Technology Corridor
Energy Storage Systems
A Case Study
How to reduce the cycling costs of conventional generation.
September 2004
By G. Paul Grimsrud, Steven A. Lefton, and Philip M. Besuner
Energy Storage Systems (ESS) can provide significant benefits associated with reduced damage to fossil-fuel power plants if the ESS is used in such as way that it reduces start-ups or load-following/cycling. Though those benefits may not be well known, understood, or documented, they are real and ascertainable.
In recent years, many utility-owned thermal generation units, particularly older coal-, oil-, and gas-fueled units, have been forced to cycle, often on a daily basis. This is partly because of the commissioning of newer nuclear and large combined-cycle base load units, and partly because of increased power from efficient, low-cost merchant power plants. The cost of cycling these older fossil units is many times the costs used in making dispatch and planning decisions (see Table 1).
We evaluated the cost of cycling for more than 200 units and found that cycling accelerates the wear and tear of many components of a generation unit, in mostly predictable ways. The increased cycling leads to higher maintenance costs and increased downtime, increased forced outage rates, higher heat rates, and shortened life expectancies. The evaluation also addresses dynamic heat rate effects-variation in generation fuel efficiency from variations in operating conditions, especially percent loading.
The Evaluation
To illustrate the concept of reduced cycling-related costs using ESS, we performed realistic simulations to produce example results using the company's proprietary (generation) system dispatch optimization and production cost model, Cycling Advisor. The results of these simulations were interpreted in consultation with Distributed Utility Associates.
The company's proprietary model allows consideration of all important system production costs, the largest being costs related to fuel and equipment damage. It also takes into account all system constraints and off-system transaction opportunities. Unique to Cycling Advisor, our system has the ability to account for cycling costs, for a range of "event" types such as load following, cold starts, shutdowns, steady loads above unit ratings, and cycling-influenced dynamic heat rate effects. The company has used this system to help several U.S. and foreign utilities estimate unit-specific total costs of cycling, to improve dispatch decisions, and to estimate full benefits and costs from specific generation investment opportunities, including peak, intermediate, and peak-load generation and ESS.
The simulations, based on hourly load variations, reflect a large utility system where generation is dominated by large fossil-fueled plants. The evaluation simulated operations over a 10-day period representing a summer peak load condition. The first simulation was used to establish a baseline: Results reflect operation of the generation fleet without storage. Results from that simulation were compared to another that included ESS. That comparison yielded an estimate of the potential cost reduction due to reduced cycling.
Readers should note that simulations do not account for short duration (less than 1 hour) power fluctuations (due to Automatic Generation Control, AGC) and related damage. Though only speculation, it is possible that storage can provide even greater benefits if effects from those short duration power fluctuations on the generation system (cost) are included in the evaluation
of ESS benefits.
Figure 1 shows an example of cycling costs for a large super-critical gas-fired unit. The numbers in this figure represent costs per on-off cycle and load-follow cycle. Although the cost per load-follow cycle is low, since there can be hundreds of them per year for a unit, their annual total cost contribution can add up significantly.
Results
For the periods simulated, overall generation cost reductions (associated with reduced cycling and start-ups) ranged from 5 to 28 percent. The benefit is highest during periods when system loads are most volatile.
For the scenario modeled, which is based on the "with" ESS and "without" ESS simulations, the benefit associated with reduced cycling and start-ups was about $16/kW of storage capacity per year. Based on experience, the authors expect that the annual benefit would vary greatly depending on the mix of generation units, and we estimate that a reasonable range is $5/kW-yr to $20/kW-year. Using a cost escalation of 2 percent and a discount rate of 10 percent, for an ESS life of 20 years, that is approximately $50/kW to $200/kW of storage (net present value).
The authors emphasize that this analysis was limited to one system, and that annual values are based on extrapolations from a 10-day simulation. These extrapolations are based on several Aptech studies using varying seasonal conditions of loads and resources.
ESS capacity could provide significant benefit if used to reduce cycling and start-ups for generation fleets with a mix of coal- and gas-/oil-fueled plants that are primarily steam-boiler type plants (Rankin cycle) and with a significant portion of older plants.
Though it is unlikely that storage would be justified based on the reduced cycling amount alone, arguably that benefit should be included in any estimate of total benefits of ESS, when evaluating the merits of and overall value proposition for a specific ESS project. It is significant enough to make the difference if financials of a given ESS project are marginal.
To develop a better indication of the potential importance of this concept for the energy storage industry, we recommend the following steps:
"Inventory" generation fleets or regions for which the benefit is highest;
Develop preliminary market potential estimates; and
Work with at least two specific generation entities to simulate and verify the benefits.
G. Paul Grimsrud (pgrimsrud@aptecheng.com), Steven A. Lefton (slefton@aptecheng.com), and Philip M. Besuner work for Aptech Engineering Services Inc. This article was prepared in consulation with Joe Iannucci (joe@dua1.com) and Jim Eyer of Distributed Utility Associates.
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