Implementing energy storage for peak-load shifting

Engineers should offer building owners the ability to reduce energy load by shifting it from peak to off-peak hours.

By Robert Corson, PE; Ronald Regan, PE; and Scott Carlson, Triad Consulting Eng December 12, 2014

Learning objectives

  • Understand the basics of peak load shifting using energy storage systems.
  • Identify the benefits of implementing energy storage systems with respect to mitigating generation requirements, energy demand, and usage costs.
  • Understand the basic concept of implementing energy storage systems with renewable energy storage.

Peak-load shifting is the process of mitigating the effects of large energy load blocks during a period of time by advancing or delaying their effects until the power supply system can readily accept additional load. The traditional intent behind this process is to minimize generation capacity requirements by regulating load flow. If the loads themselves cannot be regulated, this must be accomplished by implementing energy storage systems (ESSs) to shift the load profile as seen by the generators (see Figure 1).

Depending on the application, peak-load shifting can be referred to as "peak shaving" or "peak smoothing." The ESS is charged while the electrical supply system is powering minimal load and the cost of electric usage is reduced, such as at night. It is then discharged to provide additional power during periods of increased loading, while costs for using electricity are increased. This technique can be employed to mitigate utility bills. It also effectively shifts the impact of the load on the system, minimizing the generation capacity required.

Load shifting is not a new concept and has been implemented successfully by end users in numerous industrial and large-scale commercial facilities in the past to decrease electrical peak demand and associated energy costs. With the rapid expansion of renewable energy plants in recent years, peak-load shifting has received noteworthy attention, and for different reasons than in the past. Renewable energy sources-specifically wind and photovoltaics (PV), which have seen exponential growth recently-provide irregular power due to meteorological and atmospheric conditions (see Figure 2). As these power sources come to provide an increasingly significant contribution to the load flow in the electrical grid, their effects become more pronounced on the power quality of that grid. The erratic fluctuations in power generated by these renewables can be detrimental to maintaining transient and dynamic stability within the system. Power quality concerns generally associated with renewable energy sources include voltage transients, frequency deviation, and harmonics.

However, by implementing an energy storage system, it is possible to turn the intermittent source into one with a relatively uniform and consistent output. As such, the large-scale deployment of renewable energy sources coupled with the Smart Grid relies greatly on energy storage systems for maximum effectiveness and optimization.

Cost reduction

When peak-load shifting is applied to reduce energy costs, it is often referred to as "peak shaving." Peak shaving describes when a facility uses a local energy storage system to compensate for the facility’s large energy consumption during peak hours of the day. Most facilities do not operate 24 hr/day. In fact, most facilities do not even operate most of the day. In this scenario, the energy demand, typically measured in kW, remains relatively low most of the day and rises only during operational hours. By charging an energy storage system during the off hours of the day and discharging it during the operational hours, the peak demand charge from the utility can be reduced.

In most cases, utility companies provide a lower billing rate for energy used outside of peak operating hours, which further increases the economic benefit of implementing an ESS. For example, consider that ERCOT‘s pricing on June 27, 2014 varied from approximately $35/MWh ($0.035/kWh) to approximately $1,000/MWh ($1.00/kWh) between 1 and 4 p.m. Each MWh consumed to charge batteries in off hours would save $965, to be discharged during peak hours. For large energy users, this could result in thousands of dollars in savings a day.

In a typical financial evaluation, the peak demand and savings associated with off hours usage would be compared against the energy storage system capital expenditure, in addition to the inefficiencies of the system. ESS return on investment calculations can be even more attractive in locations with government or utility incentives. For example, the CAL-ISO bid schemes presently reward load sources that can commit, with certainty, with higher prices vs. those that are intermittent. Additional efforts are underway in California to further increase the financial incentives for ESS to better reflect their potential value to the grid as a system, as well as the environment.

Power quality

In addition to the energy cost reduction, energy storage systems are capable of increasing the quality of power to a facility, in terms of maintaining nominal voltage and frequency values. Fast-acting energy storage devices, such as batteries or ultra-capacitors, can absorb or discharge power to account for transient fluctuations in the utility power to accomplish this.

Renewable generation

As renewable energy continues to expand into a more prominent source of power in the electrical grid, it becomes increasingly necessary to convert the variable and intermittent power output into a more steady and reliable source.

