Battery Storage Takes On Gas Peaker Plants

Replacing peaker plants has been one of the holy grails of battery storage since AES Energy Storage put its first small 1MW and 2MW projects on the grid to perform frequency regulation over seven years ago. In 2014, when the company launched its new Advancion energy storage system, with a 100 MW Li-on battery array, that moment finally arrived.

“We’re competitive with power plants, Chris Shelton, president of Arlington, Virginia-based AES’s energy storage unit, told Bloomberg, noting that Advancion's $1,000 a kilowatt cost easily beat out new gas peaker plants by at least $350 a kilowatt. AES has been innovating and building up to this for several years. At the time of the launch, it managed the largest fleet of grid batteries in commercial service, with more than 200 megawatts in operation and construction, and more than 1 gigawatt in development.

A $30 billion market

Why are peaker plants such easy prey? They're fueled by natural gas, more costly to build, and often operate only a few hours a year. So storing power when its off-peak and cheap and feeding it back to the grid during high demand helps to make the batteries cheaper. Since Advancion is capable of discharging for four hours, and peaker plants also tend to fire for four hours or less a day when ramped up, “people are really seeing that this could be part of future planning for the utility sector.” Shelton added. 

To put Advancion in perspective, around 30 gigawatts of peak capacity are added around the world each year to keep up with population growth and new demand. At an average cost of $1 million per megawatt for a gas-fired plant, AES Energy Storage can now attack a $30 billion annual global market. Projected coal plant closures will speed up openings for Advancion, which was developed to replace older fossil plants in city load pockets. Since these are often found in inner cities and add to air emissions problems, substituting zero-emissions energy storage is a no-brainer.

Peak power substitution makes even more sense in overseas markets, according to Greentech Media, where electricity demand is growing faster and the cost of natural gas is higher than in North America. AES Energy Storage can reach overseas markets through its deep-pocketed utility parent. Already the leader in frequency regulation, the peak power substitution market is 20 to 40 times larger.

Advancion's first customer

Last November in a potential turning point, Southern California Edison revealed a 250-megawatt energy storage procurement, setting a new standard for integrating distributed and customer-owned energy into grid operations. Along with the shakeup in the way utilities deploy various energy assets, SCE contracted AES Energy Storage to build a 100-megawatt “in-front-of-meter” battery system - the world's largest electrochemical battery - in its West Los Angeles Basin region.

SCE is trying to replace the power lost from the retired San Onofre nuclear power station, as well as several old natural gas plants. Originally the utility had decided to procure only 50MW of storage but went for 261MW instead.

Greentech Media spoke with John Zahurancik, VP of AES Energy Storage, who said, "It is truly a modernization of the power system - the new state of the art." He added, "Energy storage can be smaller - with an architecture to take advantage of the modularity of batteries. One advantage is that you have a massively parallel array, which gives a high level of reliability and design advantage and a common set of controls."

With no air emissions, no waste stream, and no fuel supply requirements, typical permitting and construction can occur in a year, while fossil power plants might take 3-5 years at the same location. Advancion can be installed in locations near the load they serve. Very few peaking power plants could offer so many benefits.

New competitors

Advancion still has to prove its Li-ion batteries are capable of the long haul, coping with possible capacity fade over a 20 year power purchase agreement. While lithium-ion may be the preferred mass-market battery, there’s a need for batteries that can do something Li-ion struggles to do: storing or releasing energy for at least four hours at a time.

This year significant competitors have popped up, from flow batteries from Imergy and EnerVault, CellCube-American Vanadium and ViZn Energy, to sodium-ion batteries from Aquion and liquid metal batteries from Ambri. And surprising everyone, former European stealth startup Alevo invested $1 billion to build a US plant to roll out its inorganic lithium-ion battery. 

Will battery storage be integrated into the grid in 20 years?

Images: AES Energy Storage