Bending the grid – the risks of new electricity storage innovations
15 Mar 2017
What are the most promising technologies for the different services on the grid? And what is the role of insurance in enabling more flexibility? At a recent conference at the Swiss Re Institute, prominent experts from industry and science came together with Swiss Re to explore new perspectives on this topic.
It is vital for the insurance industry to understand how the organisation of the power grid has changed and will continue to change. The de-carbonisation of power production, prompted by the increased role of renewable energy, has had a positive environmental impact. However, the wind doesn't always blow and the sun doesn't always shine – power production must be increasingly agile. Grid operators have continued to look for adaptable providers at all supply chain levels (generation, transmission, and distribution). Energy storage provides innovative solutions by providing power quality, reliability and arbitrage services, as well as grid investment deferral (through optimisation of the existing assets). Prior to the conference, Swiss Re analysed 34 varieties of storage technology, and divided them into six groups.
In particular, the conference participants discussed lithium-ion batteries, all vanadium redox flow, and compressed air technologies for grid applications. They also provided an outlook on the technological risks involved. Professor Donald A. Sadoway highlighted the different forecasts concerning cost reductions in lithium ion batteries (at the battery pack level), as well as the technical and economic burden behind battery architecture, with several thousands of cells in various configurations. Sadoway is the inventor of liquid metal batteries, and participants' debate quickly turned around the competing technologies. Marcus Müller, who headed the so-called 'EEBatt project', highlighted lithium-ion battery safety concerns which require appropriate protection devices especially for fire and explosion risks, particularly for stationary applications. This was supported by Philipp Sager from Swiss Re Reinsurance, who applied Swiss Re's 4-box model to assess the risks of storage technologies, and also showed past incidences. For the re/insurance industry it is still crucially important to better understand the risks involved in these new technologies in order to provide suitable coverage solutions, especially as we have not yet seen the widespread penetration of stationary storage technology which would have allowed loss experiences.
From lab to application - the Swiss examples
Switzerland has been at the forefront of testing new storage technologies. While there have been a lot of research and application for example in regard to redox flow batteries by the Swiss poly-technical universities presented by Professor Girault, and Michael Koller from the Zurich EKZ and Dr. Chartouni from ABB presented their local experience with the 1 MW storage solution in Zurich. Of note here is the positive impact on primary frequency control, peak shaving, island operation, and voltage support. We can increase the profitability of a battery energy storage system by cumulating the applications, but without accelerating the degradation of the batteries nor losing performance. Another example where Switzerland is testing innovative grounds is the world-wide first pilot plant of advanced adiabatic compressed air energy storage technology. Dr. Zanganeh from ALACAES presented the plant, expected a market pull in 3-5 years. The technology could present interesting alternatives and has fewer issues with public acceptance, as the machinery is hidden in the mountain and not exposed to the risk of water pattern changes.
Grid alignment and the regulatory setting is crucial
Norela Constantinescu from ENTSO-E, the European Network of Transmission System Operators for Electricity, and Dr. Ulbig from Adaptricity, an ETH Zurich spin-off, both pointed out the different services and various needs that grids require. Grid actors would potentially be 'technology agnostic', as they require the most suitable technology at the correct level. Most future developments in storage technologies will happen at the distributed level, hence the Distribution System Operators will gain even more importance. Consequently, Professor Tobias Schmidt from the ETH Energy Politics Group highlighted regulatory limitations as one of the main issues for storage development on the grid. In particular, this refers to the question of storage ownership and the producer and consumer roles in an unbundled grid – which is also relevant for re/insurance with regard to liability.Summary of the Swiss Re Institute's Grid Storage event in March 2017. Summary by Oliver Schelske and David Grivel.