As PV power is generated only intermittently between sunrise and sunset, it is possible that generation does not coincide with a grid’s peak power demands. Even if the generation source coincides with peak power demands most of the time, the utility must have generation assets to power the grid in case demand remains high while cloud coverage restricts PV generation. As PV power grows to represent increased contribution to the grid, reliability issues could emerge, similar to the impact of wind power in states where wind has had much greater penetration.

The concept of peak shifting can help remedy this situation with a slightly different approach: generation shifting. In other words, ESS not only holds the promise of supporting end users in reducing their costs, but through generation shifting also allows generators access to a higher value of dispatchable generation.

Energy storage can be used to shift the peak generation from the PV system to be used when the demand requires it, as shown in Figure 3. Excess energy can be stored during peak PV generation. This allows for the distribution of this energy when the PV system is not generating adequate power, or not generating at all.

Energy storage can also be used for peak smoothing with renewable generation. This is similar to peak shifting but with a significantly shorter period and higher frequency. During a low irradiance situation, such as a cloudy day, a PV array will generate power sporadically with dips and spikes. This irregular power applies to sudden changes in wind velocity with wind turbines or windmills. Both types of these fluctuations can cause dynamic instability in the electrical infrastructure’s generating system. Local energy storage can mitigate these fluctuations in output power by regulating ramp-up controls and absorbing the spikes in power, as well as responding to sudden sags by injecting power. This smoothing of the generation curve provides a more stable power source and reliable distribution grid. In certain jurisdictions, utility companies have requirements for grid connected generation, regulating power production waveforms by means of energy storage. This is especially true where the utility grid is considered weak or isolated, such as on an island. With the exponential growth of renewable energy, integration into these electrical grids can have a more dramatic effect, which explains the fairly stunted renewable expansion in these regions.

Utility usage 

Thus far, we have discussed mainly private use or renewable merchant generator peak-load shifting. However, this technique is employed by utility companies as well. As power generation facilities age, equipment failures accelerate, and as the demand for power increases over the years, existing plants have trouble meeting load requirements. To compensate for this, a plant may elect to install an energy storage system that can be charged when demand is low and discharged when demands cannot be met by the primary generation source. This allows power plants to postpone major upgrades that could be exponentially more costly (see Figure 4).

Types of energy storage

A wide variety of methods for storing energy are implemented today, depending on the specific application and nature of the system requiring it. Energy can be stored using electrical, mechanical, thermal, and chemical storage systems-each with their own benefits and appropriate application. Electrical storage systems are the most ubiquitous, typically in the form of batteries or capacitors. These can range from small watch batteries, to data center storage with emerging lithium-variant batteries (see Figure 5), to utility-scale storage systems that may implement flow battery types.

Mechanical storage systems operate by converting electrical energy into potential or kinetic energy for storage. When it is discharged, it is converted back into electrical energy. Mechanical storage usually refers to flywheel, compressed air, or pumped hydro storage systems.

Chemical storage (excluding batteries) typically uses electrical energy to perform water electrolysis, which produces hydrogen. The hydrogen can be used differently depending on the application. While chemical storage has poor efficiency, it does allow for the storage of large quantities of energy. Although each of these methods can be effective ways to store energy, this article will focus on battery energy storage systems, as they are the prevalent systems used today.

Battery energy storage systems are the most common type largely because of the flexibility offered. As battery energy storage is constructed by combining smaller electrical units in series and parallel, it allows the system to be readily sized or modified for most applications. Further, the response time permits load flow and dynamic contribution for voltage control and frequency regulation, a critical element in coupling energy storage with renewable generation and maintaining grid stability.

Until recently, lead-acid batteries have been the preferred choice for battery storage systems. This can be attributed to their robust construction and relatively low cost. Additionally, large configurations can be constructed without needing a management system, requiring minimal support. Despite these benefits, the limited average life of approximately 2,000 cycles, which can vary substantially depending on the environment and method of use, has facilitated propagating the research and development of new battery technology, as employed in the modular battery energy storage system, which is used for high current applications in energy shifting, mass transit station propulsion systems, and on-site regulation (see Figure 6).

Recently Li-ion batteries have come into play in the industrial energy storage market, and for good reason. In contrast to lead-acid batteries, Li-ion batteries provide increased energy density, efficiency, and have more than double the life span of a typical lead-acid system, averaging 5,000 cycles of operation. Li-ion batteries initially gained popularity as small portable batteries for electronic devices, such as laptops and cell phones. However, with recent advances in Li-ion technology-mostly attributed to electric vehicle growth-the development of larger systems has become possible. These systems require a management system to monitor the batteries for proper charging, discharging, and internal voltage regulation. This requirement stems from their construction in which the thermally unstable electrodes in the battery could undergo thermal runaway. Currently, the cost of Li-ion batteries is somewhat of a hurdle for this technology. However, as production continues to increase, prices are expected to drop significantly.

