Techno-economics of Energy

Storage

Puneet Mannan Grid Resilience through Energy Storage in

SW Ontario November 20, 2013

puneet.mannan@albertainnovates.ca

780 450 5380

The Study Objective

Advance the techno-economic understanding of

select energy storage technologies in the Alberta

context

Provide some measure of quantification of the

value of Power-to-Gas (PtG), battery and

Compressed Air Energy Storage (CAES)

technologies in the Alberta electricity market

Selection of Technologies

Reasonably mature for grid scale implementation, cover a broad range of technical and operating constraints

CAES System components generally mature; exposure to

Natural Gas prices

Sodium-Sulphur (NaS) Batteries Relatively small-scale; exhibits asymmetry in parasitic

loads

Power-to-gas (PtG) Complex operation; multiple value propositions;

varying technical maturity

Selection of Wind Farms

Represent wind farm from

north of Pincher Creek area

Wintering Hills

Castle River

Castle River

Wintering Hills

Buy/Sell Decision Criteria

Switch price

Each hour of the year

Inventory level, current average cost of inventory, and

variable operating cost

Inventory ↓, switch price ↑ to a max. limit

Inventory ↑, switch price ↓ (subject to a min. limit

= sum of inventory + variable cost)

Modelled Cases

Base Case

Merchant

Wind Power

Generator

Behind-the-Fence

Merchant

Operator

Battery CAES

Power-

to-Gas

1

Battery CAES

Power-

to-Gas

1

Power-

to-Gas

2

Power-

to-Gas

2

Wind Facilities – Monthly Output

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

January March May July September November

Ele

ctri

icty

Ou

tpu

t (M

Wh

)

Wintering Hills Castle River

Wintering Hills Normalized Castle River Normalized

Wintering Hills Castle River

Capacity Factor 37.9% 32.3%

Capacity 88 MW 39 MW

Zero Hours 1046 2288

Source: Natural Resources Canada

Castle River

Wintering Hills

Results

$-

$50

$100

$150

$200

$-

$500

$1,000

$1,500

$2,000

January March May July September November Mo

nth

ly A

vera

ge P

rice

($

/MW

h)

Mo

nth

ly R

eve

nu

e (

$ T

ho

usa

nd

s)

Wintering Hills Battery

Average Hourly Price Base Case Revenue Behind-the-Fence Reveue Merchant Revenue

$-

$50

$100

$150

$200

$-

$500

$1,000

$1,500

$2,000

January March May July September November Mo

nth

ly A

vera

ge P

rice

($

/MW

h)

Mo

nth

ly R

eve

nu

e (

$Th

ou

san

ds)

Castle River Battery

Results

Energy storage increases the wind facility

revenues in all cases.

On a percentage basis, the more intermittent

wind facility benefits more from energy storage

Seven hours of energy storage capacity is not

optimal.

There are trade-offs associated with participation

in the OR markets; however, there is additional

value.

Thank you

Questions welcome

Market Price Adjustment

The market price adjustment

mechanism:

• Adjusted the market price for

the effects of:

o buying grid electricity –

Merchant cases

o selling stored energy –

Merchant and Behind-the-

Fence cases

• Reduced the overall market

revenues by about 13 per cent

• Average adjusted market price

was about $2.00/ MWh lower

than the actual historical

average.

Comparison: October 22 - 24

-40

-20

0

20

40

60

80

100

$(400)

$(200)

$-

$200

$400

$600

$800

$1,000

8 9 101112131415161718192021222324 1 2 3 4 5 6 7 8 9 101112131415161718192021222324 1 2 3 4 5 6 7

Ele

ctri

city

(M

Wh

)

Ho

url

y P

rice

(4

/MW

h)

-40

-20

0

20

40

60

80

100

$(400)

$(200)

$-

$200

$400

$600

$800

$1,000

8 9 101112131415161718192021222324 1 2 3 4 5 6 7 8 9 101112131415161718192021222324 1 2 3 4 5 6 7

Ele

ctri

city

(M

Wh

)

Ho

url

y P

rice

($

/MW

h)

Hour Ending Delivered to the Grid - BTF Delivered to the Grid - Merchant Hourly Price Wind Output

Wintering Hills

Castle River

Methodology

Hindcast model incorporated Actual wind facility production data

Actual market prices

Operating parameters and limits for energy storage

technologies

Market clearing prices were adjusted for the

effects of the storage operation

Two dispatch strategies were modelled

Behind-the-Fence

Merchant

Operating Configuration

Behind the fence storage Merchant operation storage

Energy storage operation is co-located with a wind farm

Energy storage entity that is independent of the wind farm

Buys electricity only from that wind farm

Buys electricity from a wind farm or from the grid

Uses electricity price arbitrage or other market opportunities for storing and selling electricity (or hydrogen)

Uses electricity price arbitrage or other market opportunities for buying, storing and selling electricity (or hydrogen)

Pay only DTS according to existing AESO rules

Pays STS and DTS according to existing AESO rules