Last month, one of Australia’s three energy market regulating organizations, the Australian Energy Market Commission (AEMC), recommended much-needed rule changes, including one that would enable fast and flexible resources like battery-based energy storage, to participate in Australia’s National Energy Market (NEM).
We at Fluence applaud the move, because as grid operators and market participants across the United States, United Kingdom, Germany and others already know, energy storage provides vital balancing services and greater reliability at a lower cost.
Fast-response resources like storage are a key way to add flexibility to the electricity network, which both strengthens the capabilities of the existing system and drives out inefficient operating costs.
For example, UK transmission owner and operator National Grid estimated that the deployment of the Enhanced Frequency Response (EFR) market and use of storage to provide sub-second range frequency control on the UK grid would result in cost savings of £200 million.
I and members of my team contributed comments to AEMC’s effort, offering experience drawn from deploying projects in other markets facing similar grid transitions. I find working with countries like Australia, who are taking positive steps to transform their network, to be one of the most rewarding parts of my job.
As Australia and other countries work to adopt new market rules, I would like to offer three key insights that will help speed up adoption of flexible resources like energy storage onto their networks.
- Don’t start from scratch: multiple markets already designed to cope with reliability issues
Countries can get a head start by first looking at how other markets have approached incorporating resources like storage. The discussion we see happening now in the Australian market is oriented around defining the framework for this setup in the near future.
However, we already have the framework – multiple markets in the United States have already worked through issues surrounding utilizing and compensating energy storage to provide frequency control. In particular, PJM, the mid-Atlantic grid operator of the United States, has produced clear guidelines on how to compensate providers for fast-responding storage resourcesthat Australia can draw on.
When we first deployed battery-based storage to the PJM system in 2008, we were surprised to see the range of speed and control storage provided. In some instances, the signal from PJM and our system’s response looked like identical curves, to the point where we spot-checked twice to make sure that the data was correct. Other times, the storage assets performed much faster than was both required and compensated.
We worked closely with PJM to develop a market that recognized this extra benefit to the market, which led to our customer building an additional 62 MW of energy storage in the PJM market, delivering savings to consumers and addressing the regulation needs of the system overall.
While there are still areas for improvement in this market, a key lesson for others is to build on the lessons learned from other markets so as not to repeat those mistakes.
Additional regions – notably the UK market, Midwestern ISO and Southwest Power Pool in the U.S., and Japan – have since either already changed or are in the process of redefining frequency regulation markets and providing adequate incentives, so that fast-acting resources like storage can provide the service and get compensated for the level of service that they provide.
In every market and every case, battery-based energy storage’s ability to ramp up and discharge faster than traditional resources has come up as a consistent theme– so much so that in some cases, grid operators have had to change the traditionally slow signals being sent to generators or asked storage assets to operate in autonomous mode in order to fully utilize storage’s millisecond-range response time.
Storage provides faster, higher quality grid services with less capacity
While AEMC’s analysis identified a key need — that as “variability of supply and demand increases and amount of inertia decreases, the amount and speed of [Frequency Control Ancillary Services, or FCAS] response needed to keep system frequency within requirements … increases.”– meeting that need will require less megawatts of capacity if provided by storage rather than with traditional generation.
For example, before the implementation of ancillary service market changes, the PJM market used to roughly procure about 1,000-1,200 MW of frequency regulation (~1% peak demand) from traditional generation. With the introduction of fast-acting storage resources, the market ended up procuring about only 600-700 MW of regulation, a significant reduction in the amount of megawatts required to provide same or higher degree of frequency control.
In addition, research from Northern Ireland’s Queens University Belfast (QUB) – recently published in IEEE’s Transactions on Power Systems journal– found that battery-based energy storage can provide inertial response for system reliability much more efficiently, at a lower cost and with substantially reduced emissions than a much larger quantity of thermal generation. QUB’s research found this is especially true on systems with high levels of renewable generation.
Using operating data from the 10MW Advancion Energy Storage Array deployed in Carrickfergus, Northern Ireland, QUB’s research found that just 360MW of fast responding batteries would be able to provide the equivalent stabilization to Ireland’s All-Island electricity system as would normally be provided by 3,000MW of conventional thermal generation.
In addition, AEMC’s report points to how the Australian Energy Market Operator (AEMO) has constrained the system to prevent failures – specifically limiting power flows at critical interconnections between South Australia and Victoria to minimize how far and fast frequency could change if the interconnector were to fail and requiring a mimimum level of synchronous generation to remain online at all times.
If storage were deployed to add capacity, the interconnector could operate with higher power flows – providing more value – while providing “digital inertia” to protect the network.
We see this as a key opportunity for the Australian transmission system, where deploying storage at appropriate interconnection points could help protect the regional grid – limiting Rate of Change of Frequency (RoCoF) – while enabling operators to fully utilize available transmission capacity.
- We’re past “trials”: storage is already providing reliability services in ~50 countries to date
Lastly, in AEMC’s report, they note that the plan is to work with AEMO to trial resources to provide reliability services in Tasmania and on the mainland grid before expanding adoption. Energy storage “trials” ended nearly five years ago and nearly 4 GW of storage projects are now operating commercially since then in more than 50 countries around the world.
In fact, Fluence’s global fleet of deployed projects has already provided 5,500 GWh of delivered service some of which have already provided those services for 10 years.
End-customers deserve the cost savings and reliability benefits that energy storage brings today – not in 5 years after another round of “trials” is completed and evaluated. We’re happy to work with our customers to provide operating data, offer visits to these projects and share knowledge in ways that make it easier for Australia and other countries to integrate these types of storage projects into their market.
Final thought: prioritize the resources that best de-stress the system
As Australia works to implement these changes, we hope that the new rules would account for the accuracy, speed of response, and substitution factors between fast- and slow-responding resources, both as part of the compensation mechanism and the supply requirement for frequency regulation service during each hour.
Structuring the market to distinguish between these types of resources would reduce overall cost, by reducing the total amount of frequency regulation that is required in the market when faster and more accurate resources participate.
One of the market design principles moving forward should be that resources with faster ramp rates and that can follow control signals accurately should be compensated for the performance that they provide.
These fast-responding resources provide significant benefits to the system by reducing overall errors in frequency control and thereby reducing the total requirement for frequency regulation service. Performance can be measured by an accuracy score, speed of response, and ramp rate capability.
We look forward to working with AEMO and other stakeholders on these issues to help add reliability and make the Australian grid – the world’s longest single electricity network – more resilient during this time of remarkable transition. In addition, we look forward to working with other markets who are actively looking to transform their markets as well.
Kiran Kumaraswamy is a Market Applications Director at Fluence, a Siemens and AES company. In this role, he is responsible for identifying markets and applications that are attractive for energy storage development and educating potential customers on the benefits of energy storage. He holds an MS in Electrical Engineering from University of Wisconsin, Madison and a BS in Electrical Engineering from the University of Madras, India.
