Determining risk with Energy Storage
By Chris Cioni
Within the next five years, between 2,000 and 4,000 MW of energy storage systems (ESS) are expected to be constructed. In light of high capital costs and a
number of technical hurdles, it's clear that some combination of energy storage and power quality management is needed to address the variable nature of
renewable energy production and the broader demand for grid stability.
These systems provide operators with the opportunity to increase project financial returns by storing off-peak energy for grid injection during peak load
periods. A potentially larger application is fast-acting ancillary services, which may reside on either side of the meter-allowing the load entity to
exercise much greater control of their load profile via demand response. Taken together, these opportunities point to strong growth for energy storage.
There are three factors that affect ESS performance for renewable energy projects.
• A proven technology (battery storage) in a new application
• Service environment
• Project design & construction
First, large energy storage systems have been deployed for quite some time for municipal electric supplies and sensitive manufacturing/fabrication
facilities, as well as conventional electric power generating stations. The standard application is intended to provide a steady flow of power-at a fairly
steady output-for a distinct period of time. Even so, the need for planned maintenance and periodic testing has been widely accepted by the electric
utility industry and supported by standard setting bodies such as the IEEE.
In contrast, the ESS for a wind or solar project is subject to fluctuating duty cycles. It is important to note that the utility grid operator sets the
criteria for new projects wishing to interconnect with the grid. There are other technologies available to perform some of these tasks, such as DVAR and
STATCOM, which present their own hazards. While the grid compliance criteria rests with the utility, the decision whether to use ESS, DVAR, STATCOM, etc.
is largely determined by the project developer.
The primary uses in renewable energy applications are (from the end user's perspective):
• Store energy for use at a later time (peak power maximizes financial returns)
• Mitigate negative impacts on grid power quality (in exchange for higher tariffs)
• Stabilize energy source ramp rate (capture excess energy and release during sags)
Next is the service environment. Consider the difference between a baseload power plant and one assigned to follow load. Better yet, think about driving
your manual transmission-equipped car in congested city traffic versus a drive across Nevada. Which will result in greater wear and tear on the engine,
transmission, and your knees? The same principle applies in this case. A steady wind regime equals fewer charge/discharge cycles, which equates to less
stress on the batteries and significantly lower heat production from that process. The wind regime in one location can be volatile, while another area may
be rather steady.
Lastly, consideration should be given to the unique design and construction features of each project, as no two are remotely alike. It is particularly
important that installations are designed and constructed with best fire protection practices in mind, as is identifying the factors that contribute to ESS
failure with an eye towards preventive measures. The former can be accomplished by applying existing standards for fire protection (e.g., NFPA), with some
adjustment for features unique to ESS (e.g., the height and mass of large battery banks). Mitigating the electrical control and conversion risks that might
initiate a battery failure requires a holistic approach to the integrated system.
Many common factors influence how well an ESS will perform, but there are several that are specific to a given wind energy project. Things to consider or
question when looking at a risk:
• Wind regime
The wind speed volatility determines how often the battery system cycles between charging and discharging. More cycles equal more heat generated.
Given the vast land area and large number of turbines installed at many North American sites, this factor significantly magnifies the risk. It might not be
intuitive, but the wind force can vary significantly at each turbine location. Imagine 100 turbines randomly reacting to wind gusts and lulls at different
times-with voltage and power output continually fluctuating out of synch. Chaos equals stress on the system.
• Local grid conditions
Grid conditions can vary greatly, even across small distances. Voltage levels can sag momentarily, risking turbine trips. Reactive power levels can also
vary, which presents a different electrical challenge.
The interconnection to the grid is another important factor. For example, a project might be connected via a radial transmission line, meaning a single
path in/out. The effects of electrical disturbances tend to be amplified along a radial line, making the ESS, DVAR, or STATCOM work much harder and operate
• Turbine OEM and model
Some turbines have greater capabilities to handle grid voltage fluctuations and other disturbances. The common features desired by utility operators are
"fault ride-through" and "low voltage ride-through", which enable the turbine to take on some of this work. Unfortunately, turbine selection is often
decided well in advance of the utility interconnection study required for each project.
GCube Insurance Services, Inc. is a leading provider of insurance services for renewable energy projects in wind, solar, biofuels, wave, hydro, and
tidal around the globe and is a member of the National Alliance for Advanced Technology Batteries, NAATBatt at www.naatbatt.org.
Chris Cioni, P.E., is Senior Vice President, Underwriting, GCube Insurance Services, Inc. For more information regarding insurance solutions for energy
systems for all types of renewable energy projects, please contact GCube Insurance Services, Inc. at [email protected] or visit