The acceleration of variable renewable energy projects in the north and the planned retirement of coal-fired power plants are creating an important opportunity for the development of storage systems.
Daniela Tapia
Source: Nueva Minería y Energía Magazine – November 2020
Characterized by the high penetration of renewable energies in the last 10 years, the Chilean energy transition has had several impacts, including the reduction of electricity production costs, diversification of the energy matrix, among others. But this implies increasing challenges for power system operators, because it is necessary to manage the instantaneous variability of the wind resource, as well as the ramp-up and ramp-down of solar generation. This is why storage systems have become a useful and efficient tool. This was pointed out some time ago by ACERA’s vice-president, Paola Hartung, in an opinion column.
The reasons are based on their rapid response and adaptation, compared to current options, to sudden or programmed changes in the supply and demand mix of the electricity system. This adaptive characteristic is referred to as the “flexibility attribute”. “This is why it is increasingly common to find new projects that integrate storage systems from their origin, complementing renewable power plants,” said the executive in the text. There are several types of storage systems. The most important ones in terms of their presence in the electricity systems are hydraulic or pumped storage, where there are about 9,000 GWh of storage of this type of technology.
Then there are electrochemical batteries, which are the best known. Of this type, the most familiar are lead-acid and lithium-ion, which are used in various applications. And with less widespread uses are flywheels, supercapacitors and compressed air. “One type of storage that I think will be talked about is the electrolyzer-fuel cell system. Depending on the relative prices of hydrogen technology, these systems will certainly be able to provide storage with an intermediate output in the form of hydrogen,” says Hector Chavez, associate professor in the Department of Electrical Engineering at the U. de Santiago. Considering the advantages and disadvantages of these alternative storage systems, one of the fundamental aspects that allow the effective integration of these units into the electrical system is the power electronics interface. “This interface is the key piece to achieve the correct operation of the system, and in this sense, important developments and innovations are being made in the topologies that can integrate this interface,” says Ricardo Lizana, an academic of Civil Electrical Engineering at the Universidad Católica de la Santísima Concepción.
Where are we in Chile? According to Rodrigo Jiménez, general manager of Systep Ingeniería y Diseños, electrical storage systems have so far played a secondary role in the country. For example, the first BESS (Battery Energy Storage System) was installed at the Andes substation in 2009 to provide spinning reserve and maximize the power injections of its owner’s power plants, and other BESSs were installed in 2011 and 2016, and another one will be installed at the Andes power plant in the short term. “However, there are still no storage systems that operate independently, the first attempt being the Valhalla project with a pumped-storage plant that has been promoted since 2016. Although the Andes Solar II-B and Campo Lindo projects of AES Gener stand out, which combine 253 MW of renewables with 112 MW of batteries, which, if realized, would be a milestone for storage in Chile,” adds Jiménez.
Meanwhile, in the transmission area, there was a first attempt to incorporate a storage system in the 2017 expansion process. But this culminated in a withdrawal of the work proposal, due to a lack of consensus.
REGULATION IN THE SPOTLIGHT
Currently, regulation 20.936 legally recognizes storage in the electric system. Thus, it was in 2016 that the government began its regulatory work by issuing a regulation for the operation of pumped-storage power plants. The work process continued the following year with a proposal for a power regulation, which included storage systems and their different categories. However, it was withdrawn after the process of receiving comments during its public consultation. On the other hand, in March 2019, with the regulation of complementary services, the first legal text was issued, which includes storage systems in all their categories, followed by the regulation of coordination and operation in December of the same year. “This was the first legal framework for storage systems to operate in the energy and complementary services markets. Similarly, an amendment to the power regulation is currently before the Office of the Comptroller General of the Republic, to integrate storage systems into the power market”, says the executive. But, according to experts, more specific definitions are lacking. For Inodú’s consultant, Jorge Moreno, the Flexibility Strategy published by the Ministry of Energy in September defined a work plan to improve various aspects associated with the regulation affecting storage systems. “At the moment, the regulation in Chile is relatively incomplete. Work is being done to give more certainty to those interested in the development of these systems, both in terms of capacity retribution and the way in which these systems will be operated in the energy market”, says the specialist. This point of view is shared by the academic from the University of Santiago, who adds that there is no recognition of the contribution to the sufficiency of the system that is remunerated. “Neither has there been progress towards co-optimization of energy and reserves to obtain prices, according to costs or declared bids in contrast to the auction system, nor towards more granular dispatches to capture the intra-dispatch need for flexibility, which can be satisfied by storage systems,” says the professor.
Jiménez, for his part, also states that there are other advances to be made, especially in the area of technical standards, given the gap that exists for storage systems.
AN OPTIMAL FUTURE
What is planned for this energy development alternative? The most decisive factor in favoring the massive entry of storage systems is the investment costs, which have been falling, and if they continue, battery or pumped storage systems will become increasingly competitive. In fact, since 2017 the development cost of lithium batteries has been reduced from USD 282/MWh to USD 132/ MWh (investment plus power purchase). “This is a good precedent and sets expectations for the future, making it the most developed storage technology at present. This is in addition to other technologies, such as hydrogen or compressed air, which have been developed later”, says Rodrigo Jiménez, from Systep.
For Héctor Chávez, a promising application is the complementary flexible ramp service (which does not exist in Chile), which consists of reserves to prevent ramp restrictions (especially during solar ramps) from resulting in the dispatch of diesel or other high-cost generation. “These flexible ramp services require quick response and, depending on how the pricing rules are set, can offer attractive remuneration for storage usage,” the university professor determines. Thus, the acceleration of variable renewable energy projects in the north, the retirement plan for coal-fired power plants, in addition to the pressure to retire new units, are creating an important opportunity for the development of storage systems. “Also, as the market of free customers increases, there may be opportunities for the development of storage systems in free customers. That way they will be able to have more control over energy and power withdrawals from the system,” says Jorge Moreno, of the consulting firm Inodú.
