Infrastructure and Market Implications of Energy Storage For

Electricity Markets in Europe and AsiaForFor

AESO Energy Storage Inquiry, September, 12, 2013; Calgary, Alberta

By

Magdalena AK MuirResearcher, Arctic Institute of North AmericaAssociate Professor, Aarhus University, and Adjunct Professor, Johns Hopkins University

Presentation Outline Presentation Outline

European Energy European Energy Storage:Storage:--UK UK Leighton Buzzard Leighton Buzzard Substation Case StudySubstation Case Study

Asian Energy StorageAsian Energy Storage::

-- JapanJapan-- JapanJapan

-- Korea Korea

--AustraliaAustralia

Observations on infrastructure Observations on infrastructure

and market implications and market implications

DG Energy Working Paper: The Future DG Energy Working Paper: The Future

Role and Challenges of Energy StorageRole and Challenges of Energy StorageKey role in enabling the EU to develop a lowKey role in enabling the EU to develop a low--carbon carbon electricity system by providing more flexibility electricity system by providing more flexibility and balancing to the grid, as well as backand balancing to the grid, as well as back--up to up to renewable energy. renewable energy.

Locally, to improve distribution network Locally, to improve distribution network management, reduce costs & improve efficiency. management, reduce costs & improve efficiency. management, reduce costs & improve efficiency. management, reduce costs & improve efficiency.

The paper stated that energy storage can The paper stated that energy storage can

-- Ease market introduction of Ease market introduction of renewablesrenewables, ,

-- Accelerate deAccelerate de--carbonisationcarbonisation of the grid, of the grid,

-- Improve security and efficiency of transmission Improve security and efficiency of transmission and distribution, and distribution,

-- StabiliseStabilise market prices for electricity, and market prices for electricity, and

-- Ensure higher security of energy supplyEnsure higher security of energy supply

Status of EU Energy StorageStatus of EU Energy Storage

Limited storage in the EU energy system Limited storage in the EU energy system

(around 5% of total installed capacity) (around 5% of total installed capacity)

almost exclusively from pumped hydroalmost exclusively from pumped hydro--

storage, mainly in mountainous areas. storage, mainly in mountainous areas.

Other Other forms of energy storage forms of energy storage –– batteries, batteries,

electric cars, flywheels, hydrogen, chemical electric cars, flywheels, hydrogen, chemical

storage storage -- have limited market penetration or have limited market penetration or

at an early stage of developmentat an early stage of development..

Necessary to considerNecessary to consider

Importance of EU Energy Storage Importance of EU Energy Storage

Decisions Decisions to invest in the development and to invest in the development and

deployment of adequate storage capacity will deployment of adequate storage capacity will

depend on the evolution of the energy depend on the evolution of the energy

system. Closely linked to developments like: system. Closely linked to developments like:

(a) electricity super(a) electricity super--highways with largehighways with large--(a) electricity super(a) electricity super--highways with largehighways with large--scale renewable energy systems in North scale renewable energy systems in North Sea and North Africa combined with Sea and North Africa combined with distributed and regional solutions; distributed and regional solutions;

(b) penetration of electric vehicles; and (b) penetration of electric vehicles; and

(c) improvements in demand response, (c) improvements in demand response, demand side management and smart grids.demand side management and smart grids.

Economic Challenge for EU StorageEconomic Challenge for EU Storage

Economics Economics is main challenge, and is main challenge, and

variesvaries depending on where the storage depending on where the storage

is needed (generation, transmission, is needed (generation, transmission,

distribution distribution or at customers level). or at customers level).

Economic Economic benefits to owners and users benefits to owners and users

will depend on storage location.will depend on storage location.

Uncertainty around value due to Uncertainty around value due to

compensation, innovative business compensation, innovative business

models, and storage ownership. models, and storage ownership.

