Solar to Storage Asset Management: How Recent Technology...

Solar to Storage Asset Management: How Recent Technology Developments Impact Your Business Environment

Philip Mihlmester, Executive VP-Global Energy, ICF Energy And Todd Tolliver, Senior Manager, ICF Energy and Katie Janik, Portfolio & Asset Management, ICF Energy

Philip Mihlmester, Executive VP-Global Energy, ICF Energy

Advancements in technology, reductions in cost, and improved understanding of the benefits of battery storage have increased the demand and utilization of battery storage systems. This development, in turn, has resulted in a growing need for solar battery storage asset management across the energy sector. When solar technologies originally became more reliable and scalable, the industry focus was on closing deals. Getting the asset management of solar projects right was an afterthought. Today, battery storage systems are still in the relative early phases of implementation and execution. That’s why it is critical to understand the asset management considerations pro-actively prior to risks surfacing that could impact the technical and financial performance of the system.

Who Benefits and Flattening Out the “Duck” Curve

We aren’t able to discuss battery storage without mention of the “duck” curve load profile. In areas of high solar penetration, significant excess generation occurs during the middle portion of the day when the load is relatively low, requiring conventional generation to reduce output to maintain stability of the grid. However, in the evening, the load increases dramatically when the solar generation has tailed off. This requires conventional generation to ramp up at a high rate to meet the demand, resulting in costly startup costs and the need for added generation for short periods of time.

"The control software for battery storage that enables optimal dispatch of energy in order to maximize revenue now integrates with utility energy management systems"

Adding battery storage to solar assets, or as stand-alone facilities located in these high penetration areas, is beneficial to utilities and grid operators by smoothing out ramping requirements and increases grid reliability by managing how energy is dispatched from solar projects to better match the load profile of the region. Furthermore, battery storage is beneficial to asset owners because it allows for consistency of availability and off-take for solar projects, potentially increasing revenue from the project, particularly where offtake agreements have time of day pricing.

A Closer Look at Solar to Storage Asset Management Factors

Increasingly, energy providers need to understand the changing profiles of participants who benefit from solar plus battery technology, and considerations for asset management in order to optimize the battery systems and reduce performance risk during their operating life. For context, 215 MW of solar energy projects were installed in the U.S. in 2017, the majority at the utility scale, and this is expected to nearly double in 2018. Concurrently, the renewable industry is still learning how to integrate battery storage into renewable energy projects and how to asset manage storage, both from an operational and financial perspective. During the operational monitoring phase, it is crucial to understand who provides the O&M for battery storage, how to monitor multiple revenue streams and decipher factors in battery degradation. A closer look at each:

Todd Tolliver, Senior Manager, ICF Energy and Katie Janik, Portfolio & Asset Management, ICF Energy

• Operations & Maintenance Considerations – As O&M practices become more standardized, we expect the O&M market for battery storage to become more standardized and possibly more cost effective. Currently, battery storage system integrators and developers provide the O&M for battery storage systems as the majority of O&M providers do not have the required experience to maintain them. We expect some market consolidation in this respect as O&M providers either partner with battery solution providers to offer comprehensive services or O&M providers gain the technical expertise to provide O&M on battery storage. If an O&M provider is proposing to maintain a solar plus battery storage system, it is a good idea to thoroughly understand the qualifications and experience of the provider to ensure they have the necessary expertise in solar plus battery storage. This segment of the O&M market may expand if more O&M providers gain the expertise and efficiencies to maintain battery storage systems.

• Revenue Stream Management and Monitoring – Battery storage systems on utility scale projects can provide multiple revenue streams for the asset owner to monitor during the operational phase. The pricing structure for battery storage can be combined with the project’s energy off-take or it can be structured independently from the project’s energy off-take. The asset owner will want to ensure the capability to monitor multiple revenue streams, preferably automated monitoring through the use of an asset management software program. Additionally, because the battery storage provides consistency in off-take, the energy production revenue will most likely be optimized, especially during nighttime hours, compared to projects without battery storage.

• Locating and Preventing Degradation Factors – The primary objective for battery storage during the operational phase of a project is to optimize the charge and discharge cycles to minimize the effects of battery degradation. Lithium ion batteries, the most common technology installed today, are susceptible to two modes of degradation, one caused by cycling (cycle life) and the other by simply storage charge (calendar life). The act of charging and discharging a lithium ion battery results in wear on the battery, reducing the storage capacity over time— often within 5000 to 8000 usage cycles. Additionally, as lithium ion batteries store charge, internal reactions occur that can reduce the capacity of the battery over time. Depending on the storage conditions of the battery, it may fall to 80 percent of its original capacity at the end of 20 years.

Other emerging battery technologies, such as flow batteries, boast long cycle life and long calendar life. Some of these technologies have limited field experience or other challenges that may limit application to certain services. The primary approach to managing degradation in battery systems today is to match the degradation profile to the term of the project. In the next few years, additional operational experience will provide new insight into their capabilities.

Advancements in Solar Battery Storage

A few years ago, battery storage was considered a very high-risk technology, with one renewable energy project’s battery storage system resulting in a catastrophic fire. As operational learning of battery storage systems have increased, advancements in technology have occurred making it a feasible and commercially scalable long-term solution while providing enhanced safety. The technology powering control systems for storage has improved in recent years to make storage bankable.

Several states across the country have established energy storage mandates to increase its penetration. Utilities are working hard to develop guidelines for how storage interacts with the electric grid and defining the methods for generating revenue. Lenders and investors are getting excited about the possibility of supporting and owning storage projects. Definitive revenue streams have been identified in behind-the-meter applications and the added potential of stacking services—utilizing in-front-of-the-meter use cases—are on the horizon.

The control software for battery storage that enables optimal dispatch of energy in order to maximize revenue now integrates with utility energy management systems. It won’t be long until developers and operators develop the understanding to fully integrate the software with inverters and, on-site monitoring systems. In the meantime, energy stakeholders should consider the benefits and nuances of solar to storage asset management—and take steps to educate their teams for a solar future.

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