Investors warm to integrated solar/storage package

By Henry Edwardes Evans for S&P Global

London — Two UK energy transition trailblazers anticipate a flood of demand for their behind-the-meter infrastructure package.

A vanadium redox flow machine has for the first time pre-qualified to provide firm frequency response to the UK grid, storage company redT and digital platform developer Open Energi told S&P Global Platts August 8.

The 300 kWh machine at Hanford, Dorset is coupled with 250 kWp of solar panels and already saving its agri-industrial park owner over a third on its energy bill.

Now participation in National Grid’s Dynamic Firm Frequency Response service has opened a new revenue stream for the storage asset, redT’s CEO Scott McGregor said.

“Pre-qualification is significant for us in terms of perception. Flow is an old technology, but a complex one. The rigour in passing the test is a big statement for us around the world. It shows flow can do the really fast stuff as well as long duration.”

The solar /storage package is integrated onto Open Energi’s Dynamic Demand 2.0 energy optimisation platform, which uses artificial intelligence and machine learning to control the assets.

“We are really excited by the potential of this technology not only to play in ancillary markets, but also to capture spreads in the wholesale market, which is much deeper than ancillary services,” Open Energi’s Director David Hill said.

Bumps in the road

While the underlying market for flexibility was strong, three “pretty chunky” events had knocked investor confidence over the last 18 months, Hill said.

“First the value of frequency response capitulated, over-subscribed by lithium ion batteries. Then the review of embedded benefits created uncertainty – and a lot of business models had to be reviewed. Third, the capacity market was suspended.”

A new model was emerging and investor confidence was returning, both Hill and McGregor said.

“People are getting a lot more comfortable with wholesale market risk, where it is much easier to talk about depth and continuity of value than in capacity-style markets – fast reserve, frequency response, STOR – which are not that deep,” Hill said.

The UK wholesale market is probably going to be a 30 GW market, Hill said.

“That is the size of the offshore wind market in 5-10 years’ time. When the wind blows everyone will want to be consuming and charging, and when there is no wind everyone will want to be discharging. That is a 30 GW delta, a pretty hefty market,” he said.

Multiple daily cycles

Flow machines are thought of as three/four hour duration technology, “but what we’re learning is they work for fast services too, so if you have 30-minute settlement periods we’re thinking of having one or two hour flow machines, even 30-minute flow machines, and doing 100, 200 cycles a day,” McGregor said.

The machines can charge and discharge all day long because, unlike with lithium ion batteries, there is no degradation based on cycles.

Open Energi operates 90 MW of flexible capacity across a broad range of assets from demand response to battery storage and EVs. It has learnt that lithium ion management is an art form.

“The whole game is speed and duration. Lithium ion has proved to be great at the short stuff but there is not much duration there. Especially when you look at solar , the peaks are for a number of hours. Indeed most volatility in the market is for a number of hours. So being able to optimize a system that does not have a huge amount of optionality in it is quite a challenge. You are constantly trying to make sure you are shooting your gun (the battery) at precisely the right time,” he said.

A lithium ion battery will last for 10 years with careful management and limited cycles, both said. Price spreads need to be attractive to offset the cost of degradation. Run it hard and lifetime drops to a few years.

“What our data scientists see with lithium ion is that we have to assign a throughput cost. We can’t go for every spread we want because there is an opportunity cost in every decision we make. Every action you take, you are degrading that battery bit by bit,” Hill said.

“What you get with the flow machine is you can play the whole spectrum, it is far easier to optimize it across a much broader range of services. It’s a heavy duty machine that does not wear out,” McGregor said.

Integrated package

The way to a decent return on integrated storage/solar was via a behind-the-meter infrastructure offering, McGregor said.

“The package will meet 40% to 60% of a commercial business’ demand load. They top up the other 40% from the wholesale market. So we can go to a business and say 80% of your returns are secure. The remaining 20% – we will access frequency response and anything else the market throws out for a period, but we can’t guarantee that, it is merchant,” McGregor said.

If a business puts up the capital for the package it can expect a 50% reduction in energy costs over a 25 year period.

If a business enters a power purchase agreement with a supplier like Statkraft, with the supplier financing the package, it can expect 20% savings over a similar period.

“We’re moving towards 60% of generation behind the meter – the UK is already at around 30%,” McGregor said.

“This behind-the-meter infrastructure model is the way forward, but it’s been slow because there are a lot of pieces to get right, and investors need to get comfortable. My job is harnessing that capital. I believe we are there – we are getting huge momentum across the UK and Australia,” he said.

Fully automatic

Putting storage alongside solar is one thing. Then you have to control it.

“The platform has a multi-stage optimisation process – and it is fully automatic. Unlike any of our competitors we don’t have a control room and we don’t have traders,” Open Energi’s Hill said. “We take day-ahead solar and price forecasts and create an optimal charge/discharge profile against onsite demand. We send a schedule day-ahead. The platform updates the profile throughout the day with the latest market information. If it looks like there is going to be a huge spread, or there is going to be super cheap offshore wind , the asset can discharge or charge accordingly. For instance at night, when the grid is often long power, frequency response prices are pretty good. Being able to absorb power then can be lucrative.”

Behind the meter projects demonstrated the technology best – there were more moving parts than for front of meter larger systems.

“For us the movement of generation to behind the meter is very exciting,” Hill said. “There we can use the storage system to optimize against all parts of the power market, whether it be local, optimising the solar , or national, optimising against power prices.”

How it works

Vanadium redox flow technology uses the flow of vanadium electrolyte across an ion exchange membrane.

When this exchange occurs a reversible electrochemical reaction takes place, allowing electrical energy to be stored and subsequently returned.

The technology relies on the ability of vanadium to exist in four different oxidation states (V2 to V5), each of which holds a different electrical charge.

The setup of the electrolyte and the membrane stack can be compared to that of an engine and fuel tanks.

The membrane stack (the engine) delivers power rated in kilowatts (kW), whilst the vanadium electrolyte (the fuel) delivers energy rated in kilowatt hours (kWh).

When a redox reaction occurs, the composition of the electrolyte changes. This creates a surplus of electrons at the negative terminal, relative to the positive terminal. When the system is discharged, electrons flow from the negative terminal to the positive terminal, generating an electrical current.

The redox reaction is reversed by applying an electrical current to the terminals. This returns the machine to its original state, charging the system.

In conventional batteries, power and energy are fixed together in a cell, which limits the ability to size the system accurately to the application requirements.

Energy storage machines are not constrained by these limits as the electrolyte is stored in tanks, outside of the cell stack, separating the power and energy components. This creates greater flexibility as more electrolyte or stacks can be added on a modular basis.

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