Energy storage - the ability to store electricity and deliver it to the grid as needed - has the potential to create great value for society. New technologies, ranging from batteries to mechanical flywheels, are expanding options for energy storage. Now, a federal rule issued last week known as Order No. 784 significantly expands opportunities for energy storage providers to capitalize on these advances.
Traditionally, electricity has been difficult to store. While society has been able to generate electricity for over a century, technologies to store that electricity once it has been generated have been elusive. As a result, electric grid operators have needed to balance the supply and demand for electricity in real-time, leading to costly inefficiencies like the continual need to ramp generators up and down. To keep the grid balanced, grid operators rely on so-called "ancillary services" like regulation and frequency response made possible by fine-tuning generators' output -- or now by energy storage technologies.
Despite recent federal rulings like the Federal Energy Regulatory Commission's Order No. 755 enabling enhanced compensation for energy storage, the market for energy storage has been restricted by regulation. Until last week, the Federal Energy Regulatory Commission restricted third parties from selling ancillary
services at market-based rates to public utility transmission providers under a 1999 ruling known as the Avista order. Under Avista, transmission customers had two choices for how to procure their share of the grid's ancillary services. First, customers could purchase ancillary services from their local public utility. Second, customers could self-supply regulation and frequency response services - but could only do so from resources deemed comparable to those used by their public
utility. This restriction stripped away the benefit of self-supplying ancillary services because customers couldn't tailor their purchase of regulation and frequency response services to their own needs, but rather had to buy services based on their transmission
provider's overall resource mix. For example, customers were powerless to choose resources that could respond more quickly or more accurately than those used by their utility, meaning customers faced the risk of buying too much - or too little - ancillary services.
Order No. 784 significantly reforms the Commission's ancillary service regulations. By November, public utilities must take into account the speed and accuracy of regulation
resources, which opens the door for
greater efficiency in transmission customers' purchase of regulation resources. For example, Order No. 784 allows customers to save money by buying a smaller amount of faster or more accurate energy storage
resources.
This flexibility creates a premium value for providers of these fast or accurate energy storage solutions. Order No. 784 also eases the barriers for third-party entry into ancillary service markets, and revises accounting and
reporting requirements to improve market transparency and better account for public utilities' use of energy storage devices.
Order No. 784 creates significant opportunities for utility customers, as it opens the door for lower-cost and more precise ancillary services. The order also creates opportunities for innovative companies developing and implementing energy storage technologies like batteries, compressed air, and flywheels, as Order No. 784 both increases consumer demand for these technologies and reduces developers' barriers to entry into the markets.
For more information about Order No. 784 and the opportunities it creates, contact Todd Griset at Preti Flaherty at 207-623-5300.
Energy powers society; society's choices shape energy policy. A blog about our energy resources and the choices they present for society.
Showing posts with label 755. Show all posts
Showing posts with label 755. Show all posts
Flywheel co Beacon Power sold
Wednesday, February 8, 2012
Flywheel-based energy storage developer Beacon Power Corp. may have a new lease on life, as private equity firm Rockland Capital proposes to buy the bankrupt company for $30.5 million.
Beacon Power patented a composite flywheel technology for use in balancing supply and demand on the nation's electric grid, an application known as frequency regulation. Unless this balance is maintained in real-time, problems can arise ranging from poor power quality to blackouts and safety hazards. Historically, grid operators controlled the output of electric generators to maintain this balance, but flywheels and other energy storage technologies may be able to smooth out disturbances on the grid more , more cost-effectively, and with fewer environmental impacts.
Beacon Power's business model has involved building, owning, and operating flywheel-based frequency regulation plants on a merchant basis. Indeed, Beacon Power describes itself as "a global leader in the development and commercialization of flywheel-based energy storage solutions for grid-scale frequency regulation services and other utility-scale and unitary energy storage applications."
In August 2010, Beacon Power received a $43 million loan guarantee through the U.S. Department of Energy's loan program office. That financing helped Beacon Power develop its 20 MW flywheel project in Stephentown, NY. But in October 21, Beacon Power filed for Chapter 11 in federal bankruptcy court.
At about the same time, federal regulators changed the way grid operators pay for frequency regulation. FERC Order No. 755 required grid operators to pay more for fast-responding frequency regulation -- just the kind of service that flywheel operators like Beacon Power may be able to provide best.
Now, Rockland Power proposes to pick up where Beacon left off, buying Beacon's assets for $5.5 million cash and a $25 million promissory note to the DOE. Rockland says that it intends to continue operating the Stephentown plant and developing a second facility in Hazle Township, Pennsylvania. Order 755 has given the energy storage industry a needed boost, which may be enough to let Rockland succeed with flywheel energy storage.
Beacon Power patented a composite flywheel technology for use in balancing supply and demand on the nation's electric grid, an application known as frequency regulation. Unless this balance is maintained in real-time, problems can arise ranging from poor power quality to blackouts and safety hazards. Historically, grid operators controlled the output of electric generators to maintain this balance, but flywheels and other energy storage technologies may be able to smooth out disturbances on the grid more , more cost-effectively, and with fewer environmental impacts.
