From California to the Caribbean: Sharing Expertise on Developing Energy Storage for Grid Applications in Island Nations

Island nations seek innovative and urgent solutions to accelerate the deployment of clean, sustainable solutions to reduce electricity costs, improve grid reliability, and enhance the resilience of their electricity systems against extreme natural and man-made events. Many small island developing states (SIDS) have already initiated a clean energy transition by tapping into solar, wind, geothermal, hydroelectric, and other renewable energy resources to supply their electricity needs cheaply and reliably. However, energy storage is a vital component remaining to be incorporated into many island electricity grids, as it can support renewable energy integration, deliver frequency regulation services to the grid, and provide spinning reserve in lieu of expensive fossil fuel generators, among other things. The versatility of energy storage systems (ESS), in addition to the declining costs of storage technologies like batteries, creates a value proposition to increase its deployment in SIDS. So, it’s important to understand fundamental ESS information, the nuances associated with its project development, and the significant role storage can play on electricity grids in islands.

The 2019 Energy Storage North America (ESNA) Conference, held November 5–7 in San Diego, provided an opportunity for utilities, regulators, developers, manufacturers, and other interested stakeholders to acquire insights on the current energy storage market, the vast range of technologies both in development and operation, and useful lessons from previous energy storage projects. Stakeholders interested in developing energy storage should consider four insights from the conference:

1. Batteries, an increasingly popular form of grid energy storage, are relatively new and untested on many electricity grids; therefore, project proof points and tariff structure changes are required to initiate and stimulate deployment.
2. The type and chemistry of the ESS installed constrain the variety of services the system can provide.
3. Islands need energy storage to accelerate renewable energy integration and increase grid optimization—but the process to achieve this requires persistence and patience from stakeholders.
4. The value received from developing and operating ESS at scale can be enhanced through a planned and integrated approach.

1. Batteries are relatively new and untested on many electricity grids; therefore, project proof points and tariff structure changes are required to initiate and stimulate deployment.

Energy storage deployment has advanced incredibly in places like California, where over 7,200 megawatts (MW) of energy storage projects are currently operational and bold legislation such as Assembly Bill 2514 mandates California’s three investor-owned utilities to install 1,325 MW of energy storage by 2020. However, deployment has been challenged in other jurisdictions, partly due to the effort required to integrate energy storage (particularly battery energy storage systems [BESS]) into rigid electricity sectors. Kurt Waldner, director of product management and strategic marketing at GE Energy Storage, highlighted four key challenges affecting battery energy storage deployment while speaking at ESNA 2019: (1) Battery energy storage is a relatively new entrant to an established electricity sector, and change from the status quo is hard; (2) the process to agnostically determine that energy storage is the right technology to be used is relatively complex; (3) more projects need to be completed to prove the real-world benefits of batteries; and (4) the process to change tariff structures to account for batteries can be lengthy.

Energy storage “pilot projects” can be used to counteract these challenges by identifying the true benefits of storage on island grids, testing which regulatory frameworks are most conducive to its development, and determining appropriate tariff structures to incorporate the value and cost of storage. This will ensure that proof points are delivered without major disruptions to utility operations. Rocky Mountain Institute’s (RMI) critical facilities blog further highlights the power of pilot projects and their demonstrated success when used to test technologies and new regulations.

2. The type and chemistry of the ESS installed constrain the variety of services the system can provide.

In addition to presentations and keynote addresses, ESNA 2019 included a broad range of storage-related workshops, such as Energy Storage 101, covering foundational ESS concepts, and Energy Storage 201, providing an update on US markets and business models for energy storage. For stakeholders interested in understanding ESS and its grid applications, a few foundational concepts are needed. There are many types of ESS capable of supporting the electricity grid: batteries, compressed air systems, flywheels, pumped storage hydroelectricity, thermal systems, and more. In the last decade, batteries have proliferated in use for grid applications, with multiple technologies and chemistries currently in deployment, including lithium-ion (Li-ion), nickel-based, sodium-based, and flow batteries.

Li-ion batteries particularly inhabit the spotlight due to their versatility in providing spinning reserve, renewable energy firming, and frequency regulation services. However, they aren’t particularly long-duration batteries and can suffer from degradation challenges if cycled too frequently. RMI recently published a Breakthrough Batteries report that details the costs and market segments for numerous battery technologies. Although Li-ion batteries are commonly used for grid applications, the report highlighted zinc-based, flow, and high-temperature batteries as alternatives that will compete with Li-ion batteries on costs in the near future, while also being better suited for long-duration applications.