EU Grid EU Grid Integration ChallengeIntegration Challenge

Storage is not a standStorage is not a stand--alone alone

technology and must be considered technology and must be considered

with grid infrastructure.with grid infrastructure.

Storage will complement other ways Storage will complement other ways

of improving grid flexibility. of improving grid flexibility. of improving grid flexibility. of improving grid flexibility.

Integrated measures are needed Integrated measures are needed

-- Large Large centralisedcentralised storage, storage,

-- Small Small decentraliseddecentralised storage, storage,

-- Flexible generation systems, andFlexible generation systems, and

-- BackBack--up capacity.up capacity.

UK Leighton Buzzard SubstationUK Leighton Buzzard Substation

6 MW/10 6 MW/10 MWhMWh Smarter Network Storage Smarter Network Storage

Battery Technology Project involves Battery Technology Project involves

S&CS&C Electric Europe, Samsung SDI and Electric Europe, Samsung SDI and

YounicosYounicos on UK Power Networks substationon UK Power Networks substation

Project has technical and commercial aspectsProject has technical and commercial aspects

--Deploy largeDeploy large--scale distributionscale distribution--based storagebased storage

--Implementation of smart Implementation of smart optimisationoptimisation & control & control

system to manage & system to manage & optimiseoptimise storage flexibilitystorage flexibility

--Innovative commercial arrangements to support the Innovative commercial arrangements to support the

shared use of energy storage in providing wider shared use of energy storage in providing wider

system benefits (standby reserve and frequency)system benefits (standby reserve and frequency)

--Assessment & validation of value of storage.Assessment & validation of value of storage.

..

UK Leighton Buzzard UK Leighton Buzzard Substation ImplementationSubstation Implementation

UK Leighton Buzzard UK Leighton Buzzard Substation Cost AnalysisSubstation Cost Analysis

Funding Funding of £13.2 of £13.2 Million ($22C Million) Million ($22C Million)

by by OfgemOfgem, under The Low , under The Low Carbon Networks Fund Carbon Networks Fund

scheme for the period of Jan 2013 scheme for the period of Jan 2013 to to Dec 2016.Dec 2016.

Income forecast for project from short term Income forecast for project from short term

operating reserve and frequency response, and operating reserve and frequency response, and

displacement of generation capacitydisplacement of generation capacity

Anticipated future UK energy storage benefits:Anticipated future UK energy storage benefits:

Research Research from Imperial College, identifies from Imperial College, identifies

savings savings from energy storage of £3bn a year by from energy storage of £3bn a year by

the the 2020s 2020s , , based on based on 2GW 2GW of energy storage.of energy storage. The The

value value increases increases with with increasing increasing renewable renewable

generationgeneration, with savings of £10bn a year identified , with savings of £10bn a year identified

towards towards 2050, based on 25GW of 2050, based on 25GW of energy storage.energy storage.

Energy Storage In JapanEnergy Storage In Japan

Japanese Ministry of Economy, Trade and Japanese Ministry of Economy, Trade and

Industry announced largeIndustry announced large--scale storage scale storage

batteries for electricity grid substations.batteries for electricity grid substations.

Tohoku Electric Power will install largeTohoku Electric Power will install large--scale scale

Storage batteries (lithiumStorage batteries (lithium--ion batteries) at ion batteries) at

NishiNishi--Sendai substation. Hokkaido Electric Sendai substation. Hokkaido Electric

Power and Sumitomo Electric Power and Sumitomo Electric IndisutriesIndisutries will will

install storage batteries (install storage batteries (redoxredox flow flow

batteries) in Minami batteries) in Minami HayakitaHayakita substation.substation.

The companies will cooperate to increase The companies will cooperate to increase

renewable energy in the Hokkaido area.renewable energy in the Hokkaido area.

