Although today microgrids serve a tiny fraction of the market, that share will grow as costs fall. Utilities can benefit if they plan ahead.
Storage Steps Up
storage close to load centers, or on the right side of a transmission constraint. Not everyone wants to live next to a fossil plant. Plus, you’ve got emissions, siting and permitting issues, including a water supply for cooling. Storage takes many of those issues off the table.
FPP In September Duke announced it will add another 400 MW of wind capacity at its Los Vientos plant in Texas. Any plans for including storage there?
Gates: We’re always looking to install storage where it makes sense, but that’s really a market-design question.
State renewable portfolio standards (RPS) represent an annual GWh target, so X percent of the retail load in a given year needs to come from renewables. But there’s generally no requirement for when those MWh are delivered. It’s for ERCOT or the ISO to determine. And if you sign a PPA for output, the buyer wants the lowest-cost power, and adding storage adds cost. So in a market like ERCOT, it’s difficult to add storage to an integrated renewables project because the cost-recovery mechanism is in two different buckets. However, more and more customers are starting to realize the value storage can provide, and are starting to ask how it can be included.
Hawaii or Puerto Rico – which have very small island grids – require the developer to include storage. You must deliver ramp control and firm output to connect to the grid because a large renewable project on a small grid could cause major stability problems. In markets like that, the rules require storage to be part of a renewable project.
In California, rather than impose the burden on the generator, they’re developing a market mechanism that will incentivize fast ramping resources. They’re basically telling generators if they can provide the flexibility of fast ramping, then the ISO will have a ramping product specifically for that.
In the Carolinas, where Duke operates as a traditional vertical utility, we control the entire value chain from generation through to the end customer. There are no price signals for frequency regulation or flexibility, so the way a vertically integrated utility looks at the issue is different from an IPP in a structured market like ERCOT. There is no question storage can provide value here; it is a question of defining that value, and developing the regulatory framework to allow storage to be included as part of the utility portfolio.
FPP Based on the success at Notrees and FERC orders 755 and 784, could storage technologies someday affect the way power producers evaluate and operate their generating assets – in particular, slower-responding fossil assets in RTOs and ISOs that rely on them to supply ancillary services like frequency regulation?
Gates: That’s the vision we have. And now that more storage is being deployed, more people are asking that question.
If you’re an electric utility in a regulated market, it comes down to how storage is viewed by the utility and the regulatory body. If utilities incorporate storage into their planning today, how do they value that so that regulators will see that it