behind-the-fence energy storage systems to … · estimated annual average revenue from 2012 to...

BEHIND-THE-FENCE ENERGY STORAGE SYSTEMS TO FACILITATE THE PARTICIPATION OF EXISTING WIND FARMS IN ANCILLARY SERVICESCANWEA O&M SUMMIT, JANUARY 29-30, 2019, TORONTO

Presented by Martin RheaultAuthors: Payam Zamani, Shila Karimi and Martin Rheault

Copyright Statement 2

BBA AT A GLANCE

▪ Private consulting engineering firm established in 1979 ▪ Over 800 employees

- Locations across Canada | Vancouver, Calgary, Timmins, Sudbury, Toronto, Abitibi, Montréal, Boucherville, Mont-St-Hilaire, Labelle, Québec City, Labrador City

▪ Practice-Centered Engineering Firm▪ Leading expertise in the following sectors:

- Power

- Mining

- Environmental Services

- Biofuels, Oil & Gas


THE CONTEXT

▪ LCOE of Wind is now the lowest*▪ Change of policy and electricity market

design▪ Shorter electricity contract terms in

the future▪ Transition from subsidized to

unsubsidized▪ IPPs have to bear more risks

*REF.: LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 12.0, 2018

LOWEST LCOE


WHAT IF…

What if all the wind capacity would have participated in Ontario spot market in 2018?

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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Energy Price IESO

Average Price Received by Wind

Discount


WHAT IF…

What if all the wind capacity would have participated in Alberta spot market in 2018?

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Energy Price AESO

Average Price Received by Wind

Discount


WHAT IF… WE HAD STORAGE

What if all the wind capacity would have participated in Ontario spot market in 2018 and had a 2-hourstorage, 10% of wind capacity? ~$1.3/MWh increase, 6% reduction of discount

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$-

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Energy Price IESO

Average Price Received by Wind without ESS

Average Price Received by Wind with ESS

Discount

Discount with ESS


WHAT IF… WE HAD STORAGE

What if all the wind capacity would have participated in Alberta spot market in 2018 and had a 2-hourstorage, 10% of wind capacity? ~$1.9/MWh increase, 3% reduction of discount

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$-

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Energy Price AESO

Average Price Received by Wind without ESS

Average Price Received by Wind with ESS

Discount

Discount with ESS


WHAT ABOUT OTHER REVENUE STREAMS

Energy arbitrage improves revenues, but it’s not enough. Let’s take advantage of ancillary services.


COMPETITIVE ELECTRICITY MARKETEnergy Market

(Arbitrage)Ancillary Services

Operating Reserve

Contingency Reserve

Spinning Reserve

Active

Standby

Non-Spinning (Supplemental)

Reserve

Active

Standby

Regulating Reserve

Active

Standby

Demand Response Load-Shed Service Black Start Service

▪ Ancillary Services is a closed market, so early adopters will win

- AESO procures:- ~240MW in Regulating Reserve (Act and Stby)

- ~330MW in Spinning Reserve (Act and Stby)

- ~255MW in non-Spinning Reserve (Act and Stby)

- AS needs will increase with renewable growth


FINANCIAL MODELING OF THE ESS

ElectricityMarket

EnergyStorage System

ESS Revenue

OptimizerRound-Trip Efficiency

Life Cycle

Nominal Energy &

Power

Opex & Capex

Capacity Maintenance Agreement

Basic Parameters of ESS

Perfect Knowledge

Market Forecast

Probability of Dispatch

Market Parameters

Output

Day-Ahead Bid Schedule


ARBITRAGE OPERATION – TYPICAL DAY #1

Revenue: $464.90

$0

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

MWh

Charge

Energy

SOC

Price


REVENUE STREAM OPTIMIZER – TYPICAL DAY #1

Revenue: $3,267.69

*hourly offering enabled

-10

-5

0

5

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20

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

MWh

Charge Energy Act Reg Act Spin Act Sup

Stb Reg Stb Spin Stb Sup SOC


ARBITRAGE OPERATION – TYPICAL DAY #2

Revenue: $8,321.49

$0

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Charge

Energy

SOC

Price


REVENUE STREAM OPTIMIZER – TYPICAL DAY #2

Revenue: $28,873.74

*block offering enabled

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MWh

Charge Energy Act Reg Act Spin Act Sup

Stb Reg Stb Spin Stb Sup SOC


ANNUAL AVERAGE PRICES FOR ANCILLARY SERVICES

AESO’s Annual Average Prices for Energy & Active Reserves from 2012 to 2018

$-

$10

$20

$30

$40

$50

$60

$70

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$90

2012 2013 2014 2015 2016 2017 2018

Pool Price Regulation Reserve Price

Spinning Reserve Price Supplemental Reserve Price


ESTIMATED ANNUAL REVENUES

Estimated annual revenue from 2012 to 2018 for a typical 10MW / 20MWh ESS operating in Alberta

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

$5,000,000

2012 2013 2014 2015 2016 2017 2018

Perfect Knowledge Market Forecast


ESS REVENUE OPTIMIZER VS ARBITRAGE

Estimated annual average revenue from 2012 to 2018 for a typical 10MW / 20MWh ESS operating in Alberta

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

Arbitrage ESS Revenue Optimizer

Perfect Knowledge Market Forecast


BENEFITS OF BEHIND-THE-FENCE PROJECTS

▪ Lower capital cost▪ Minimal impact on existing supply/demand contracts▪ Avoid ever-increasing demand tariffs▪ Simpler Behind-the-fence interconnection with utilities▪ Easier permitting and social licensing▪ Cost effective integration to central control system


TECHNO-FUTURE KEY TAKEAWAYS

▪ Storage is an effective technological solution to generate more revenues▪ Simple arbitrage strategies will not succeed ▪ Deep market knowledge will be an asset▪ Advanced data analytics knowledge will be required (Development & Operation)▪ Procurement of highly flexible technology and control system is a must▪ Artificial intelligence functions (neural networks) will unlock further profitability

- Improved forecasting accuracy

- Enhanced decision making (adaptive bidding strategy)

- Possibility to out-bid competitors

- …

bba.ca

MARTIN RHEAULTDIRECTOR, WIND, SOLAR AND [email protected]

behind-the-fence energy storage systems to … · estimated annual average revenue from 2012 to...

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