LBL explores how to compensate battery owners for grid value


Distributed batteries “offer utilities an under-utilized, flexible resource,” says a report from Lawrence Berkeley Laboratory.

Batteries that customers purchase for use during power outages, and batteries used to increase solar self-consumption, could both provide grid services at other times, the report says.

To capture the value of batteries, policymakers and utilities can “improve distributed battery storage economics” in a way that also reduces grid operating costs. That involves compensating customers so they are more likely to buy a battery and operate it in a way that provides grid services. Grid services from batteries will then reduce the need for utility-provided grid services, reducing costs for all customers.

Beyond batteries’ obvious ability to provide energy, batteries can also provide capacity, as well as grid services such as ramping support, frequency regulation, and voltage regulation, the authors note. Batteries can also reduce solar curtailment, and help defer transmission and distribution investments.

The report aims to guide decision-makers on the challenges of updating utility rate designs to “capture” the value of distributed batteries, and describes some approaches that states and utilities have taken so far.

The authors foresee greater adoption of distributed batteries as battery costs fall, and a greater ability for batteries to provide grid services with “advanced technology that enables a higher level of visibility, communication, and control.”

They point to three such technologies: smart inverters for batteries that are compliant with the IEEE 1547-2018 standard; virtual power plants that aggregate customer-sited batteries using automated controls and communication; and distributed energy resource management (DERM) systems operated by utilities.

The authors focus on the retail utility perspective. A distribution utility “typically has very little visibility of the real-time operation” of distributed resources, they say, adding that this can impair the utility’s ability to “ensure real-time reliable and safe operation of the distribution system.”

The report does not discuss sending real-time prices to smart batteries and other devices that can automatically respond to price signals. That approach was proven to work in a pilot study on a distribution circuit served by the California utility SCE, funded by the California Energy Commission. Even so, the LBL study projects that over time, “more dynamic, automated programs could become prevalent.”

In regions with a grid operator known as an ISO or RTO, grid services that batteries can provide may be priced through organized markets that “produce a transparent assessment of value,” the report says, but grid services “procured outside of organized markets must rely on avoided costs.”

The Lawrence Berkeley Laboratory report is titled “Opportunities and Challenges to Capturing Distributed Battery Value via Retail Utility Rates and Programs.”

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