Powerstar CEO Alex Mardapittas discusses how demand-side response through energy storage is set to develop as the energy transition progresses
An effective way of participating in demand-side response is through investment in leading-edge battery energy storage technology.
An energy storage asset, when connected to the grid, can manage demand through an intelligent energy management system. It enables the smart and flexible use of energy and rapid response to grid events. This can include access to DSR contracts such as Firm Frequency Response (FFR), Enhanced Frequency Response (EFR) and, until it was recently suspended, the Capacity Market to provide revenue for the site.
As well as providing DSR, energy storage can also help provide backup to the site in the case of any energy-related failures that occur throughout the energy network. Energy storage solutions, such as Powerstar Virtue, have the ability to provide integrated full uninterruptible power supply (UPS) capabilities that can support the load in the event of an energy-related failure. In some cases, this response can be seamless – in less than a millisecond.
This next generation of UPS is able to provide site-wide protection rather than system specific protection, which means the entirety of the site can be protected from energy-related failures rather than the protection being limited to specific systems, such as IT, which is the norm in traditional UPS systems.
As the energy transition progresses and the need for the National Grid to use DSR increases as the energy network becomes more decentralised and distributed across many smaller sources rather than concentrated in a few large power plants, the potential for energy-related failures is set to increase.
The ability of some energy storage solutions to provide enhanced energy resilience through full UPS capabilities alongside DSR is especially important due to the increasing demand for energy and heightened expectations for businesses to be operational at all times – any disruption to the energy supply could be significantly costly for both a company’s finances and its reputation.
When considering investment in DSR assets, the wider business case should be considered as there are additional benefits that certain energy storage solutions can provide.
One of these, in the case of Powerstar Virtue, is the ability to integrate patented voltage regulation technology. This ensures that all of a site’s electrical equipment is operating at an optimal level close to its design characteristics. The presence of voltage regulation results in reduced energy consumption and costs as well as prolonging the life of electrical equipment.
The wider business case can add robustness to the decision to invest in assets that can provide DSR as it is an evolving market.
Potential Capacity Market amendments
An example of an evolution within DSR can be found in the suspension of the Capacity Market mechanism, which was introduced by the British government in 2014 to provide an insurance policy against the possibility of future energy-related failures, such as brownouts and blackouts, to ensure that customers continue to benefit from reliable electricity supplies.
The Capacity Market was brought to a surprising halt in November 2018, when the European Court of Justice annulled the European Commission’s decision not to object to the Capacity Market. This immediately suspended the Capacity Market.
The suspension came after a challenge from Tempus Energy, which claimed that the Capacity Market privileges generation over DSR providers in a discriminatory and disproportionate manner.
The challenge essentially argued that less sustainable types of generation receive greater rewards than low-carbon alternatives, such as DSR providers that use energy storage, and that the Capacity Market failed to sufficiently incentivise businesses to reduce their consumption during demand peaks, which is again a less favourable outcome for smarter and cleaner technologies such as energy storage.
It is likely that the Capacity Market will need to be amended to remove this seemingly structural bias against DSR and cleaner energy before the suspension can be lifted.
This is good news for assets such as energy storage, which support the transition to cleaner sources through storing energy from renewables at times of excess generation for later use.
Potential amendments that have been implemented in other markets, such as in France and Poland, gave preference to low-carbon generators and greater access to DSR asset owners.
Enhanced business case
This potential greater access to the Capacity Market for DSR asset owners will further increase the revenues that can be achieved from owning an energy storage solution. In addition to the savings that the solution can provide through reducing energy costs and increasing energy resilience, alongside the expected increase in value of DSR processes such as energy arbitrage, the business case for energy storage is set to be enhanced further.
The importance to the UK electricity system of balancing the network through DSR is almost impossible to overstate. The balancing of the network enables the reliable supply of electricity, and for the economy of the UK and the everyday lives of its citizens to continue as normal. Through the energy transition, it is crucial that the balancing of the network also transitions in a way that best suits the changing energy landscape in order to best support the new ways in which energy will be transmitted, distributed and consumed.
Energy storage is a vital component in balancing the network as it provides users with the flexibility required to partake in DSR while securing their own operations through site-wide UPS. The value of such technologies is enhanced when bespoke solutions can be made, which enable customers to select the features that are most relevant to their operations.