The power grid is a pretty complex system. Electricity is generally produced on an as-needed basis. Generators ramp up and down based on demand. However, energy storage systems are beginning to change how demands are being met.
Hydro Is Storage
Energy storage isn’t a new concept. In fact, pumped-storage hydro systems have been around since the late 1800s. According to the Department of Energy (DOE), there was 23.6 GW of operational pumped-storage capacity in the U.S. in June 2018, which accounted for 94% of the country’s energy storage. Furthermore, some experts have argued that all hydropower is a form of energy storage.
“Our water reservoir[s] are our batteries,” Eric Martel, president and CEO of Hydro-Quebec, said in March during a panel session at the BloombergNEF (BNEF) Summit in New York. Hydro-Quebec is a Canadian public utility that operates some 60 hydroelectric generating stations. Martel said Hydro-Quebec’s reservoirs are so large that the utility “can store 175 TWh, which is more than enough to provide the whole electricity for the New York state for a year and a half almost.”
Pumped-storage hydro systems function kind of like a bank. Owners can make deposits, that is, use electricity to pump water into a reservoir when power is abundant and the price is cheap. Then, they can make withdrawals by reversing the operation and generating power when electricity prices increase, thus pocketing the price difference. There is some lost energy along the way, because the systems are not 100% efficient, but as long as the price difference more than makes up for the losses, the economics work.
Besides arbitrage, energy storage can also help defer generation, transmission, and distribution capacity additions; improve grid flexibility, reliability, and resiliency; provide ancillary services; stabilize power quality; minimize renewable energy curtailments; and assist end-users in managing energy costs.
“If we use the hydro capacity to store energy and to firm the production of other resources, then we are getting to power which is as-consumed power, no longer as-produced,” Grzegorz Górski, managing director of ENGIE’s Centralized Generation Métier, said at the BNEF event.
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