Farm Energy – Written evidence (LES0018)
Multi-Day Energy storage for the UK
Form Energy, Inc. (“Form Energy”) is a U.S. energy storage technology and manufacturing company that is developing a rechargeable, iron-air battery capable of continuously discharging electricity for 100 hours at a system cost less than 1/10th the cost of lithium-ion battery technology. Form’s multi-day battery will enable a clean electric grid that is reliable and cost-effective year-round, even in the face of multi-day weather events. With over 500 employees, Form Energy has U.S. offices in the San Francisco Bay Area; Somerville, MA; and the Greater Pittsburgh Area. Our first commercial manufacturing facility is under construction in Weirton, WV, and will begin operations mid-to-late 2024, ultimately employing over 750 employees and producing 500 MW of capacity per year.
How much medium- and long-duration energy storage will be needed to reach the Government’s goal of a fully decarbonised power grid by 2035 and net zero by 2050, and by when will it need to be ready?
Ultimately, the volume of medium and long duration energy storage required will depend on the overall energy mix of the United Kingdom, as well as critical enabling factors like transmission infrastructure and market mechanisms like the Capacity Market. It is important to stress that these factors are interrelated; more energy storage can reduce the renewable generation capacity required to reach net-zero, and the capacity of infrastructure needed to manage the system. This in turn can lead to lower overall system system costs, through avoided overbuild of renewables and system upgrades.
In a study which will be published in the near future, Form Energy assessed Great Britain’s trajectory towards a net-zero power system, including the targets established in Britain’s Energy Security Strategy for deployment of wind (offshore and onshore), and drivers like carbon pricing and other fuel prices.[1] Ultimately the study found that an optimal portfolio of multi-day storage can reduce costs by nearly £1bn per year when compared to a build with no MDS.
This analysis uses Formware[2] to examine the portfolio of resources that can reliably and cost-effectively meet UK government targets in 2030. Two cases are included: the Policy Case, No MDS assumes a future in which multi-day storage is not available, while the Policy Case, With MDS includes multi-day storage as a selectable resource option.
Total resource build in 2030 for both cases is shown in Figure 1. Each case includes 50 gigawatts (GW) of offshore wind, 30 GW of onshore wind, and 50 GW of solar to comply with government targets. While overall resource build is the same between cases, there are notable differences in resource selection. The model selects almost 12 GW of multi-day storage in the Policy Case, With MDS as a replacement for 3 GW of gas/oil peaking units, 7 GW of pumped hydro, 1 GW of hydro, and 1 GW of combustion turbines fueled by hydrogen.
Figure 1. Optimized resource portfolios, 2030
Resource portfolios that include multi-day storage promote achievement of decarbonization goals at least-cost. Total annualized system cost in the Policy Case, With MDS is almost £1 billion, or 4.3%, lower than in the Policy Case, No MDS, in which multi-day storage is not available. These system cost savings are driven by using more renewable energy and less imported fuels, and the replacement of other more expensive storage assets, as shown in Figure 2. On a net present value basis, inclusion of multi-day storage results in savings of £11.56 billion over a 25 year period using a discount rate of 6%.
Under what scenarios would the grid draw heavily on long-duration storage? How well are these scenarios understood?.
Multi-day energy storage can play an increasing role in providing system reliability, especially as the penetration of renewable energy increases. Forthcoming analysis by LCP Delta, commissioned by the UK Government, underlines both the growing number of renewable over/undersupply events, but also their growing duration. By 2030, the analysis estimates that 40% of such events will last longer than 48 hours. This is driven by the UK’s significant ambition in wind energy, and higher wind penetration scenarios have been demonstrated to accentuate this challenge.
In order to navigate these events, while aligning with the UK’s target of 2035 for a net-zero power system, it is clear that multi-day energy storage will need to play a significant role in providing system resilience. By bulk time-shifting renewables, it can capture sustained moments of oversupply while delivering resilience throughout wind droughts.
What impact will future climate change have on demand – for example, how much will the seasonal differences in power demand change with warmer winters and greater use of air conditioning?
Increasing electrification of the energy system, especially in the areas of heating and cooling, will lead to system changes in supply and demand patterns. These will be further compounded by climate change, which will cause increased volatility in weather events.
While warmer winters may reduce energy demand for heat, a greater volume of that energy will be served by the electricity system. As highlighted by the Met Office, while the frequency of cold snap events may decline overall, the potential for extreme winter weather continues and may even increase in a warming world. As was the case in December 2022, these events can combine very cold temperatures with very low wind generation, posing reliability challenges. It is essential for both system stability and, ultimately, human health and protection that our electricity system can continue to deliver reliable energy in these events. To this end, zero-carbon dispatchable capacity in a decarbonised grid is critical for system resilience as a whole. Multi-day storage can play a key role here.
