Study shows only select types of new wind+battery or solar+battery power plants reduce local transmission congestion
In the United States development of new wind and solar plants has outpaced development of new transmission. Transmission allows load centers to access electricity generated from low-cost resources in other areas. Congestion occurs when transmission limits are reached and can prevent low-cost resources (like wind and solar) from being fully utilized, limiting their market value and maintaining higher marginal prices in the load center. Energy storage, which can often be built more quickly than new transmission, can help ease transmission congestion by shifting generation and load over time. In locations with a high concentration of wind or solar power plants (variable renewable energy rich areas, or VRE-rich areas), development of hybrid solar+battery and wind+battery power plants is growing, partly motivated by the desire to avoid selling energy during congested, low price hours. But, will the ongoing boom in hybrid plant development effectively ease congestion? And are adding storage and expanding transmission interchangeable when it comes to a plant’s value? A new study from Lawrence Berkeley National Laboratory sheds light on these questions.
The study, “Interactions Between Hybrid Power Plant Development and Local Transmission in Congested Regions,” published in Advances in Applied Energy, is available here (as open access) and will also be discussed at a webinar on 10-July from 5-6pm PT. Join here: https://shorturl.at/dfUV4 (password: 693782)
Unique data-driven methodology
The study focuses on 23 locations in the United States’ bulk power system that experience significant congestion today and already have a stand-alone solar or wind plant. These locations were carefully selected as leading examples of conditions that may emerge broadly in systems with a high VRE penetration and therefore may serve as a “window to the future.” Metrics were developed and then analyzed at these locations using historical market price, generation, and weather data.
Insights from two perspectives
The study offers two sets of results: one from the perspective of the regional grid manager assessing plants’ impacts on congestion and transmission value, and one from the perspective of a plant developer assessing revenue potential. A summary of the key findings from each perspective follows.
Grid perspective: Hybrid plants only reduce congestion in VRE-rich areas under specific circumstances, depending on the plant configuration, operation, and technology.
The impact a hybrid has on congestion depends not only on its precise location, but also on how a plant’s operation is constrained by limits on battery cycling. Cycling limits are imposed to manage battery degradation and could vary due to battery chemistry and other factors. Combined with the cost of battery replacement, cycle limits can be viewed simplistically as a degradation cost per unit of energy dispatched. Furthermore, the ability to charge the battery from the grid (not only from on-site solar or wind generators) is an important determinate in the ability of a hybrid plant to reduce grid congestion. Figure 1 (left) shows that in solar-rich and wind-rich areas, new hybrids which charge from the grid and can cycle their battery frequently (i.e., have a low degradation cost) typically decrease congestion, though the effect is small. New hybrids in other configurations (e.g., with a more conservative cycling requirement that only charge from the paired renewable generator result) increase congestion, but they result in less congestion than building a stand-alone solar or wind plant (Figure 1-right, green bars). This final point indicates that adding batteries to an existing stand-alone wind or solar plant will almost always reduce congestion.
Figure 1. Congestion impacts of building additional hybrids (left) or stand-alone generators or storage (right). The median value among years 2018-2021 and all plants matching the specified location and generator types is shown. The same set of 23 congested generation nodes is used to locate all plant types.
Science & Industry Implication: That more frequent cycling and lower-cost batteries can help to reduce congestion impacts of hybrid plants highlights an important benefit that could be gained from basic science and technological research into battery degradation processes or into competing energy storage technologies. Furthermore, the finding above highlights the need to develop more sophisticated cost-benefit trade-offs between the battery degradation costs of various types of cycling and the associated arbitrage opportunity. Finally, the finding suggests that there is a possible link between battery warranty policies (for example, a warranty might limit cycling to once per day) and grid congestion – perhaps changes to manufacturing warranties could help to modestly reduce congestion (a topic for future research).
Policy Implication: The benefits of hybrid plant “grid charging” for reducing congestion reveal the importance of plant design choices that provide this capability and the role of flexibility in incentive programs. The Inflation Reduction Act, for example, provides incentives for hybrids that charge from the grid, facilitating these hybrids to reduce congestion more easily. In contrast, previous incentive programs focused on hybrids with storage that charged only from the attached solar or wind generator.
Developer perspective: Wind plants saw a larger increase in their revenue potential from transmission expansion than did solar plants, while both types of plants saw roughly similar percentage revenue increases from hybridization.
In addition to analyzing the relationship between hybrids and congestion from the transmission grid perspective, the study considers the flip side of that relationship: How would transmission expansion affect projects in congested regions financially? In VRE-rich areas, wind plants see similarly large revenue opportunities from local transmission expansion (Figure 2, red bar) and hybridizing by adding battery storage (Figure 2, blue bars). Solar plants also benefit from transmission expansion, but the value is small compared to wind plants and compared to adding storage. These results highlight the different stakes that solar and wind developers have in regional transmission planning decisions.
Figure 2. Revenue enhancement opportunity for stand-alone VRE generators from adding a battery or expanding transmission. Adding a battery assumes grid charging is allowed for the hybrid and a $25/MWh battery degradation cost. The median value among years 2018-2021 and all plants matching the specified location and generator types is shown.
To learn more about these results and their implications, please join the webinar on 10-July from 5-6pm PT. Join here: https://shorturl.at/dfUV4 (password: 693782).
We thank the US Department of Energy’s Solar and Wind Energy Technologies Offices for their support of this work.