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Dec 27, 2021

Analysis of common application scenarios and revenue models of energy storage

We think that the development of energy storage technology, the use of its scenarios and value mining should be divided into three levels, the first level is the single benefit model, which refers to only consider the investment income brought by the existing mechanism system, without considering other indirect benefits not covered by the mechanism system, the method is simple, but deviates from the actual value of energy storage, such as the scenario model of time-sharing tariff management, power plant frequency regulation, etc.; the second level is the system value model, which is to consider all the benefits of energy storage in the power system, considering the system value of energy storage, but not the social benefits of energy storage, such as emission reduction, improving infrastructure utilization, etc. This method better reflects the actual value of energy storage, such as the demand-side response of energy storage, etc.; the third level is the comprehensive benefit model, which is to take the regional energy system as the research object, by comparing the two cases of the system with and without energy storage This method can reflect the actual value of energy storage more comprehensively, which is the inevitable trend of energy storage economic research. The development of this level will be combined with the comprehensive energy use of society, such as the future energy Internet model of transportation, electricity and gas network interconnection model, carbon trading model, etc.


I. Traditional power generation field


(I) Auxiliary dynamic operation


Dynamic operation means that in order to ensure the balance between load and power generation in real time, the output of thermal power units needs to be adjusted according to the requirements of dispatch, instead of working at rated output constantly. Specifically, it includes four operating states: start-up, ramp-up, non-full-generation state and shutdown. The application of auxiliary dynamic operation means that the energy storage device and the thermal power unit jointly adjust the output size according to the requirements of the dispatch, so as to minimize the fluctuation range of the thermal power unit output and make the thermal power unit work as close to the economic operation state as possible.


Since energy storage technology has a fast response time, auxiliary dynamic operation by applying energy storage technology can improve the efficiency of thermal power units and reduce carbon emissions. Dynamic operation can cause creep in some components of the unit, resulting in damage to these devices and increasing the possibility of failure, i.e., reducing the reliability of the unit. At the same time, it increases the possibility of replacing equipment and the cost of overhaul, which ultimately reduces the lifetime of the entire unit. The application of energy storage technology can avoid the damage of dynamic operation on the life of the unit, reduce the cost of equipment maintenance and replacement, and thus delay or reduce the demand for new generating units on the power generation side.


Second, the field of renewable energy


(A) peak-shaving and valley-filling


In the low load or limited power, intermittent renewable energy to charge energy storage devices; in the high load or not limited power, energy storage devices to charge the grid. This application makes energy storage and renewable energy as a complete system when its output is adjustable and dispatchable, reducing the power system standby unit capacity and making intermittent, renewable energy grid friendly and dispatchable.


(ii) Tracking planned power output


In recent years, large-scale wind power has been integrated into the grid operation. As the power output of wind power is characterized by randomness and fluctuation, it makes the power balance of the grid affected, so the power generation power of wind farms needs to be predicted to ensure the power balance and operational safety of the grid.


Third, the auxiliary service areas


(A) Frequency regulation


Power system frequency is one of the main indicators of power quality. In actual operation, the frequency cannot always be maintained at the reference frequency state, and when the power of the prime mover and the load power in the power system change, it will inevitably cause the change of the power system frequency. The deviation of frequency is not conducive to the safe and efficient operation of power consumption and generation equipment, and in some cases, even damage the equipment, therefore, after the deviation of system frequency exceeds the allowable range (China's deviation range is 0.2Hz), frequency regulation must be carried out.


(II) Peak regulation


In the actual operation of the power system, there are peaks and valleys in the electricity load, and certain generating units need to be equipped to generate electricity when peak load is needed to meet the electricity demand and achieve the balance between electricity production and electricity consumption in the power system. As the operation mode of power system varies from country to country, the classification of power auxiliary service also differs. At present, in the foreign auxiliary service market such as the United States, there is no peak-adjustment auxiliary service included, and in China's auxiliary service market, peak-adjustment auxiliary service is divided into basic peak-adjustment and paid peak-adjustment.


