Battery Storage - a Wind-Wind for Everyone

It seems these days that batteries never leave the press. Rightly so given the state of affairs in the power and energy sector. With the rapid proliferation of renewables it was only a matter of time before energy storage became a hot topic. And stayed a hot topic. You see, renewable power resources (like wind and solar) are intermittent by nature and therefor it makes perfect sense that in order to make these resources more usable or cost effective in today’s world they have to be coupled to some sort of energy storage. What is interesting is that here in the northwest a rapidly growing wind portfolio has not necessarily led to increased power outages or more curtailment in the absence of the supporting battery footprint. Why is it that when the wind stops blowing, that there absence of electricity doesn’t cause power outages?

It is no secret that hydroelectricity in the northwest is abundant, making the regional cost of electricity best ranked in the nation. Even nuclear power (at ca. 2.5-3 ₵/kWh) can’t compete with hydro; the looming question is if this is still the case? One of the earliest assessments of operational and management costs (O&M) for hydroelectricity generation facilities (published in an NREL report) were made in 2003 by Hall et al.1 Oddly enough, just prior to a mass insurgence of wind power (in ca. 2006), there was a reported shift in maintenance practices for regional power generation sites.2 The shift was from a “fix-it-when-it-breaks” mode to a “fix-it-all-the-time” mode. In short it became impossible to tell how much wind’s so called free lunch was costing, but it remained clear that the producers weren’t paying a dime. So here in the northwest excess wind generation leads to either a scaling down of hydro generation, transmission outages in the region, or it gets sent to the big toaster. Thus we hardly ever curtail in the northwest.

...the power market players don’t necessarily care if the power is renewable or fossil based — they buy and sell power for profit — an energy future that is both sustainable and affordable inadvertently relies on our ability to bridge renewables with stationary storage.

In truth I believe it would never really make sense to “toast” power as expensive as wind, but it happens when it seemingly makes economic sense. That is when hydro water levels may not allow for scaling back generation (see below) and transmission lines are too crowded to divert excess power (not often but it happens). However the problem is not whether we toast wind or not, but why we would ever curtail a reliable renewable power resource in the first place. Yes, hydroelectricity is a renewable power resource that systematically gets curtailed when there is too much wind online in the northwest. And we do this because installing energy storage costs something while doing nothing seemingly costs nothing. This mode of operation does not consider the O&M cost for turning on and off the hydro generation, which invariably arises from the additional start-stop (ramping-slowing) events of the hydro facility. In fact one might be hard pressed to quantify exactly how much wind intermittency costs—by relying on hydroelectricity and worse fossil fuel powered “spinning reserves”—because of a timely shifts in maintenance practices.

No one denies hydroelectricity has taken on a tertiary use priority in the US. The primary uses belonging to water utilization and management (i.e., recreational water use, irrigation, water supply management, flood control, etc.) and only secondarily used for power generation. Mitigating intermittency of power generated by the surrounding renewables has unfortunately become a default. This might have been expected (or even planned) since hydro itself is a renewable power source. The difference being that hydroelectricity (along with the more traditional sources) is not given priority even though it is a renewable power source. What seems to have been forgotten is that hydro uses hardware, just like wind and solar, in order to generate power.

So what does all this have to do with stationary energy storage technologies? Well, it is known that primary generation is scaled back when wind experiences upticks in generation, and conversely spinning reserves kick in when generation falls short of forecast (or when base load generation like hydro or coal can’t be ramped up quickly enough to cover the deficit), and nothing on our grid is set up to deal with 100’s or 1000’s of megawatts in sudden upticks and/or shortages, but these events can be reasonably expected from wind as well as solar. Further, the convolution of price metrics and complexity of the power market makes for even the most promising stationary storage technologies seem too expensive. And why they have been so glacially slow to mature. Not just in the northwest, but everywhere that complex power markets create enough smoke that true economics (at best) become guesswork. Thus, despite RFB’s being inherently flexible, and having the capability to cover a broad spectrum of power management needs (at a very competitive cost mind you), these systems have not yet achieved the impossible benchmark of being more free than free.

So in order to objectively compare the cost for keeping wind on a so to speak free lunch program—versus finally shifting responsibility to the source—we ought to consider the cost of maintaining our hydroelectric/pumped-hydro storage facilities. It should be noted that there exist a number of environmental factors, which are prohibitive to scaling hydro for power generation purposes, which include intermittency mitigation (and this is in addition to the obvious geographical/topographical limitations). So despite the apparently low cost of hydroelectric power in a secondary use case scenario, the intrinsic cost of hydroelectricity as a primary power source (that is to effectively mitigate today’s wind capacity and the anticipated capacity) would likely be astronomical and permanently disruptive to the environment. That said, the cost effectiveness of a stationary storage technology alternative objectively lies within the variable cost component of the Levelized Cost of Energy (LCOE).