Smart Grid

The Smart Grid is considered by many to be the future of the power grid, and energy storage plays an essential role as part of it. Power distribution topology today is generally centralized around a power plant that delivers energy through transmission lines. These transmission lines transfer power to distribution stations, which then supply power to loads served in localized areas.

As demand for energy increases, key constraints exist throughout the system. Additional generation assets can require substantial time to acquire necessary permits, and transmission lines that need to be upgraded often incur considerable public resistance to development and cost-particularly if such upgrades require modifying existing overhead lines to run underground. So, a key thought process for Smart Grid development is not to think solely in terms of displacing existing approaches, but how Smart Grid methodologies and approaches can complement existing systems to improve the reliability and operation of the overall grid while meeting such growth expectations.

An essential element in the concept of the Smart Grid is supplementing centralized resources with decentralized options (see Figure 7). The Smart Grid supports the central power plant configuration with the integration of renewable energy sources located throughout the power network-from utility scale generation that may occupy hundreds of acres, to small residential power sources. This is accomplished through a control and automation center that monitors and reacts to events that occur within the system-from regulating generation and load flow to isolating power outages.

For renewables to play this critical role in the Smart Grid, they cannot be intermittent sources as with the wind and PV technologies as they exist today. They must be reliable generators with stable voltage outputs, which can be accomplished using energy storage for optimum penetration into the grid. To create the Smart Grid, the utility and renewable generators require a flexible technology that can quickly respond to transient and dynamic power fluctuations. Ideally, in the future, in addition to the power producers, consumers will also be encouraged to have their own energy storage systems to shift peak loads and mitigate demand fluctuations to the grid.

Codes and standards for energy storage

National Electric Code (NEC) has included sections on energy storage systems for some time now. As the implementation of energy storage continues to evolve, so have the codes. While this article offers a brief synopsis of key codes and standards to consider, the implementation of energy storage systems can be very complex and should be performed only by an engineer well versed in ESS application and power system design. The following NEC articles should be referenced in the design and implementation of battery storage systems:

  • 2011 NEC, Article 480 dictates the requirements for the use of storage batteries including the storage environment, overcurrent protection, insulation, and ventilation.
  • 2011 NEC, Article 690.71 also applies to battery energy storage, specifically for PV systems.
  • 2014 NEC, Article 690.71(H) is a new addition that describes requirements that apply to battery storage circuits that are greater than 5 ft long or pass through a wall or partition. The five requirements are as follows:
  1. A fused disconnecting means and overcurrent protection shall be provided at the energy storage device end of the circuit. Fused disconnecting means or circuit breakers are acceptable.
  2. Where fused disconnection means are used, the line terminals of the disconnecting means shall be connected toward the energy storage device terminals.
  3. Overcurrent devices or disconnecting means shall not be installed in energy storage device enclosures where explosive atmospheres can exist.
  4. A second disconnecting means located at the connected equipment shall be installed where the disconnecting means required by requirement No. 1 is not within sight of the connected equipment.
  5. Where the energy storage device disconnecting means is not within sight of the PV system ac and dc disconnecting means, placards or directories shall be installed at the locations of all disconnecting means indicating the location of all disconnecting means. 

The following IEEE standards should be referenced, as applicable, in the design and implementation of battery storage systems:

As the Smart Grid develops and renewables increase in the percentage of generation, the use of energy storage system technology will mature to accommodate these demands. As battery and other energy shifting technology systems improve the quality and efficiency of our distribution systems, users will experience greater reliability and superior voltage and frequency stability, at lower costs.

Robert C. Corson, PE, is a senior electrical engineer at Triad Consulting Engineers Inc. He designs and implements power systems and renewable energy projects requiring energy storage systems for peak load shifting. He is also an adjunct professor at New York University.

Ronald R. Regan, PE, is a principal of Triad Consulting Engineers Inc. He is responsible for renewable energy and power generation projects in U.S., Caribbean, and South America.

Scott C. Carlson is a staff engineer at Triad Consulting Engineers Inc. He specializes in the optimization and use of energy storage systems to be implemented on renewable energy projects.