This week, Metering.com analyses energy storage as a service market in the US.We look at factors both positively and negatively impacting on energy storage as a service market.
We spoke with Tanuj Deora, Executive Vice President and Chief Content Officer at the Smart Electric Power Alliance (SEPA).
1. What is your definition of energy storage-as-a-service?
We tend not to talk about storage-as-a-service; it’s a standard business model for other grid assets, at least in the United States. For example, we don’t talk about generation-as-a-service; we talk about power purchase agreements (PPAs) or feed in tariffs (FITs).
A simple way to think about energy storage would be independent/third party asset deployment and ownership, vs. direct customer or direct utility ownership.
2. An overview of the regional energy storage-as-a-service market.
In the meantime, SEPA’s 2017 Utility Energy Storage Market Snapshot contains data from utilities on the entirety of the US energy storage market, which saw 207MW, 257MWh of energy storage added to the grid in 2016.
3 . What are some of the factors driving the market? Which factors are negatively impacting on the market?
In the US, a few issues are making third party (or ESaaS) particularly attractive for energy storage, most notably, individual consumers are unlikely to have the sophistication to fully understand, value, and monetise energy storage given the variety of value streams that can be “stacked.” Utilities have this sophistication, but the risk and uncertainty of the value and revenue recovery opportunities have meant they are more cautious that third parties may be.
Another factor that seems to be negatively impacting the market at this time is the uncertainty around wholesale market rules for aggregation of distributed energy resources (DERs), including storage.
If smaller storage units could be effectively aggregated and compete within the bulk market, we could see a lot more penetration as those other “stacked” values are realised. This is addressed in a report we published last month with EEI, “DER Aggregations in Wholesale Markets.”
4. What are some of your recommendations that can be implemented to boosts the market?
The primary opportunity is for market players (utilities, regional transmission organisations, distribution system operators, regulators, third parties, etc.) to work together to develop tools and policies to identify and value precisely the variety of value streams that can be stacked to support energy storage deployment. And of course any work - research, deployment, pilots, etc. -- that can help drive down costs and increase value is always helpful.
5. What are some of the advantages of energy storage as-a-service over ordinary storage solutions?
Third-party ownership can provide (a) new sources of capital, (b) additional expertise and creativity, and (c) more options to try innovative technologies and business models that differ from current customer or utilities business models.
6. Do you believe that the ‘as a service’ concept will become more prominent than other options?
As mentioned before, it’s already a model broadly applied in generation today, both at the bulk power scale (through PPAs) and distributed scale (PPAs and FITs.) Whether it becomes the dominant deployment model will depend very much on broader answers to questions about moving to a more transactive grid versus the utility playing a more central role in DER deployment.
Energy storage in general
Meanwhile, a study recently conducted by Navigant Research highlights that utilities will increase deployment of energy storage systems to reduce energy transmission and distribution infrastructure costs.
The energy market research firm forecasts utilities in North America to deploy over 14,000MW of energy storage capacity between 2017 and 2026.
According to Navigant, utilities will employ distributed energy resources to avoid the costs of building new energy delivery lines, substations and related infrastructure and technologies.The extent at which US utilities are realising the value of energy storage continue to increase evidenced by the inclusion of projects in companies’ Integrated Resources Plans (IRP).
In previous years, majority of energy storage projects have been deployed as pilots and constructed systems have been commissioned to utilities by project developers. This year, the market witnessed an increase in energy providers marking energy storage a main focus.For instance, the Portland General Electric has five energy storage projects included in its 2017 IRP under efforts to meet a target of 5MWh by 2020 in line with recommendations set by the Oregon Public Utility Commission.
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