That there exists a direct correlation between increased number of start/stop events and a reduced life expectancy of major facility components is undisputed. It is also mostly undisputed that an increase in renewables in the northwest has led to more frequent start/stop events at the hydro facilities. For a better understanding on all the factors of increased O&M due to start/stop events with hydro facilities refer to Reclamation Managing Water in the West: Hydrogenerator Start/Stop Costs published by US Department of Interior (DOI) Bureau of Reclamation.3 For now it suffices to say that the O&M cost pertaining to hydroelectricity is more than the $8/MWh (or just under 1 ₵/kWh) as reported by NREL in 20124, that is if wind penetration is any indication.5-7

So how much does wind’s free lunch program cost? The DOI report a cost of $274 to $411 per star/stop event with the Annual Number of Starts (ANS) average at 35. However, due to the non-linear relationship the reported cost can be expected to grow more rapidly than ANS. Meanwhile, the average ANS have already increased from 35 (between 2000 and 2005) to 113 (between 2006 and 2011) and likely more so in recent years. In fact if nothing changes, and the average ANS grows linearly (best case), then the peak average ANS may exceed 200 by next year. Of course it is not as straightforward as proportionally increasing the O&M cost with respect to increasing ANS, but nonetheless is useful in a LCOE prediction for hydro. Thus using 200 as the average ANS produces an O&M cost of ca. 4.6 ₵/kWh (Note that it is significantly more than the 2 ₵/kWh LCOE reported by the National Hydropower Association8). There you have it, the free lunch program in a nutshell.

Now why is this so important? The answer is because LCOE for installing RFBs is estimated at ca. 3.0 ₵/kWh (with a lower upfront capital investment). RFB O&M cost is driven by several factors, but only one that impacts the cost substantially over a 20-30 year service life. The reactor cell stacks range anywhere from 20% to 40% of the overall system cost. The wide gap in cost arises from the different tactics for deployment. One approach is to build using inexpensive components (with a replacement strategy in mind), which can sometimes yield a lower upfront cost to the end user. The cheap reactors have to be replaced more frequently and you don’t have to look far (viz. the China made products epidemic) to be reminded of the proverbial saying, “I am just not rich enough to buy cheap things.”

In any case, the landscape is not getting any less competitive, and so the game has become mostly about reducing the stack cost or making it last longer. And so, the major O&M cost can be estimated using 40% of capital cost with roughly a 10 year re-investment frequency (Note that some emerging technologies can boost this to as much as 20 and even 30 years—see eChemion, Inc.). And the price for stationary storage continues to fall. E.g. the sales price for a vanadium chemistry RFB is expected to fall to $324/kWh by 2024 as reported by LUX Research, Inc.9 Using an example wind farm of about 100 MW power capacity and roughly 3 cycling events per day (see figure below), the variable component for LCOE can be estimated.

Integrating the area under the curve indicates that a 25MW/100MWh (or ca. 100 IMERGY Power Systems ESP250TM Series units) support system would do it. At 3 cycles per day for 10 years and the stack replacement cost at the rated power produces the estimated value above (Note the 3.0 ₵/kWh is reduced to <1 ₵/kWh with an achievable 30 year service life).

To conclude I want to point out that understanding the industry economics is not trivial. Understanding the “free lunch” component of wind in the northwest is a bit more straightforward. In any case the power market players don’t necessarily care if the power is renewable or fossil based—they buy and sell power for profit—but an energy future that is both sustainable and affordable inadvertently relies on our ability to bridge renewables with stationary storage (that pencils out). So if the variable operation and maintenance cost for wind is hidden in turning on and off the northwestern hydro spigot, it may be sometime before a more cost effective solution like stationary storage pencils out. Therefore it becomes imperative to not only define cost under a common LCOE equation, but with all the variable costs accounted for.

1. Hall et al., “Estimation of Economic Parameters of U.S. Hydropower Resources,” INEEL, 2003, 29.; 2. Haddon et al., “Northwest Regional Benchmarking Study: A Comparison of Hydro Generation Plants in the Pacific Northwest,” Report by HJA Consulting, 2006, 27.; 3. Osburn et al., “Hydrogenerator Start/Stop Costs,” Reclamation: Managing Water in the West, 2014, 117.; 4. MHall et al., “Hydropower Technologies,” Chapter 8. National Renewable Energy Laboratory. Renewable Electricity Futures Study, Vol. 2, Golden, CO: NREL; pp. 7-1 – 7-32, 2012.; 5. “Wind Generation Capacity in the BPA balancing Authority Area,” BPA Transmission Technical Operations, 2014.; 6. “Comments of the Bonneville Power Administration,” U.S. FERC, 2010.; 7. “Direct Testimony Volume 2,” BPA BP-14 Initial Rate Proposal, 2012.; 8. “Hydropower is Affordable,” National Hydropower Association, 2015.; 9. C. Jacques, “Lower-cost Flow Batteries to create $190 Million Energy Storage Market in 2020,” LUX Research, 2014.

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