Battery energy storage systems to hedge prices and support the power grid
Volatile electricity costs have impacted business across the industry over the past year . Battery storage can offer a solution to not only guarantee supply but also to hedge costs and maximise the use of renewables .
By Philip Appelsved , VIMAB Group
Companies in Europe for whom the demand and reliability of power is critical were heavily affected by soaring costs of energy during 2022 . The situation has been fueled by the Russo- Ukrainian conflict , resulting in natural gas supply from Russia to Europe being cut off and countries that had previously relied on Russian gas as a source of energy have been forced to procure energy elsewhere . In addition to driving prices , the intermittent power shortage has also caused a big strain on many countries ’ power grids , as the spread between demand and supply has increased . Large fluctuations in energy prices causes production cost uncertainty and difficulties in production planning .
Active energy trading Large fluctuations in energy prices over the day does however not only pose a threat to production , but it also presents an opportunity use the price spread to one ’ s advantage . By using large scale energy storage systems , i . e ., big batteries , one can get leverage to own advantage , by trading on the hour-by-hour spot market . The trading is conducted by autonomous algorithms that through analysis of various factors , such as own consumption patterns , the need for power and the day ’ s price curve , determines tipping points for each transaction . For those cases where the site owner also has production , e . g ., a photovoltaic system , the battery can store generated power until pricing is more beneficial for selling , thereby increasing the yield from the photovoltaic system .
Back-up power In addition to presenting an opportunity for active trading on the energy market , energy storage systems also function as back-up power , for those cases where the energy grid is not stable , or where a power outage simply is not an option due to production methods . In comparison to using diesel-fueled back-up power or similar , batteries are much quicker to respond upon power outages and require a minimum of maintenance .
Reduction of active power Energy storage systems can offer big cost reduction potential by reducing what is in certain countries referred to as “ activated power ,” which means that the peak power that is utilised during the month , will be the cost basis for the remainder of the month . Many processes that require a lot of power , only require high power output during shorts periods of time . By extracting accumulated power from the batteries , rather than from the grid , cost of energy can be reduced significantly .
Support the power grid balance The disruption in power delivery that Europe has experienced in 2022 , has not only driven energy prices , but also caused the compensation for frequency containment services to go through the roof . Frequency containment is necessary to maintain a stable frequency in the power grid , depending on location , this will typically be 50 , or 60Hz . If the power input to the grid is too high relative to the output , the frequency in the grid will
rise , and vice versa . In order to avoid deviations from the nominal frequency , the transmission system owner , TSO , i . e ., the grid operator , will procure frequency containment from the market . Providing frequency containment services to TSOs has during 2022 been tremendously profitable in certain markets , and will likely continue to be so as many governments have a set agenda to increase the ratio of solar and wind in the total power supply . Although this is a sustainable strategy , it comes with a few implications . One of them being that these are energy sources where power output is difficult to plan ahead , resulting in a high demand for frequency containment in the power grids . In summary , battery energy storage systems do not only provide security in power supply , but they also present a possible revenue stream and facilitate a transition to using only renewable energy sources .
About the author
Philip Appelsved is Chief Sales Officer for VIMAB GROUP , an industrial group active within steam and energy solutions , industrial cleaning and industrial valve maintenance , among other . The group consists of seven highly specialised companies and turns over approximately EUR 23.2m . Philip ’ s main task and responsibility as Chief Sales Officer is to grow current markets as well as to find and develop new markets .
22 Stainless Steel World March 2023 www . stainless-steel-world . net