On the Effectiveness of Using Energy Storage in Internal Grids

Abstract

Change in the structure of generation associated with a large-scale adoption of renewable energy calls for more “flexible” power systems. This can be addressed by energy storage systems (ESS), research has shown. This paper substantiates the need to devise and adopt novel mechanisms of payment for ESS services so that the ESS industry could evolve further, and more production, design, and operation practices could emerge. The paper further presents thirteen services, each of which can drive return on ESS investment. The authors analyze how ESS's could be used to reduce peak loads and costs of power purchasing from electricity consumers; for proof, the paper shows a projection of return on ESS investment for an existing company. This analysis shows that given the current ESS equipment prices, electricity rates, and power purchase rates, investment in ESS can pay off within timeframes that ESS owners/investors may find borderline attractive. The further an ESS connection point is located from the end user's electricity-consuming equipment, the fewer return on investment (ROI) mechanisms are available. The paper shows that a properly configured charge/discharge algorithm for ‘behind-the-meter’ ESS's is a win-win. It therefore concludes with recommendations on how to use ESS's more efficiently and generate ROI faster.