Page 59 - Energize March 2022

TECHNICAL

the energy rating, the system can expand revenue stream in California. the owner chooses to run the system less
from providing 10 MW in 30-minute The RA rules also require generators aggressively due to unattractive market
increments, to providing 10 MW in to bid into the CAISO market during most conditions, the augmentation can be
2-hour increments. The flexibility of the hours of the day so that CAISO knows delayed or even skipped to reduce cost as
GEMS platform also enables a mix of these assets are online and available. For much as possible. By tracking the battery’s
high-power battery cells from the initial ESS, the most lucrative secondary revenue flexible warranty, GEMS enables the
design with high-energy cells in the stream available in the CAISO market is system owner to make trade-off decisions
future design to minimise cost and plant typically frequency regulation. Therefore, for various market conditions. This flexible
footprint at initial deployment and after the ESS assets deployed in California are approach provides the investor with
augmentation. four-hour systems, but are used most more confidence that merchant revenue
Lastly, the Wärtsilä EFR/dFFR of the year for frequency regulation, a is attainable, which boosts returns and
system design benefits from a flexible use-case which requires shorter duration allows for competitive bidding in RA
warranty that adjusts according to system storage solutions in other markets. tenders.
throughput. Through a competitive
procurement, superior warranty terms Market uncertainty Conclusion
from the battery vendor were secured While many California ESS assets have In the United Kingdom and California, two
for this project. The GEMS platform signed RA contracts for ten years with early and significant markets for energy
displays and tracks all battery performance utility off-takers, CAISO frequency storage, success for storage owners is
elements related to revenue and regulation is an entirely merchant market only possible if investments are future-
warranty through a GEMS dashboard. revenue stream. Frequency regulation proofed. In both markets, investors must
The dashboard provides insight to the could be highly lucrative or near worthless plan to future-proof energy storage to take
ESS owner about system management in the future. RA contracts have fixed advantage of revenue streams that are
and assurance to the battery vendor capacity requirements, so an energy not contracted. These revenue streams
that warranty terms will be honoured. storage owner must plan to meet the are uncertain, so a flexible system design
This warranty available to Wärtsilä UK fixed capacity requirement over the is necessary, to be confident that the
projects is unique because it provides an life of the ten-year contract either by revenue streams are attainable. In the
incremental value when the system owner oversizing the system for ten years of UK, the revenue risk includes frequency
chooses to conserve the batteries. planned degradation or by planning for an response revenue in the years after an
Until now, many investors have augmentation of energy storage capacity. EFR or dFFR contract has expired, as well
perceived the risks in the UK ESS market However, if frequency regulation values as future changes in the capacity market.
to be too high. The ESS investment case go up or down, the energy storage owner In California, the risk includes frequency
depends heavily on revenue generation may wish to utilise the ESS differently, regulation revenue, which augments
coming after National Grid’s current leading to an increase or decrease in revenue from a bilateral capacity contract.
contracted revenue period. With the degradation. Given the uncertainty of ESS In both markets, storage owners who do
combination of intelligent software, usage in California and the requirement not assume additional merchant revenue
careful planning and warranties that for fixed capacity in 10-year contracts, an in their project pro-forma, will be unable
address customer needs, system owners augmentation plan and flexible warranty to compete in solicitations for long-term
can future-proof their investments in the provide significant incremental value to a contracted revenue. Once projects are
burgeoning UK battery storage market. storage owner. built, the measures taken to future-proof
ESS will make the difference between
Case Study 2: California Independent Future-proofing approach realising revenue expectations and being
System Operator (CAISO) For California RA systems, Wärtsilä offers left with stranded assets.
Market overview an augmentation plan, which it has put Wärtsilä has built software technology
The California Public Utilities Commission into place in a 20 MW / 80 MWh project and engineering philosophy with flexibility
requires distribution utilities to procure deployed in California in 2016. Under in mind. Regardless of the changes that
capacity commitments of at least 115% this plan, GEMS will track the warranted come to battery storage technology
of their peak loads. This requirement is capacity of the batteries and display or energy storage market revenue,
met though bilateral Resource Adequacy trend values over time. At the same time, our systems will be equipped with the
(RA) contracts between utilities and our team designed for flexibility with a flexibility to achieve optimal results for
generation owners. For limited energy planned inverter-based augmentation storage owners.
resources such as ESS, RA contracts are at approximately Year 5 of the system.
defined to require four hours of discharge If the owner chooses to run the system Contact Mirja-Maija Santala,
duration at rated capacity. Most grid-scale more aggressively for more revenue, this Wärtsilä Energy,
ESS projects in California are four-hour augmentation can occur sooner with mirja-maija.santala@wartsila.com,
systems because RA is the most lucrative more batteries augmented. Likewise, if www.wartsila.com/energy

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