HomeSmart Grid T&DEnergy StorageQ&A: Trading storage on the energy market

Q&A: Trading storage on the energy market

A battery-based energy storage project in Germany is set to test the technology’s economic viability. Tildy Bayar spoke with one of the project partners about its design, implementation, challenges and goals

M5BAT: a 5 mw stationary battery storage facility

Credit: Uniper

Large-scale battery energy storage solutions are increasingly seen as able play a balancing role as more variable renewable power sources are integrated onto the world’s grids.

However, the operation of stationary battery storage solutions must also be a profitable enterprise, and it is yet to be seen which of the competing battery technologies will win in terms of economics.

A new project which aims to trade battery storage capacity on the energy market represents an important opportunity to gauge the technology’s economic viability, as well as to test different battery solutions in operation.

The Multi-Megawatt Multi-Technology Medium Voltage Battery Storage, or M5BAT project’s first stage was represented by the construction of a 5 MW stationary battery facility located in a converted building in Aachen, Germany. The facility came online in September 2016 and Uniper, which was responsible for the building modification, is set to handle the energy trading during the upcoming second phase. The lead-acid batteries were supplied by battery manufacturer Exide, with current converters from solar technology firm SMA. In addition, the ISEA which is an institute of the RWTH University in Aachen has signed on to conduct research, operation and testing. Partial funding was provided by Germany’s ministry for economic affairs and energy.

The project aims to test the economical operation of stationary batteries on the energy market through its connection with the local medium-voltage grid, as well as gaining experience in the long-term operation of a mix of different battery technologies including lead-acid and lithium-ion. The facility is also planned to be used for testing further storage technologies.

PEi spoke with Uniper’s Dr Christian Folke, project manager for M5BAT, about the project.

Q: Why is this project important?

A: The Energiewende, in Germany but also to an extent in other parts of the world, is a movement towards more renewable energy generation in most of the generation portfolios in the western world. (California is also at the forefront of integrating renewable energy, the UK has offshore wind, etc.) All of these technologies are fluctuating and do not necessarily correspond to energy demand. This expansion of renewable power generation is challenging, making storage indispensable.

Fossil fuel power plants, which are the backbone of power generation and provide the backup power required to close the gap between demand and fluctuating generation, will be needed for many years ahead. But an exact timing until when they are available is not clear. So in the future more capacity is required to balance the gap, and this was the driver for Uniper’s involvement in the project. Battery storage is one of the most promising technologies to balance short deviations between generation and demand.

Our focus is on several things: technical knowledge of how to permit, construct, implement and operate [a battery energy storage facility]; integration into a trading portfolio; and then the project is mainly intended to find out how profitable batteries already are in the current energy market.

Q:What is predicted for the outcomes of the project?

A: One point is whether battery storage can be profitable at all? Is there a potential for it in the European energy market? For us this is the basis for taking investment decisions: is there a market for this type of application? What would be the preferred battery technology? And what would be the best project setup? (For example, we would not use an existing building for future commercial projects.) How would we proceed with regard to the market?

Also, profitability is not about the technology, but about which is the most profitable application for it, and this is currently quite clear: the primary reserve control (in the UK this is the frequency containment reserve). We want to figure out if there are any other applications that might generate income through energy trading and with regard to support schemes. It’s also the case that some services batteries can provide are just not rewarded – but this can change.

Another potential source of income: conventional power plants provide inertia; they have rotating masses as instantaneous reserve. This would have to be simulated if these plants were not available anymore, by batteries if this is an option. This project will investigate potential future markets, as well as how to bring batteries into the market.

Q: What determined the specific battery technology mix to be tested?

A: We would like the plant to be reliable in the market, but on the other hand, it is a research project. However, the research is not basic research; it’s very, very close to being 100 per cent commercial, very close to market.

The selection of batteries was a compromise regarding these two major constraints. The backbone of the plant is composed of lithium-ion manganese oxide batteries, and also lead-acid batteries. These two battery types provide 80 per cent of the plant’s capacity and power, in order to provide a reliable basis. Then we included advanced lead acid batteries, which are quite close to state-of-the-art, and then two more smaller-scale, not fancy but more challenging, not so widespread technologies: lithium iron phosphate and lithium titanate oxide. These are more next-generation.

Selection of the battery types was discussed, modified and changed within the course of the project because we had some even more unusual battery technology types, but during the course of the project the number of suppliers for this technology was reduced from two to one, and also prices went up. So instead [we selected] technologies which have a fairly good, and now almost predictable market outlook.

Q: Are there any special issues involved, in energy trading or otherwise, that would not be involved for a traditional power plant?

A: There are some aspects that are not comparable to existing fossil fuel plants. Fossil fuel plants usually do not have limited capacity. If you have a gas connection there is always gas available; with a coal-based plant you always have a pile of coal available. For storage, especially storage based on batteries, you can have limited capacity. In Aachen we have a ‘c-rate’ of 1: for 1 kW of power we can provide a capacity of 1 kWh. Usually there is a 0.5-2 c-ratio for batteries, but higher rates are possible.

In this case the requirement is to deliver, in Germany’s primary reserve market (known as frequency containment reserve in the UK), one-half hour in both directions. This means positive as well as negative balancing services. Therefore the battery has to have a certain capacity, and we have to pin down limited capacity. For pumped storage the capacity is not an issue because it is very long, but for batteries the capacity is decisive, especially in relation to the overall investment. Capacity is costly.

