Transmission Services

Summary for Decision Makers

Storage can provide many services at the transmission-level, namely providing capacity adequacy, load shifting and energy arbitrage, transmission upgrade deferral, and other essential grid services like providing operating reserves, voltage regulation, and black start capabilities.


Capacity Adequacy

Peaking capacity above annual peak demand is needed to maintain reliable electricity supply during normal operation, and under extreme and emergency conditions at the bulk-power system level. Energy storage help to support system adequacy and contribute to this peacking capacity, often also called the system capacity margin, planning reserve margin, or reserve margin.

What to Consider

  • The duration of peak demand determines how much energy capacity from a storage device is needed to reliably contribute to the reserve margin. The shorter duration storage applications, the less costly to build, resulting in higher likelihood that a storage investment is more economically viable relative to traditional peaking capacity.
  • Increased share of solar PV in the generation mix changes the shape of net demand, ultimately reducing the duration of peak demand. As the share of solar PV increases, the change in the net demand shape can improve the ability for medium-duration (i.e., 4–6 hours) storage resources to provide reliable peaking capacity.
  • Cost of storage capacity relative to other peaking capacity such as conventional fossil-fueled power plants and demand response programs is important to consider.

How to Decide

Should storage be an appropriate solution, a quantitative analysis can help further inform a decision. Storage can be included in a capacity planning process as one option to serve peak load among other grid solutions, with the CEM itself identifying if storage is a cost-effective solution.


Load Shifting and Energy Arbitrage

Load shifting and energy arbitrage are two terms used to describe the process of shifting energy from one time of day to another during the operation of a power system. For example, excess electricity at night, when demand is low, can be stored until it is needed later during periods of peak demand during the day.

What to Consider

  • Spread of electricity costs between the daily valley and peak of electricity production provides opportunities for energy arbitrage (i.e., “buying low and selling high.”).
  • Storage costs relative to other grid flexibility options such as demand response is an important factor to consider. In some cases, it can be more cost-effective to incentivize end-use consumers to shift the timing of their electricity usage rather than to install storage solutions. Incentives for demand shifting can be effective in places with large industrial loads but less so in residential and small commercial loads.

How to Decide

A combination of CEM, PCM, and financial modeling tools can help inform planning decisions around energy arbitrage. Important inputs for this analysis include the cost of energy storage capacity (both power and energy), the typical hourly profile of electricity prices, and the mix of generating technologies that currently serve demand. It is important to ensure the quantitative tools can adequately represent the evolving power sector landscape, to capture anticipated changes in electricity demand, costs of energy storage, availability of demand response, and costs of conventional technologies in the short, medium, and long term.


Transmission Upgrade Deferral

Energy storage systems can shift the timing of power flows in the transmission network to reduce loading on key transmission corridors, helping to avoid costly equipment failures and extending the life of existing assets. In addition to deferring upgrades, energy storage systems can similarly increase the lifetime of existing equipment by reducing overall loading below the rated equipment carrying capacity, thereby reducing wear and tear on the equipment. Another related use case for energy storage can be to mitigate uncertainty for transmission upgrades.

What to Consider

  • Costly traditional transmission upgrades and additions make energy storage a more appropriate solution for transmission deferral in certain jurisdictions and where prospective new transmission corridors face right-of-way and land-use permitting issues, which may be time consuming and expensive to resolve.
  • Rate of demand growth. Energy storage can reduce transmission loading and delay transmission upgrades in areas with relatively low demand growth, indicating that energy storage can delay a transmission upgrade for a longer period. Because transmission congestion is localized in specific areas in the grid, it is important to assess demand growth on a localized level, as it relates to the specific transmission corridor that is congested or projected to become congested in the future.
  • Small or modest projected overload of key transmission corridors may indicate that energy storage would be a cost- effective option for delaying major investments in transmission expansion.
  • Ability for storage to provide additional benefits can lower the overall cost of utilizing the storage system for transmission upgrade deferrals, making it more competitive with traditional investments.

How to Decide

The value of energy storage for deferring transmission upgrades is tightly linked with the cost of storage, the cost of transmission upgrades, and the rate of load growth. Energy storage can be a cost-effective solution if it can substantially delay needed investments in the transmission network. The decision to invest in an energy storage solution rests on the marginal cost savings that can be achieved from delaying the transmission investment. Different tools are used to evaluate this trade-off for different time horizons and geographic scopes.


Essential Grid Services

Essential grid services (otherwise known as ancillary services) are provided by grid resources that can be preprogrammed for automatic responses or called upon by system operators to mitigate imbalances in supply and demand. Energy storage technologies outfitted with modern power electronics and control systems can be well-suited to provide various types of essential grid services. There are three major categories of essential grid services that energy storage can provide:

  1. Operating reserves are needed to maintain the supply-demand balance in the power system as demand changes throughout the day, during unexpected disruptions, and during extreme weather events.
  2. Voltage regulation services help to maintain stable voltage levels on individual transmission and distribution circuits.
  3. Black start is the process of restoring electricity service following a partial or total network outage and is a basic requirement for all electric power systems.

What to Consider for Operating Reserves

  • Magnitude of operating reserve requirement. The total amount of operating reserves needed to maintain a reliable electric grid depends on a series of factors, including the size of the power system, the mix of customers being served, the sizes and types of generators that supply electricity, changing weather conditions, and other environmental conditions.
  • Duration of operating reserve requirement. Different energy storage technologies have different durations that can make them more or less suitable for providing certain types of operating reserves.
  • Response time requirement. Like duration, different types of operating reserves require different response times from participating resources. Unlike duration, which is largely driven by the cost of storage capacity, response time is typically limited by a technology’s physical capabilities.

What to Consider for Voltage Regulation Services

  • Local voltage regulation requirements. Energy storage devices can be used to help support stable voltage levels, which leads to reduced energy losses and prevents equipment from degradation. One consideration for siting an energy storage project can be current and future local requirements for voltage regulation.

What to Consider for Black-Start Services

  • Opportunities for additional energy storage services. Energy storage devices outfitted with grid- forming power electronics (known as grid-forming inverter-based resources) have been considered as an alternative to diesel-fueled black-start systems, although seldom needed.

How to Decide

Simulations of power system operations with production cost modeling tools help determine if and how much bulk-power energy storage can contribute to longer-duration operating reserves. Power Flow Models are used to assess how energy storage devices contribute to system stability through short-duration operating reserves and voltage regulation. For black-start services, detailed power flow modeling and testing is needed to determine whether an energy storage device can reliably and safely provide black-start support to specific generators in the network


Building Blocks to Enable Provision of Transmission-Level Services

  • Clear Technical Interconnection Processes and Rules: Clear technical requirements describing the desired performance and behavior of the energy storage system under various operating conditions are important, as well as clearly defined technical screening practices for evaluating interconnection applications.
  • Clear Participation Rules: Various market rule changes would seek to ensure the eligibility of storage to participate in the power system in a way that recognizes the unique technical and operational characteristics of the resource class. Policymakers and regulators may have to clearly define the allowable investment, ownership, and remuneration models (i.e., “business models”) for storage projects in their jurisdictions.
  • Ability for Storage to Seek Fair Remuneration: Modifications to policy, market, and regulatory frameworks are often required to ensure storage resources can be fairly compensated for the range of flexibility services they are technically capable of providing.
  • Regulatory Support for Pilots: Facilitating utility pilots for energy storage resources may be an important tool to promote utility familiarization and ultimately support the procurement of system flexibility services from these resources. Regulatory requirements to transparently monitor the technical and economic performance of the pilot, and publicly disseminate learnings to the extent feasible, are typically a good practice.
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