In our future energy systems we will pretty often see times where, let’s say, a sudden storm front brings heaps of cheap and green and beautiful but, alas, in that particular time unneeded wind power into the system. And we will see times where the opposite happens: a sudden shortage of wind and solar power. What can we do about it?
You will quickly turn to battery storage as the key solution. Batteries can physically store excess power and feed power back into the system when there is a shortage in the market/grid. A great solution, no question about it. But is it also the cheapest solution? Looking at the fundamentals and the current numbers of battery technology when asking if battery storage will be the key solution to the fluctuation challenge of renewables, we should think again:
So we should also think of other solutions for the fluctuation challenge of intermittent renewables until battery costs have significantly come down. Luckily, batteries are not the only assets which can provide flexibility to the energy system in the new energy world. Every CHP unit has flexibility, even the backup capacity unit in your local supermarket or high school. Most run-of-river hydropower stations have flexibility. And many power consumers can also provide flexibility to the system if they are able to be flexible in terms of when to take power out of the grid. What are the differences between these assets and a stationary battery?
In order to tap the flexibility all those assets have, you’ll need some system in place that aggregates the many small units into one larger – virtual – unit and at the same time takes every restriction of every unit into consideration. This is exactly what a Virtual Power Plant – a VPP – does. Instead of physically storing excess renewable energy and feeding it back to the grid, all units networked in a VPP dance around the actual feed-in of wind and solar power, following the lead of wind and solar in regard to their own power production or consumption. Over the last five years, we at Next Kraftwerke have aggregated a flexible capacity of around 1.000 megawatts in our VPP – out of an overall 2.800 megawatts capacity (including solar and wind). Using this flexible capacity by shifting generation and demand of small-scale units, we balance the fluctuations of solar and wind on a daily basis. The only investment costs incurred for these 1.000 megawatts of flexible generation and demand were the costs for connecting these flexible assets to our control system and the costs for setting up and operating the control system which processes live data from all assets and automatically dispatches their optimized schedules.
To put it in a nutshell, the current flexibility principle on national markets (e.g. markets for control reserve or spot markets for wholesale electricity trading) is “first shift, then store”. Why?
Investment Costs | Variable Costs | |
Batteries P2X ("store") | HIGH (Initial investment to set up physical unit) | LOW (maintanance, electricity costs, trading costs) |
VPP ("shift") | LOW (no initial investment to set up physical unit, integration costs into VPP are negligible) | LOW (maintanance of VPP control system, trading costs) |
Now, let’s look at the limitations of a VPP and the potential to bring the two worlds – batteries and VPPs – together.
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Now, what’s the big picture here apart from the intricacies of the new flexibility technologies and concepts illustrated above? We know already that solar and wind will trump conventional power plants in regards to costs and capacity; in many places of the globe this has already happened. What we are seeing right now is that, additionally, we have more and more non-conventional flexibility options which are already available – VPPs, batteries, P2X. Their market shares will increase just as well and they will establish a merit order of their own.