The existing building used for M5BAT had to be heavily adapted

You have to make sure the battery is always sufficiently charged if you want to provide the service. If the reservoir or cell state of charge is too low, then you are not able to provide the service, so the recharging scheme is a major difference and something which has to be added that is not required for conventional power plants. The recharging scheme has to be agreed with the TSOs. There are both European and national guidelines under the network code on load frequency control and reserves (NCLFCR). Grid codes state that, for example, if you want to enter the fast balancing service market – for which batteries are best suited – you have to provide for the minimum times which are given in the network codes. You want to be as close as possible to the minimum capacity required to be able to stick to the guidelines and provide for the minimum required time.

Usually, if you provide frequency containment reserve, that means you are directly coupled to the frequency of the grid. As soon as the frequency goes up you have to charge, as there is too much power; if the frequency goes down you have to discharge. Lithium-ion batteries especially can do this very well. Fluctuating is not about losses, but if you do this charging and discharging all the time, you’re losing energy on average because all of these processes incur some losses and the overall state of the charge of the battery will reduce over time. Say you start at 50 per cent, it will be going down. You have to guarantee that it’s not going down, so you have to simultaneously reserve some capacity to recharge. This is the recharging regime.

There is another difference for the economics. The Aachen plant is about 5 MW, which is relatively small. For plants of this size you cannot afford to have a 100 per cent equipped, 24/7 control room. So you have to find other schemes for being able to guarantee a certain availability, and also to guarantee a maintenance concept and a surveillance concept. For smaller-scale plants it is not economic anymore to always have a team on-site. We had to find ways to be able to guarantee that downtime is low, that we can have fast access and remote monitoring, and at the same time reduce the manpower that is on-site. Not because it is a battery project, but because it’s smaller-scale – it’s not feasible to have the same team on-site as a 1000 MW power plant.

Push the button: M5BAT’s partners get the project underway

In the energy trading, the connection is one thing, but integration must be more automatic and there must be more IT because of the smaller scale. If you’re operating the plant in the trading market, response times are fairly high so you can provide full power within five seconds, and it can be even faster. This ramp rate is much higher than fossil fuel plants, which is a potential advantage because you can make use of it in order to allow lower ramp rates for other plants. In a portfolio with a battery, the battery is very, very fast, and the fast action time does not necessarily negatively affect its lifetime. For conventional power plants you try to avoid fast ramp rates; by means of a battery you can reduce the ramp rate of conventional power plants, while providing the same overall service. Putting more of the load change on the battery and less on the conventional power plant will increase the lifetime of the conventional plant.

Q: What work was involved in modifying the existing building for this project?

A: Uniper was responsible for the permitting process, which was easy compared to a power plant and was almost straightforward. There were some challenges around fire protection, which is reasonable because there is not so much experience with regard to fire protection for lithium-ion batteries. Convincing the authorities that we had a decent and fully operational fire protection system that can handle every situation was more demanding.

You would never be able to get a permit within the city of Aachen for a new-build power plant. So this was an existing building, and it was not really suitable to carry the load of heavy batteries so we had to make reinforcements. The site was chosen because of its closeness to a high-voltage substation and to the buildings of the ISEA institute in Aachen.

We installed a new HVAC system to guarantee that all of the batteries have the right temperature. We also had to guarantee air exchange rates for the lead-acid batteries because there are two types, and one of them has hydrogen emissions. To avoid explosive mixtures you have to guarantee a certain air exchange rate. With a common project (not a research project) you wouldn’t do this, you would just buy a containerized solution which includes a fire protection system, air conditioning and the batteries.

Q: How will the facility work to test other battery storage solutions once the project is complete?

A: We have five different battery technologies within the plant, with three containers on the roof, so it’s not so difficult to exchange the three rooftop containers: with a crane, you can take down one and plug in another. We have to stay within the voltage level and power output limits, but we can change the batteries in the roof containers. The batteries in the building can also be exchanged, but this requires a bigger effort as they are not containerized.

Q: How does Germany classify energy storage for support scheme purposes? In the UK, storage is not classified as power generation so there are often problems for developers in attempting to secure subsidies. Depending on how Germany classifies storage, will this affect the project?

A: In Germany we do have support for batteries used in households, and it’s very decent, but it doesn’t affect us. Then we have some support included in the Renewable Energy Act, if you make your plant more flexible and if you integrate [renewables with the grid], but this also does not affect our plant. However, there are exemptions from paying double fees on the grid, because usually you would have to pay a grid fee for charging and discharging. As a battery is providing services to the grid, it is exempted.

There is a negative side for storage: it is not yet recognized as the fourth element of energy economics (besides generation, transmission and consumption), so the regulators try to classify batteries under generation or consumption. It would be preferable to have it classified as a fourth category; this would make things much easier in regulation e.g. with regard to fees and technical requirements.

With regard to technology standards, there are some obstacles as we are connected to the medium-voltage grid and the technology rules only focus on the connecting of PV or wind, which of course are fluctuating resources. Grid management is something you do if you have an unpredictable generator. Storage is predictable and can be used to support the grid, but they have tailored the guidelines towards renewable energy, and so we have to fulfil standards which do not make a lot of sense in terms of energy storage. It would be preferable to have guidelines for energy storage.

In Aachen we had to install a device that allows the DSO to reduce our output, because for a wind or PV plant it would make sense, you can press a button and output is limited. But our storage plant would of course automatically try to balance this out, so it makes no sense, but it’s in the guidelines. The device will probably never be used, but they had to install it.

However, given the growing amount of storage coming onto the grid, I think the rules will change in future. It’s not that storage is not recognized by the entities concerned, it’s just that it’s not yet converted into something new. People hesitate to change these guidelines, but we need a level playing field with regard to the standards and connection requirements.

You can visit the Uniper M5BAT project as part of this year’s POWER-GEN Europe Technical Tour. For more information click here