Operating a Renewable Energy Storage Asset: Risks and Challenges

November 18, 2023

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Ascend Presents

In a rapidly shifting renewable energy landscape, successfully operating battery storage assets offers significant opportunities, risks, and challenges related to resource adequacy, cost, regulation, and quality assurance. At the Ascend Summit 2023, Jeff Hartsough, Managing Director of Asset Operations at Ascend Analytics, moderated a panel that focused on operating storage and renewables, including day-ahead and real-time bid optimization strategies. Fellow panelists included Chris Eshleman, Director of Energy Analytics and Electric Supply at Ava (formerly East Bay) Community Energy in Oakland, California, and Ted James, Head of North America at ACCURE Battery Intelligence. Mr. Eshleman currently manages load for Ava’s assets, which includes two years of experience operating a battery in CAISO, and recently supported the go live of a new solar + storage hybrid asset for Ava. Mr. James provides battery intelligence and analytics for 1 GW of assets in Texas and 3 GW of assets worldwide.

Key Takeaways

  • Mitigating risks associated with the timely deployment of a storage asset requires properly configuring APIs and leveraging a bid optimization platform, such as Ascend Analytics' SmartBidder™, that offers seamless connection to all data points involved.
  • Data points such as available state of charge (SOC) and correct degradation curves have become essential inputs for optimizing bidding and improving battery performance.
  • Accurate data collection represents a crucial first step in mitigating operator risks related to resource adequacy and cost.
  • As ISO regulations continue to evolve, much of the storage industry wants CAISO to approach bidding from a state of charge standpoint rather than the current construct of unloaded capacity.
Left to Right: Chris Eshleman, Director of Energy Analytics and Electric Supply at Ava (formerly East Bay) Community Energy in Oakland; Ted James, Head of North America at ACCURE Battery Intelligence; Jeff Hartsough, Managing Director of Asset Operations at Ascend Analytics

Challenges of Bringing the Asset Online

Panelists identified several challenges in ensuring the timely online deployment of the asset. These challenges include completing the construction project on time, establishing interconnections between the Energy Management System (EMS), the bid optimizer, the scheduler, and the ISO, as well as ensuring readiness of all data points. Mr. Eshleman, with his recent experience of having a hybrid asset come online, emphasized the importance of having all APIs configured and the ease of using a platform, such as Ascend Analytics' SmartBidder™, that offers a seamless connection to all data points. Both panelists acknowledged the critical importance of testing in the final months to successfully bring the asset online.

Safety and Health of the Battery

The panel emphasized the unique challenges related to the health of batteries, given the rapid scaling of production and operation of batteries worldwide. Mr. James observed that most batteries currently going live have been manufactured by young, recently created hardware companies, which makes quality assurance more challenging and leads to issues with reliability and monitoring data quality. This dynamic underscores the significance of the EMS in optimizing performance and ensuring battery health. Data points such as available state of charge (SOC) and correct degradation curves have become essential inputs for optimizing bidding and improving performance. Additionally, the panelists shed light on the impact that a project's location and prevailing weather conditions have on the battery, and vice versa. For example, a battery asset coming online in California must seriously consider risks posed by wildfires and gain approval from all local emergency agencies. Mr. Eshleman noted the importance of advanced preparation and agency approvals in such cases.  

Risk Management is Critical for both ISO Markets and Physical Battery Systems

From Mr. Eshleman’s perspective as a battery operator, risk takes the form of failing to meet resource adequacy (RA) compliance obligations in CAISO, or not breaking even in the market. Most of a battery’s value in CAISO derives from RA compliance, which an operator can only claim once the battery reaches its commercial operation date (COD). Thus, achieving COD within the expected timeframe becomes necessary to mitigate the risk of not reaching financial targets. However, as community choice aggregators (CCAs) like Ava and their constituents become more attuned to reaching climate goals, the risk landscape may change since batteries will start to target emission reductions in addition to revenue gains. For Mr. James there exists a myriad of physical risks for batteries, ranging from a battery’s health to its ability to capture market opportunities. He stated that Accure's primary goal involves monitoring the safety of a battery asset, and then providing sufficient data so that an owner can effectively operate their battery to best meet their financial targets and manage risk. Collecting accurate data becomes the first step in reaching these objectives.  

Left to Right: Mr. Eshleman, Director of Energy Analytics and Electric Supply at Ava and Mr. James, Head of North America at ACCURE Battery Intelligence discuss the importance of risk management for ISO and battery systems.

ISOs: Slow to Move, Not Yet Friendly to Batteries

Mr. Eshleman has been part of battery optimization projects for the past nine years and has witnessed the slow evolution of CAISO regulations as more and more batteries have come online. He noted that operating a battery within CAISO still poses challenges since the current optimization framework was not built with batteries in mind. Consequently, much of the storage industry would like CAISO to approach bidding from a state of charge standpoint rather than the current construct of unloaded capacity. This could make a battery asset easier to manage, and CAISO has already begun implementing a more accurate state of charge calculation for batteries that participate in frequency regulation. In addition to a more detailed consideration of state of charge, adding a market construct of ongoing monitoring would be extremely helpful in making sure these assets can reach their full potential.  

Battery Space: Still New, Physical Limits of Batteries Not Yet Met

Due to contracts like PPAs, ITC/PTC constraints, and warranty limitations, batteries that are currently in operation have followed relatively strict cycling and state of charge regimens. The degradation of batteries has been slower than expected, and the industry has not yet seen what happens when batteries are allowed to optimally participate in the market. To further complicate things, the results of lab testing and theoretical testing on a battery’s physical limitations do not always play out in the market. Thus, it will take some years before sufficient data exists to recalibrate an understanding of a battery’s physical capabilities.

About Ascend Analytics

Ascend Analytics, an innovative leader at the forefront of the energy transition, offers advanced software and consulting services that capture the evolving and real-time dynamics of energy markets. The company provides its customers with optimized and comprehensive decision analysis that covers everything from long-term planning to real-time operations in the electric power supply industry.

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