Map ofMap of Japan Electricity Distribution Japan Electricity Distribution Network with Different Regional Systems Network with Different Regional Systems

Japanese Japanese Electricity Electricity Market ImplicationsMarket Implications

Japan plans to unbundle transmission and Japan plans to unbundle transmission and

distribution , as 1distribution , as 10 regional power 0 regional power

companies own more than 70 percent of companies own more than 70 percent of

generation and control transmission and generation and control transmission and

distribution networks. distribution networks.

Smaller companies such as Marubeni and Smaller companies such as Marubeni and

Softbank will be more willing to invest in Softbank will be more willing to invest in

renewable renewable energy under new framework.energy under new framework.

Residential solar customers Residential solar customers also have also have option option

oof storing f storing energy from solar systems to use energy from solar systems to use

to offset timeto offset time--ofof--use electricity rates.use electricity rates.

Energy Storage in Energy Storage in South KoreaSouth KoreaSouth Korea government is considering South Korea government is considering

mandatory use of energy storage mandatory use of energy storage andand

management systems by companies and management systems by companies and

public offices that consume electricity.public offices that consume electricity.

Private companies will store energy in offPrivate companies will store energy in off--

peak times when supply and prices are low, peak times when supply and prices are low, peak times when supply and prices are low, peak times when supply and prices are low,

and sell excess power back to the market.and sell excess power back to the market.

Government will revise Government will revise current electricity current electricity

ratesrates, widening the gap between , widening the gap between highest highest and and

lowest lowest amounts paid, to allow amounts paid, to allow higher higher uptake uptake

when when demand is demand is low.hislow.his approach will approach will

encourage greater renewable generation.encourage greater renewable generation.

South Korea Electricity GenerationSouth Korea Electricity Generation

Energy Storage in AustraliaEnergy Storage in AustraliaEnergy storage study by Clean Energy Energy storage study by Clean Energy

Council considers energy storage to support Council considers energy storage to support

existing networks, facilitate the efficient existing networks, facilitate the efficient

operation of electricity markets, improve the operation of electricity markets, improve the

stability of our grid, and meet needs of stability of our grid, and meet needs of

remote communities and a customers. remote communities and a customers.

Commercial storage options considered are:Commercial storage options considered are:

Supporting Fringe and Remote Electricity Supporting Fringe and Remote Electricity

Systems, Network Support, Market Systems, Network Support, Market

Participation, Grid Stability, Residential Participation, Grid Stability, Residential

Storage, and Business Storage.Storage, and Business Storage.

Australia Electricity Australia Electricity MarketMarket

Observations on Observations on Infrastructure Infrastructure and and

Market Implications of Energy StorageMarket Implications of Energy StorageUse, value and location of energy Use, value and location of energy

storage depends on electricity storage depends on electricity

transmission and market designtransmission and market design

EElectricity markets & infrastructurelectricity markets & infrastructure

mmay change ay change for energy for energy storage.storage.mmay change ay change for energy for energy storage.storage.

Economic Economic challenges of storage may challenges of storage may

equal to technological challengesequal to technological challenges..

Replicable models of public Replicable models of public --private private

partnership for pilot energy storage partnership for pilot energy storage

projects from Europe, UK, and Asia.projects from Europe, UK, and Asia.

AcknowledgementsAcknowledgements::

This energy storage research is occurring under the This energy storage research is occurring under the

Sustainable Energy Development Project Sustainable Energy Development Project of of the the

Arctic Institute of North America, Aarhus University Arctic Institute of North America, Aarhus University Arctic Institute of North America, Aarhus University Arctic Institute of North America, Aarhus University

((HerningHerning) and Johns Hopkins ) and Johns Hopkins UniversityUniversity..

Further information on energy storage available at:Further information on energy storage available at:

http://www.arctic.ucalgary.ca/research/sustainablhttp://www.arctic.ucalgary.ca/research/sustainable_energy_developmente_energy_development

http://www.arctic.ucalgary.ca/files/arctic/Energyhttp://www.arctic.ucalgary.ca/files/arctic/EnergyStorageWeblinks.pdfStorageWeblinks.pdf