Battery storage transforming the electric power grid

Following up to “Lowering peak energy demand with a bank of lead-acid batteries in the basement“, see McKinsey report “Battery storage: The next disruptive technology in the power sector” by David Frankel and Amy Wagner.

Solar customers are paying for their own energy but not paying for the full reliability of being connected to the grid. The utilities’ response has been to design rates that reduce the incentive to install solar by moving to time-of-use pricing structures, implementing demand charges, or trying to reduce how much they pay customers for the electricity they produce that is exported to the grid.

However, in a low-cost storage environment, these rate structures are unlikely to be effective at mitigating load losses. This is because adding storage allows customers to shift solar generation away from exports to cover more of their own electricity needs; as a result, they continue to receive close to the full retail value of their solar generation. This presents a risk for widespread partial grid defection, in which customers choose to stay connected to the grid in order to have access to 24/7 reliability, but generate 80 to 90 percent of their own energy and use storage to optimize their solar for their own consumption.

and

The grid is a long-lived asset that is expensive to build and maintain. Fixed fees for grid access are unpopular with consumers, and regulators are therefore not particularly keen on them, either. However, imposing fixed fees could ensure that everyone who uses the grid pays for it. The volumetric or variable rate structure in general use today is a historical construct. People are used to paying for the energy they use. But as more and more customers generate their own energy, the access to the grid for reliability and market access becomes more valuable than the electrons themselves.

and

Utilities must radically change their grid-system planning approaches. […] Storage can be a unique tool in support of this. The straight economics of changing grid planning, with respect to return on capital, may not look different at first glance. But, because storage is more modular and can be moved more easily, the risk-adjusted value is likely to be much higher. That will enable utilities to adapt to uncertain needs at the circuit level and also to reduce the risk of overbuilding and stranded investments.

Advertisements

Tell me (anonymous OK)

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s