A complex business case calls for sophisticated modeling.
Ralph Masiello is a senior vice president and Rick Fioravanti is vice president of storage applications and support at DNV KEMA.
As advanced technologies – such as electricity storage – reach commercial viability, entities looking to adopt and deploy the technology are challenged with creating a business case to justify their deployment. The challenge is two-fold. First, though the technology potentially might be a better solution, its cost could still be higher than the alternatives. Second, where the technology is being installed into a modern, flexible electricity grid that enables the technology to perform multiple applications, current modeling approaches might be unable to capture secondary benefits offered by the device. The challenges are driving integrators of storage to examine and re-examine how such technologies should be valued on the grid.
Traditionally, these distributed energy resources (DER) have been valued as single applications with narrowly defined attributes. Examples include rural installations where the generator provides reliability in place of a grid connection; backup generation for critical loads where traditional grid reliability and power quality are insufficient for some facility needs; or part of a top-down (state) or bottom up (customer) initiative to use renewable generation. In such cases, economic valuation could be a secondary driver compared to emissions or similar green drivers; or the economic valuation is dependent on tax incentive structures, such as feed-in tariffs or provisions for net metering.