Battery technology suitability for grid use cases

Source: Breakthrough Batteries: Powering the Era of Clean Electrification. Rocky Mountain Institute, 2019.

The table above underlines how battery storage systems excel at providing some services for the grid, but a single ESS can’t excel in every use case. Value stacking, whereby an ESS can perform multiple use cases, increases the monetary benefit from the ESS; however, the ability to optimize the ESS diminishes if too many or noncomplementary use cases are stacked. Due to their lower degradation rates and long-duration capabilities, the Breakthrough Batteries report identifies flow and high-temperature batteries as more valuable and less risky options for value stacking relative to current Li-ion batteries. Furthermore, it recommends that stakeholders understand the differences in manufacturer quality of specific battery chemistries to maximize expected benefits from value stacking while minimizing risk.

3. Islands need energy storage to accelerate renewable energy integration and increase grid optimization—but the process to achieve this requires persistence and patience from stakeholders.

Energy storage systems are providing tremendous value to island grids today, and this was emphasized during ESNA 2019. In May, the Bermuda Electric Light Company (BELCO) unveiled a 10 MW/5 megawatt-hour (MWh) battery storage system to provide reserve capacity and spinning reserve on its grid and reduce fuel costs. Additionally, on the island of Nantucket, 30 miles off the coast of Massachusetts, National Grid recently installed a 6 MW/48 MWh battery together with a 15 MW diesel generator. The hybrid system enhances the resilience and reliability of electricity on the island by providing extended backup generation if any subsea transmission cable failures occur. Moreover, it will provide energy during summer months when electricity demand peaks due to over 50,000 people staying on Nantucket, in contrast to just 11,000 residents who inhabit the island year-round.

Both projects received commendations at ESNA 2019, with the Nantucket system winning the Innovation Award for best microgrid solution. These examples validate the multifold value that ESS can provide on island grids, and their success can be attributed to bold foresight from stakeholders, efficient project execution, and extensive research to identify cost savings and grid reliability improvements. When developing energy storage projects, stakeholders must plan for the long term, thinking deeply about potential use cases for storage and how they can be deployed to reduce electricity costs, while also supporting greater renewable energy integration.

4. The value received from developing and operating ESS at scale can be enhanced through a planned and integrated approach.

During an ESNA panel discussion on rebuilding after disaster, Ana Sophia Mifsud, senior associate at RMI, highlighted three recommendations for maximizing the benefits of ESS, particularly in locations where deployment is at a nascent stage. For stakeholders considering or utilizing energy storage in nascent markets, she recommended the following:

• Optimize resources that are already deployed. On islands like Puerto Rico, almost 100 MWh of energy storage resources were installed in the last three years, mostly behind the meter. This represents a significant untapped market for aggregating the value of multiple systems and tapping into services such as energy arbitrage and frequency regulation. Therefore, utilities should seek ways to monetize these resources.
• Integrate resilience into utility planning. Solar and storage assets are scalable and distributable. When batteries are colocated with solar photovoltaic and other generation assets, they can provide backup generation to facilities providing critical services. As a result, adequate planning must occur to identify and integrate the adequate mix of resources to increase the reliability and resilience of electricity systems, particularly to combat the impact of shock events such as hurricanes.
• Seek assistance from the private sector to fill financing gaps for storage projects. One potential solution for financing energy storage projects is to seek local or regional blended finance mechanisms that combine development finance, philanthropic funds, commercial loans, and concessional loans. This will help to acquire the capital required to develop and scale energy storage projects, while also minimizing the risk to investors.

With the growing role of energy storage on electricity grids, island nations must explore energy storage and the available technologies to support their clean energy transitions. This can be done by thinking deeply about the services energy storage can provide and the exact storage technology that will achieve this, acknowledging the nuance of developing new projects and setting the groundwork in place for successful execution, exhibiting patience and perseverance during project development, and enhancing the value provided by energy storage through a planned and integrated approach. Not only will energy storage increase the ability to integrate higher penetrations of renewable energy, it will also improve the efficiency of grid operations while enhancing electricity system resilience during an extended grid outage. The roadmap for successfully deploying energy storage projects has already been printed in a few locations, and by sharing insights from multiple geographies, that success can be mapped globally.