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  • Energy storage as a clean resource for peak demand

    By Ted Ko, Director of Policy, Stem, Inc. March 22, 2018

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    Recently, several states have proposed a relatively new concept, a Clean Peak Standard, for meeting peak demand needs of the electrical grid with clean energy resources. The basic idea is similar to a Renewable Portfolio Standard (RPS) in that resources earn credits (dubbed Clean Peak Credits) for each KWh of clean energy delivered to the grid, but in this case, credits are only earned for energy delivered during specified hours of peak grid demand, known as the Clean Peak Window. Implementation of Clean Peak Standards will need to decide how much of the electricity discharged from energy storage during a Clean Peak Window qualifies for Clean Peak Credits. Unfortunately, the seemingly-intuitive answer—electricity stored from paired renewables such as solar and storage—is incorrect if the objective is to give credit to 100% clean energy and replace high-emissions energy generation with zero-emissions generation. The concept of using energy storage to shift clean energy (such as solar production) from off-peak periods to peak periods by physically “pairing” renewable generation with energy storage is often termed “making renewables dispatchable.” While laudable and useful for grid balancing, this is in fact not always 100% clean. This is because the cleanliness of energy discharged from a grid-connected energy storage device has nothing to do with paired renewable generation due to marginal unit accounting. The greenhouse gas (GHG) emissions associated with the charging of grid-connected energy storage are entirely determined by the “marginal generating unit” on the grid to which the storage is connected. Charging energy storage causes an incremental increase in demand on the grid and, as a result, the generator that is “on the margin” needs to increase its output to meet that demand. The GHG emissions associated with the technology producing that increased output is the “cleanliness” of the energy being stored. The above is true regardless of whether the storage is co-located with a renewable generator or not. Figure A, below, illustrates this point. By charging the standalone storage from the grid, the marginal unit needs to meet the increased load. By charging the storage from an associated renewable generator, the storage is diverting that solar supply from its injection to the grid, and a marginal generating unit needs to increase output to meet the decreased supply. Therefore, the energy being stored has the exact same GHG emissions as the standalone energy storage scenario. When the grid is experiencing an “overgeneration” of clean energy, then a clean generator is the marginal generating unit, and only then. During these conditions, the emissions from storage charging in either configuration (standalone storage or paired with renewables) are the same: both are zero emissions. But outside of a period when clean is on the margin, the marginal generating units are likely fossil-fueled. Thus, the degree to which energy storage counts as a clean resource for the Clean Peak Standard only depends on when the energy storage was charged, not whether the energy storage is paired with renewables. Therefore, any Clean Peak Standard implementation must give equal credit to standalone energy storage and storage paired with renewable generators. Figure A Retrofit vs New Build The description above assumes that storage is either added to an existing renewable generator (“retrofit”) or is added as standalone storage to the mix of existing generators that are elsewhere on the grid. Good public policy should next consider what scenarios exist where storage can enable new renewable generation to be built. In other words, to the extent the renewable generator would not have been built without the energy storage, the storage device should get credit for the emissions reduction caused by new renewables displacing fossil generation. This is known in GHG calculations as the “build margin”, as opposed to the “operating margin” that was described above. If the energy storage is shifting clean energy from off-peak to peak, then it should get full credit in the Clean Peak Standard. This is akin to unbundling RECs in an RPS regime. If storage qualifies for Clean Peak Credits based on this “new build” concept, then that physical pairing of storage with renewables is again unnecessary. A new renewable generator could contract with a storage installation somewhere else to shift energy on the grid from times when the renewable generator is producing to the Clean Peak Windows and thereby satisfy the Clean Peak requirements. This abstract concept of pairing resources by contract is termed “virtual pairing”. Key Design Elements for Storage Therefore, Stem presents the following recommended rules for energy storage eligibility in a Clean Peak Standard. Note that in all cases, the term “standalone storage” includes both single installations and aggregations of installations, e.g. an aggregated fleet adding up to a 1 MW resource is treated the same as a single 1 MW installation. For a storage resource that discharges 1 MWh during a Clean Peak Window, the resource gets up to 1 MWh credit, depending on how “clean” the charging energy was.
    • Where the storage is retrofitted to existing renewable generation or added standalone to the grid, storage should receive CPCs for Peak Discharge up to the amount of energy it charged during times when clean energy is on the margin (Clean-Margin Charge amount).
      • Example 1: Discharge on Clean Peak is 10 MWh; Charge on margin is 6 MWh = only 6 of the 10 MWh discharged was clean so earns CPC of 6 MWh
      • Example 2: Discharge on Clean Peak is 10 MWh; Charge on margin is 12 MWh (including 2 hours for other uses) = All of the 10 MWh discharged was clean so CPC of 10 MWh
    • Where the storage is enabling the build of new renewable generation, the co-located and standalone storage should receive CPCs for Peak Discharge up to the amount of energy it charged when the (virtually or physically) paired generator is producing (Renewable-Paired Charge amount).
      • Example 1: Discharge on Clean Peak is 10 MWh; Charge on paired production is 7 MWh = CPC of 7 MWh
      • Example 2: Discharge on Clean Peak is 10 MWh; Charge on paired production is 13 MWh = CPC of 10 MWh
      Co-located w/ Renewables Standalone Storage
    Retrofit / Existing generators CPC credit = Lesser of (Peak Discharge, Clean-Margin Charge) CPC credit = Lesser of (Peak Discharge, Clean-Margin Charge)
    New Build of Renewables CPC credit = Lesser of (Peak Discharge, Renewable-Paired Charge) CPC credit= Lesser of (Peak Discharge, Renewable-Paired Charge)
    • CPC = Clean Peak Credit
    • Peak Discharge = KWh of energy discharged by storage during Clean Peak Windows
    • Clean-Margin Charge = KWh of energy used to charge storage that occurred during times when clean energy is the marginal generator
    • Renewable-Paired Charge = KWh energy used to charge storage that occurred when a (physically or virtually) paired, new build renewable generator was producing more KW than the charging KW of the storage
    • Credit awards: Clean Peak credits measured on monthly cycles