferate around the
world. But innovation in the policy, regulatory, and market
framework may be required to continue sustained and stable
growth of the energy storage industry. Technological advances
alone may not be enough for rapid adoption and deployment of
battery energy storage. One of the primary obstacles energy
storage faces is the inability to monetize each value stream
the storage can provide. While there is general agreement that
many elements of energy storage can prove beneficial to the
power grid, these benefits are often difficult to quantify and
price appropriately.
Recent policy has been driven predominately at the state
level-and, typically, via energy storage mandates. As of 2016,
California, Connecticut, Massachusetts, Nevada, New York,
and Oregon have requirements or policies in place that specifically require or provide subsidies for battery energy storage.
Most notably, the California Public Utilities Commission established a requirement that California-regulated utilities procure
at least 1.325 GW of energy storage by 2020. Similar legislation
is in place or proposed in other states, requiring a minimum
amount of battery energy storage capacity in the future. While
these policies will be effective in promoting pilot projects, they
may be an inefficient way of obtaining all the services energy
storage provides.
To better support battery energy storage technology
deployment, the industry should consider three broad topics
that can have a significant impact:
1) regulations and markets tailored for results
2) technology agnostic policies, regulations, and market
rules
3) a diverse mix of hybrid solar projects.
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Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - November/December 2017