Beacon Power's business model has involved building, owning, and operating flywheel-based frequency regulation plants on a merchant basis. Indeed, Beacon Power describes itself as "a global leader in the development and commercialization of flywheel-based energy storage solutions for grid-scale frequency regulation services and other utility-scale and unitary energy storage applications."
In August 2010, Beacon Power received a $43 million loan guarantee through the U.S. Department of Energy's loan program office. That financing helped Beacon Power develop its 20 MW flywheel project in Stephentown, NY. But in October 21, Beacon Power filed for Chapter 11 in federal bankruptcy court.
At about the same time, federal regulators changed the way grid operators pay for frequency regulation. FERC Order No. 755 required grid operators to pay more for fast-responding frequency regulation -- just the kind of service that flywheel operators like Beacon Power may be able to provide best.
Now, Rockland Power proposes to pick up where Beacon left off, buying Beacon's assets for $5.5 million cash and a $25 million promissory note to the DOE. Rockland says that it intends to continue operating the Stephentown plant and developing a second facility in Hazle Township, Pennsylvania. Order 755 has given the energy storage industry a needed boost, which may be enough to let Rockland succeed with flywheel energy storage.
FERC Order 755 promotes energy storage
Wednesday, December 21, 2011
New technologies have the promise to help electric grid operators perform the challenging task of balancing supply and demand at all times. This means making sure there the exact amount of electricity is being generated across the region as is demanded by consumers at that very moment. Line losses and the constraints of each local transmission and distribution system add complication. If the grid gets out of balance, problems arise with the electricity's frequency and power quality. In the worst case, failure can lead to cascading blackout, and safety can be at issue.
Historically, the balancing act has involved sending coordinated dispatch instructions to generators and demand response resources. Rules typically guide the grid operator in telling individual generating units to operate at specific levels. For example, flows through hydroelectric turbines can be varied, or fuel can be added to boilers or combustion turbines at a faster or slower rate. Through careful management, these conventional generation resources have been used to balance supply and demand, providing services known as frequency response and frequency regulation.
Though it is partly automated and well-practiced, this conventional resource dispatch process does take some time to take effect. Energy storage technologies such as flywheels, and batteries can not only provide frequency regulation, but can engage and ramp up much faster than conventional resources can. These faster-ramping resources could provide the grid relief in real time, as opposed to ramping up more slowly like conventional generation.
In most US markets, providers of efficient fast-ramping frequency regulation have been compensated the same as when conventional units provide regulation service, even when using fast-ramping resources is more efficient. At times this has meant that conventional resources have been dispatched when fast-ramping ones would have been lower-cost (and less polluting). For these reasons, this October the Federal Energy Regulatory Commission found that the current frequency regulation compensation practices "result in rates that are unjust, unreasonable, and unduly discriminatory or preferential."
In Order No. 755, FERC issued a final rule requiring the grid operators in organized markets to compensate frequency regulation resources based on the actual service they provide. Under Order 755 (123 page PDF), this must include separate payments for capacity (the marginal unit’s opportunity costs of being available) and for your actual performance.
Winners under Order 755 include providers of fast-ramping frequency response. These could include developers and operators of flywheel energy storage companies like Beacon Power, battery storage facilities, and compressed air energy storage, and other resources still in the conceptual phase. Winners also include energy consumers in the markets affected by Order 755, who should benefit from lower costs through improved operational and economic efficiency.
Historically, the balancing act has involved sending coordinated dispatch instructions to generators and demand response resources. Rules typically guide the grid operator in telling individual generating units to operate at specific levels. For example, flows through hydroelectric turbines can be varied, or fuel can be added to boilers or combustion turbines at a faster or slower rate. Through careful management, these conventional generation resources have been used to balance supply and demand, providing services known as frequency response and frequency regulation.
Though it is partly automated and well-practiced, this conventional resource dispatch process does take some time to take effect. Energy storage technologies such as flywheels, and batteries can not only provide frequency regulation, but can engage and ramp up much faster than conventional resources can. These faster-ramping resources could provide the grid relief in real time, as opposed to ramping up more slowly like conventional generation.
In most US markets, providers of efficient fast-ramping frequency regulation have been compensated the same as when conventional units provide regulation service, even when using fast-ramping resources is more efficient. At times this has meant that conventional resources have been dispatched when fast-ramping ones would have been lower-cost (and less polluting). For these reasons, this October the Federal Energy Regulatory Commission found that the current frequency regulation compensation practices "result in rates that are unjust, unreasonable, and unduly discriminatory or preferential."
In Order No. 755, FERC issued a final rule requiring the grid operators in organized markets to compensate frequency regulation resources based on the actual service they provide. Under Order 755 (123 page PDF), this must include separate payments for capacity (the marginal unit’s opportunity costs of being available) and for your actual performance.
Winners under Order 755 include providers of fast-ramping frequency response. These could include developers and operators of flywheel energy storage companies like Beacon Power, battery storage facilities, and compressed air energy storage, and other resources still in the conceptual phase. Winners also include energy consumers in the markets affected by Order 755, who should benefit from lower costs through improved operational and economic efficiency.
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