What are the benefits of renewable energy producers if they provide storage capacity?

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“EDP Renewables has put into operation, within the photovoltaic power plant in Băilești, a battery type energy storage system”, announced at the beginning of December 2019 a press release from Madrid. A year ago, the same EDP (Energias de Portugal) completed the installation of an energy storage unit in its wind farm in Cobadin, Dobrogea.

These are the first and, for the moment, the only large batteries in Romania: large-scale electricity storage units – each with a capacity of one megawatt (MW) -, located near units for the generation of electricity from renewable sources.

“This project represents a step forward in the modernization of energy storage systems. It is a discovery that revolutionizes the energy market, because it transforms renewable energy sources, such as wind and solar, into constantly available energy sources, making them much more efficient and reliable, ”said Duarte Bello, director at EDP Renewables, in the EDP release.

So the wind turbines in Romania would have been producing a lot. And the energy was sold in advance for the next day. As it was so much, the price dropped to near zero. And the weather forecast was correct. That evening, the wind was by far the country’s first source of electricity: at 22.50, for example, wind turbines produced 2,500 MW per hour, and national consumption was 6,500 MW.

And the situation on November 30 was not a premiere. On May 1, 2019, for example, against the backdrop of sustained wind, the price of electricity was 0.01 lei / MWh in each of the hours between 9.00 and 17.00. That is, one kilowatt/hour cost 0.00001 lei. I mean wind in my pockets.

True, in the case of Romania, such days can still be counted on the fingers, but in the western markets, there are enough times when the spot price of energy becomes even negative. I mean, you’re getting paid for electricity tomorrow, you’re not paying for it. It looks like an anomaly, but only in appearance. And again, there’s another explanation.

For those who are less familiar, in an energy system must balance. This means that, at any given moment, the amount of energy produced must be equal to the amount of energy consumed for the network to work. If someone has contracted to sell a certain amount of energy, they must produce it. If it does not produce it, it will create an imbalance, which it will pay. As a rule, expensive – in the case of Romania, this means the average price of the closing of the spot market from the previous day, to which is added 450 lei / MWh. This brings the final price to 700, 800 and even to 1,000 lei / MWh, given the record rates from us at the end of summer.

Suppose the investor in a production unit from renewable sources signs today that tomorrow evening, between 9 pm and 10 pm, he sells 100 MWh, at the price of 200 lei. If it does not blow the wind and cannot deliver the energy, it can finally reach the balancing market, where it will pay maybe 1,000 lei for the energy it has assumed it sells for 200 lei, because it assumed that it will blow the wind and that it can provide that amount of energy. As is the opposite, as already seen. The wind is very strong, it can produce more than it was contracted for sale, and the excess energy must be sold for very little money.

Next year, global storage capacity is expected to reach 25,000 MW, which means two and a half times the hourly consumption of Romania during peak periods. For 2030, an increase is estimated at 346,000 MW, and for 2040 – at 1,095,000 MW.

For comparison, the installed power of Romania is currently 20,000 MW (of which 3,000 in wind and 1,400 in photovoltaic), but from the operating regime, it is seen that we can rely on a maximum of 10,000-11,000 MW.

Among the newcomers who now rely on renewable energy storage are the Italians from Enel, the largest European energy company, also present in Romania.

If four years ago Enel had no storage capacity, the group reached 113 MW this year. And in the next three years, the capacity of the batteries operated by the Italians will increase by more than four times, to reach the end of 2022 to 439 MW.

According to a presentation made by Bloomberg New Energy Finance (BNEF) analysts at the “Energy Transition 2019” event, organized by the Romanian Wind Energy Association, the cost of batteries has dropped dramatically in recent years. Specifically, with 76%, from 2012 to now. If the storage solutions had a total cost (LCOE) of $ 800 / MWh, this meanwhile dropped to less than $ 200 / MWh.

It may sound expensive, but forecasts made by BNEF indicate that using wind energy and high-capacity storage will result in a lower cost of energy than coal-fired electricity. And this is even in China, a country where, despite the increased demand for electricity, coal-fired power plants are still being built automatically, despite the global trend of reducing carbon dioxide emissions.

Groups with a total power of over 40,000 MW (ie double the total installed capacity of Romania licensed) were connected to the Chinese network in only the first six months of this year. From the presentations from BNEF, LCOE for a new coal unit in China would now be about $ 50 / MWh, while for a “new” MWh in wind power it is over $ 100. The calculations were made in the case of a new generation capacity of 50 MW in the wind turbine, which is attached to a storage capacity of four hours.

Somewhere on the horizon of 2025, the cost of the two technologies will be equal, after which the cost of the wind turbine with the battery attached will be constantly below that of coal. Obviously, in the case of the latest technology, the cost increases. Costs are already much closer if lower storage capacity is taken into account. For the same 50 MW new in the wind, but with 25% storage for the same four hours, LCOE is now about $ 75 MWh. In just two years, it will be the same as coal.

The conclusion is drawn by EDP CEO João Manso Neto, who was in Bucharest recently, to celebrate ten years of activity on the local market: “Although direct investment in batteries does not bring immediate profit, it is necessary for the presence on the market. long term. And I think that the market, the energy buyers, will demand such storage solutions. ”

The large battery in the center of town

In 2018, New York Governor Andrew M. Cuomo announced as a goal the implementation of a 3,000 MW capacity for energy storage by 2030.

Start. In the first part of December 2019, Enel X and related group Real Companies announced the launch of a 4.8 MW / 16.4 MWh battery system, located at the Gateway Center complex in Brooklyn.

Giant. It is the largest storage system in New York right now and will help Con Edison, the area’s electricity supplier, during peak periods. As an eloquent comparison, the storage system would ensure the consumption of 328,000 bulbs of 50 watts at the same time for one hour.

Generator. The Gateway Tower building, which was erected in 2002, had long since become a generator of electricity for the area, thanks to photovoltaic panels. Since its inception, it has delivered over 100 MWh of electricity, which the local network has taken from the batteries during peak hours.

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