(iii) Standby capacity


Standby capacity refers to the reserve of active power reserved by the power system to ensure power quality and safe and stable operation of the system in case of accidents, in addition to meeting the expected load demand. The reserve capacity can be called at any time and the output load is adjustable. Generally speaking, the reserve capacity in the power system should be equal to 15%-20% of the normal power supply capacity of the system, but the minimum value should be equal to the capacity of the largest single installed unit in the system.


Fourth, distributed energy and micro-grid area


(A) Time share tariff management


At present, grid companies adopt time-sharing tariffs based on retail electricity prices. Users can arrange their electricity consumption plan according to their actual situation, and shift the electricity demand from the time of higher tariff to the time of lower tariff, so as to achieve the purpose of reducing the overall tariff level, which is the time-sharing tariff management. Time-sharing tariff management is very similar to peak-shifting, but time-sharing tariff management is based on a time-sharing tariff system. In an electricity market where time-shifted tariffs are implemented, energy storage is the ideal means to help electricity users achieve time-shifted tariff management. By charging the energy storage system when the electricity price is low and discharging it when the price is high, not only can the overall cost of electricity be reduced through low storage and high discharge, but also the user's electricity consumption habits can be changed without changing, and the electricity can be used according to their needs even when the price is highest. The benefits of time-of-use tariff management are mainly obtained through the tariff difference and the adjustment of electricity consumption plans.


(ii) Capacity cost management


In the electricity market, there exist two forms of tariffs, one is the electricity tariff and the other is the capacity tariff. Among them, the electricity tariff refers to the tariff that is billed according to the actual amount of electricity transacted. The capacity tariff differs from the electricity tariff in that it depends primarily on the maximum value of the power used by the customer, independent of the length of time used at that power and the total amount of electricity used by the customer. The use of energy storage technology can supplement the capacity of the user's peak hour electricity consumption, thus reducing the capacity tariff paid to the power company.


(iii) Improving power supply reliability


Energy storage is used to improve the reliability of microgrid power supply, which means that in the event of a power failure, energy storage can supply the reserve energy to end users, avoiding the interruption of power during the fault repair process to ensure the reliability of power supply. The calculation of the economic value of reliability can be difficult in general. On the one hand, the economic benefits corresponding to improved reliability are related to outage losses, and different loads are affected differently in a certain outage event; on the other hand, some important loads are involved in public safety, post-disaster relief and some special situations in wartime, and the value of providing power supply assurance services in such cases is very difficult to quantify. Therefore, the part of the revenue mainly depends on the value of the power service to the users, and the compensation for the loss of power outage is also a part of the revenue.


(iv) Improving power quality


Energy storage technology for improving power quality means that energy storage at the load side can maintain power quality in the case of short-term faults and reduce the impact of voltage fluctuations, frequency fluctuations, power factor, harmonics and second to minute load disturbances on power quality. Similar to the improvement of power supply reliability, the benefits of improving power quality through energy storage are mainly related to the number of power quality failure events and the degree of damage caused to customers by low-quality electricity services, while indicators such as the capacity of the equipped storage system can also influence the benefits of this component.


By analyzing the main role of energy storage in the energy system and the revenue model, the revenue model of energy storage is established. In the field of traditional power generation, energy storage mainly plays the role of assisting dynamic operation, replacing or delaying new units; in the field of renewable energy, energy storage mainly plays the role of peak shaving and valley filling and tracking planned power output; in the field of auxiliary services, energy storage mainly plays the role of frequency regulation, peak regulation and standby capacity; in the field of distributed energy and microgrid, energy storage mainly plays the role of time-of-use tariff management, capacity cost management and improving power supply In the field of distributed energy and microgrid, energy storage mainly plays the role of time-of-use tariff management, capacity cost management and improving power supply reliability.


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