Wednesday, November 25, 2015

ON releasing stored energy

The IESO, officially the operator of Ontario's electricity system, has announced the contracting of nine energy storage projects.
"Storage technology remains one of the most innovative and exciting aspects of our energy policy, particularly because of the incredible potential it presents. It will help strengthen our system and improve service to electricity consumers," said Bob Chiarelli, Minister of Energy. "Our government is proud to see the leadership of these five Ontario companies as they move forward to create good jobs and invest in their local economies."
"The energy storage market is maturing," said Bruce Campbell, President and CEO of the IESO. "Now that we have completed our two-phase procurement process for a total of 50 MW of new energy storage in Ontario, we look forward to having these facilities up and running. These projects will help us better understand how energy storage technologies can support the operation of the grid by providing much needed quick response and operational flexibility."
There is a reason I no longer treat "IESO" as an acronym - there's functionally no "I" and whatever the "ESO" is, it isn't the body's original MO.

The IESO press release does provide a rationale for the contracts:
This latest set of contracts... is focused on the capacity value – the ability to be available to store energy and provide it back when called upon – and the arbitrage value – the ability to store energy during periods of lower prices and inject it back into the electricity system when prices rise – of energy storage.
Bruce Sharp, probably the province's best cost analyst, did some math in a comment on the IESO's Linkedin page:

Bruce Sharp, P. Eng. I'm skeptical about energy storage. A major red flag is that it's virtually never discussed in terms of energy capability (MWh) but instead only in terms of power deliverability (MW). The other is cost. This 16.75 "MW" will cost $ 9 million dollars per year or $ 537,000/MW/year. The most favourable assumption would be that the systems will be continually cycled, storing half the time and returning energy to the grid the remainder. Assuming 100% uptime, there are then 4,380 notional matched pairs of charge/discharge hours in a year. If we also assume the round trip efficiency is 100%, each pair of hours must provide $ 123/MWh of value to break even...
Since May 2002 I looked at hourly prices (HOEP) in 12-month rolling windows. For HOEP > $ 100/MWh, the initial period-ending 200304 had 809 hours, the overall peak was 1,557 hours (ending mid 200601) and the current count is 120. For HOEP > $ 75/MWh, the initial period-ending 200304 had 1,994 hours, the overall peak was 2,634 hours (ending again mid 200601) and the current count is 218: The analysis to determine actual potential value is much more complex than this but these numbers peg the upper end of hours in very conservative (i.e. favourable to storage) terms, Conclusion: Historical Ontario hourly price variations don't come close to justifying the current price of storage.
The IESO seems to have learned the term "arbitrage value" impresses people, without having tried any math to test the value proposition.

Bruce Campbell might be helped "to better understand" things by employing better people - pissing away ratepayer money hasn't been demonstrably successful thus far.

One of the projects did have some information released on "energy capability (MWh)." While 8 of the projects involve batteries, the one that grabbed the most media attention utilized compressed air.
At peak output, the storage unit is capable of powering about 330 homes. Depending on how much power is drawn, the system can run for a little over an hour.

Two other recent stories connect as a commentary on the IESO's performance, and information handling skills.

  1. PowerBlades Closes, 136 jobs lost reports " the company finished work on all of the orders it had received to date and there simply weren’t any promises of new contracts in the forseeable future."
  2. The IESO announced the delay of its contracting of more industrial wind turbines due to sooo much work: "Based on the high volume of proposals received in response to the LRP I RFP (103) and complexity of the evaluation process, the target date for the completion of the evaluation of proposals described in the Timetable has been extended to March 2016."

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