Grid Services: Benefits, Opportunity, and Value-Staking

Value Stacking with Grid Services

Grid services provide dynamic load control to support the electric grid including shedding, shifting, and modulating loads. Modulating loads provide ancillary services (e.g., frequency regulation) and voltage control.  Grid services support the generation, transmission, and distribution of electricity by providing value through avoided electricity system costs (generation and/or delivery costs).

Grid Services include the value-stacking of a range of power generation, energy efficiency and load management solutions including but not limited to the following:

  • Providing capacity services and energy shifting: System operators must ensure they have an adequate supply of generation capacity to reliably meet demand during the highest-demand periods in a given year. This peak demand is typically met with higher-cost generators which are almost exclusively used to serve peak demand, such as open cycle natural gas turbines; however, energy storage systems can also be used to ensure adequate peaking generation capacity. System operators can also improve the ability of variable renewable energy (VRE) plants to reliably contribute to peaking capacity by pairing VRE with energy storage, which can enable these resources to shift their generation to times when they are most needed. Storage systems may not need to be sited with VRE generators (known as co-location) in order to provide such benefits, and there are pros and cons to such co-location that must be carefully considered before siting storage systems.
  • Providing fast-response ancillary services: Many forms of energy storage, most notably batteries, are capable of rapidly and accurately changing their charging and discharging rates in response to external signals. By quickly changing their output, these storage resources can provide valuable ancillary services that system operators use to help balance short-term differences between demand and supply. These ancillary services are particularly important in systems with large amounts of variable renewable energy generation, as system operators must be able to respond to unexpected changes in energy supply. Currently, ancillary services are predominantly provided by conventional generators. Using cost-effective and system-appropriate energy storage projects to align supply and demand through the provision of ancillary services increases the flexibility of the power system and helps reduce both the curtailment of renewable energy resources and spinning reserve requirements from conventional resources.
  • Transmission and Distribution Upgrade Deferral: The electricity grid’s transmission and distribution infrastructure must be sized to meet peak demand, which may only occur over a few hours of the year. When anticipated growth in peak electricity demand exceeds the grid’s existing capacity, new investments are needed to upgrade equipment and expand network infrastructure. Deploying energy storage can help defer or avoid the need for new grid investments by meeting peak demand with energy stored from lower-demand periods, reducing congestion during periods of stress on network infrastructure and improving overall transmission and distribution asset utilization.
  • Black Start: When starting up, large generators need an external source of electricity to perform key functions before they can begin generating electricity for the grid. During normal system conditions, this external electricity can be provided by the grid. After a system failure, however, the grid can no longer provide this power, and generators must be started through an on-site source of electricity. On-site energy storage such as a lithium-ion battery storage system can provide this service and avoid fuel costs and emissions from conventional black-start generators. As system-wide outages are rare, on-site energy storage can provide additional services when not performing black starts.
  • Behind-theMeter Applications: Battery storage systems that are interconnected behind-the-meter (BTM) can provide services for individual electricity consumers as well as services ‘upstream’ at the distribution- and transmission-levels. ‘Customer-facing’ services can broadly be categorized as (1) Bill savings; (2) Increased PV self-consumption; and (3) Backup power.

1) Bill savings: retail tariff elements determine how a customer is charged for electricity consumed from the grid and consequently determine the extent to which energy storage systems can help to reduce their electricity bills. Flat volumetric tariff elements that charge the same rate for energy consumption from the grid ($/kWh) regardless of when the energy is consumed provide little to no opportunity for energy storage to help customers reduce their bills. Time-of-use energy charges, which charge different rates for consumption during different parts of the day, and demand charge elements, which charge customers based on their maximum instantaneous consumption ($/kW) during a given period, offer opportunities to reduce bills with energy storage by shifting demand to different periods.

2) Increased PV self-consumption: Production from customer-sited solar PV systems and energy demand may be poorly aligned depending on customer demand patterns. This may mean solar PV energy that exceeds customer demand is either curtailed or exported to the power system, depending on restrictions on the customer’s interconnection agreement. Depending on how solar PV exports are compensated, this may represent a lost financial opportunity for the customer. Energy storage can help customers address the mismatch between their demand and PV generation by storing excess PV energy and discharging to meet demand after PV generation has tapered off.

3) Backup power: Energy storage, especially if combined with a generating source like solar PV or when interconnecting with multiple distributed energy resources (DER) in a micro-grid setting, can meet the energy needs of customers in the case of grid outages. This can be critical for essential infrastructure by, for example, ensuring power to an emergency shelter or hospital during a storm. Uninterrupted power can also be critical for sensitive industries that would suffer significant consequences from even brief interruptions.