The current energy sector turmoil in Europe is evermore subject to dichotomies. On one side there is a tremendous push for renewables, driven by the need to address climate change, fossil fuels dependency, namely gas, and record-breaking high electricity prices. On the other side, there is the challenge to be able to use all the variable renewable energy produced, thus extracting the most value from it and attaining the full climate, societal, and market beneficial impact, which is already not happening today.
There are multiple factors limiting the actual value of renewable generation, particularly the fastest growing source, which is utility-scale Solar Photovoltaics (PV). The known variability of the resources, and their limited ability to dispatch and meet demand. Moreover, the fact that, regionally, the generation tends to follow similar profiles, meaning an accumulation of renewable generation in several periods of the day, and thus cannibalization of its market value, which may hinder investments from Independent Power Producers (IPP). These reasons, associated with the fact that the integration of these sources is outpacing immensely the capability of the electricity grid’s upgrade investments to accommodate different and more distributed energy sources, bring additional urgency to seek flexibility enablers, such as energy storage. Today, the result of a lack of flexibility is renewable energy curtailment in regions with high concentrations, further aggravating this challenge in the short and medium-term.
The need for energy storage grows in different forms and is coupled with its multifunctional potential. Energy storage is needed at the local level, coupled with renewable generation as challenges such as curtailment due to the grid’s operational constraints being mainly location dependent. Additionally, such energy storage systems need to provide different services in order to capture multiple revenue streams, enabling a business case and bringing added value to renewable energy. With the increase of renewable sources connected at each grid connection point to maximize their utilization factor, the required duration of such energy storage will also increase in time, meaning that different technologies, beyond Lithium-ion, will be needed, with Long Duration Energy Storage (LDES) being fundamental for ensuring the accommodation of renewable energy in a fully decarbonized scenario. Also, depending on the technology, a systemic integration is needed to complement the need for the power systems’ adequacy of generation and demand, which today is ensured by pumped hydro storage.
However, the optimal use of energy storage is fundamentally dependent on its management software, the ability of forecasting generation and market prices, and, therefore, the enabling of optimization algorithms and algorithmic trading of such resources in the different electricity markets. This means not only the merchant participation in energy storage in wholesale, day-ahead, and intra-day, markets but their active participation in ancillary services, in a faster, more efficient way than traditional sources. Moreover, this allows Grid operators, as it has been the case of successes such as the UK, to create new services that recognize the potential of different energy storage technologies, and that is more adequate to the generation and demand characteristics that we have today and will have tomorrow. In fact, these innovative AI-driven tools, while leveraging the value of renewable energy in the perspective of an IPP, also contribute to creating flexibility at the power system level, fomenting the further integration the renewable energy, being fundamental for the decarbonization of the electric sector.
