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Distributed Energy Resources and Energy Storage Systems:

PNNL Energy Researchers Develop Economic Framework for a Changing Energy Infrastructure

June 2018
Distributed Energy Resources and Energy Storage Systems:
With support from DOE’s Office of Electricity, PNNL engineers modeled energy storage operations to determine the long-term financial benefits or value to Portland General Electric. Shown here are rows of battery racks at PGE’s 5-megawatt Salem Smart Power Center in Salem, Oregon. Photo courtesy of PGE.

Flip a switch and light cuts the dark, but few of us stop to think about how those electrons made it to our living rooms—or how that energy, as a service, is valued.

The United States has traditionally relied upon large, centralized power generation sources with energy flowing in one direction—from the source to the consumer. However, beyond our living room light switch and up the wire from our homes, change is happening across America’s energy infrastructure.

Today’s power grid is decentralizing with renewable sources, such as wind and solar generation, and with energy flowing to and from grid-scale energy storage systems. Distributed energy resources like these are not only making the nation’s power grid far more resilient, but also far more complex. As a result, traditional economic and infrastructure models, public investment, procedures, and regulatory processes are becoming obsolete.

To refresh the models, procedures, and regulatory processes, as well as guide future energy system decision-making, energy grid researchers at Pacific Northwest National Laboratory have published a paper in the journal Energy & Environmental Science that:

  • Classifies benefits for services provided by energy storage systems, including capacity, frequency regulation, and outage mitigation;
  • Defines approaches for monetizing energy storage system services;
  • Assigns ranges of values to major energy storage system applications by region based on an extensive literature review; and
  • Evaluates the capabilities of available tools, such as PNNL’s Battery Storage Evaluation Tool, to estimate value for specific energy storage system deployments.

“As our society moves from centralized power generation-based systems to more dynamic, distributed energy systems, the work we are doing here at PNNL can provide a means to better understand the value of energy services—and provide utilities and policymakers a tool to inform their planning and decision making,” said Patrick Balducci, PNNL chief economist and lead author of the paper.

The PNNL research team, which is funded by DOE’s Office of Electricity, applied a variety of economic models to energy storage projects located in California, Massachusetts, Oregon, and Washington, and is working with several states, including Nevada, Oregon, and Washington. Nevada, for example, recently passed legislation to set energy storage targets. “As we work with states and local utilities, big and small, the message we are trying to share is, ‘If you don’t look at distribution, transmission, and customer energy management benefits, then many of the benefits associated with energy storage is underrepresented or missed entirely,’” said Balducci. “So we are helping energy managers improve their integrated resource planning process to better reflect the full benefit that energy assets, based on their unique properties, can provide to the system.”

The team’s paper provides clarity across use cases in five categories:

  • Bulk energy—arbitrage and capacity;
  • Ancillary services that allow equilibrium between load and generation within the power grid;
  • Transmission services;
  • Distribution services; and
  • Customer energy-management services.

For each category, the PNNL team examined monetization approaches, summarized existing topical research and then normalized findings by region in a common metric of dollars per kilowatt per year. “We defined various value streams that you can attribute to energy storage,” said Balducci. “Energy storage can do things that no other resource can do. It can place energy into the distribution grid with a faster response time, act as generation or load, and it can store energy for use during peak demand periods.”

The paper concludes that in the United States, “there is a growing realization that a future with more (distributed energy resources) is becoming a necessary reality … The value and effectiveness of energy storage in supporting a cleaner, more resilient future grid are being validated through numerous field demonstrations and analyses, yet regulators and grid operators continue to struggle with the complexities and opportunities provided by energy storage.”

Balducci views this study as a “research hub” for the current state-of-practice with respect to how energy storage translates into an extensive set of services, and how to model them to generate a full and complete economic assessment. “This is a foundation upon which many future studies can be built.”

PNNL Research Team: Patrick J. Balducci, Jan Alam, Trevor Hardy, and Di Wu.

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