Furthermore, Form underlines the need for such events to be fully modeled as part of system planning. Specifically, we think that models should:
- Use a chronology that includes all 8,760 hours of the year, rather than a “typical day” or “typical week” methodology in order to accurately capture realistic variation in demand and renewables production as well as the dynamics of long-duration and multi-day storage state-of-charge. In the event that 8,760 capacity expansion modeling is not possible, Form recommends an approach that allows for the use of representative days while still representing the full 8,760 hours of the year (or longer). This approach meets the minimum requirement to accurately capture the value of long-duration storage in shifting energy on a weekly and seasonal basis.
- Include scenarios that capture periods of real grid stress, such as multi-day lulls in renewable energy generation or periods of high commodity prices. Many energy system modeling approaches do not capture multi-day lulls in renewable energy generation and do not consider the implications of such events on resource builds, energy prices, grid reliability, etc. Daily - and often weekly - sampling techniques fail to include 24+ hour periods of correlated wind and solar outages. The magnitude of such solar and wind lulls is expected to increase as regional electricity supply shifts toward renewable energy technologies. Therefore, it is critical that resource planning models rely on renewable generation profiles that include lull periods.
- Use weather-correlated load and renewable generation profiles as input assumptions to capacity optimization modeling. System load and renewable generation can often be anticorrelated, meaning that system load is high in hours in which renewable output is low, and is often driven by weather conditions over a given time period. These periods are a driver of system need for firm capacity, making weather-driven input assumptions for load and renewable generation particularly important in energy system analysis of high renewable grids.
- Model multiple weather years, including those with periods of grid stress caused by extreme weather events. Industry-standard modeling often builds an optimal resource mix designed to meet the average annual peak load, with an established reserve margin, under typical weather conditions. However, weather can vary significantly from year to year, which has major impacts on the requirements of the energy system. A modeling approach that includes multiple historical weather years will produce results which are robust against interannual variability in weather patterns.
3. Which technologies can scale up to play a major role in storage?
Iron Air Batteries offer a route to multi-day energy storage with an ultra-low entitlement cost, based on scalable materials and with the potential for widespread deployment in markets with high penetration of renewables. First developed in the 1970s, Form Energy has undertaken substantial development on the technology, will be TRL level 9 with our first deployment in 2024.
Form’s iron air batteries have the following key characteristics:
● Multi-Day: Form’s batteries can discharge into the grid for up to 100 hours. This is aligned with analysis by Sepulveda et al. which identified systems with at least 100 hours as having the greatest impact on electricity costs and firm generation.4
● Scalable: The primary active materials of these batteries are iron, air and water. This means their deployment is not constrained by critical raw material value chains,
● Cost effective: Due to the low cost of our fundamental components, there is a route to substantial cost reductions. Further cost reductions will be driven by the commencement of mass manufacturing, with production expected to commence in our West Virginia facility in Q1 2024 and production in Europe expected by the end of the decade. Round trip efficiency has been deprioritised in favour of reducing costs, in line with analysis by Guerra et al. among others.5
● Safe: Iron air technology does not have a risk of thermal runaway, and can operate in a wide temperature window.
4. What policy support is currently in place to support deployment of storage technologies? Is it sufficient to support deployment at scale?
Energy storage, especially multi-day energy storage, can add significant value to the electricity system. In addition to reducing volatility by capturing low prices and responding to high prices, it can provide decarbonised firm capacity and reduce the need for overbuilding renewable generation and transmission capacity.
While basic trading can capture some of this value (i.e. arbitrage), much of the wider system reliability and grid optimization value is not yet captured. This value can be found in the provision of zero-carbon dispatchable capacity, avoided or deferred transmission infrastructure upgrades and reduced need for overbuild of renewables. This can lead to both challenging economics for specific technologies, and higher overall system costs for consumers.
Capturing this value can be done in a number of ways:
- At the most basic level, establishing specific resource targets in combination with a competitively procured support scheme based on an overall system value analysis can lead to sufficient deployment. This approach has the benefit of being rapidly implementable and can lead to faster deployment of storage. It would further give clarity to investors across the system of what to expect, and how to plan accordingly. By reducing the cost of capital and providing certainty, we would expect investment costs to trend downwards going forward.
- Another route could see the development of system services products aimed at specific value stacks. This approach has been developed in Australia, as discussed below, and could be structured around topics like congestion management or seeking guarantees of firm capacity during multi-day periods of grid stress. The advantage of this is a lower risk of unintended consequences, while still giving clarity and being rapidly implementable.
- Finally, existing market structures should be assessed to ensure they fully capture the value of long duration storage. The Capacity Market, for example, should be aligned with the needs of a fully decarbonised system which experiences multi-day undersupply events, rather than short term moments as seen in today’s market. By capturing the specific value of long-duration, clean energy storage, the Capacity Market can be a powerful tool for supporting the deployment of new technologies.
It is important to stress that all of these mechanisms are focused on realising value for consumers which today’s markets do not capture. While some level of incentives may be needed as technologies reach commercial maturity, the primary objective is to speed up the transition to a net-zero power system while at the same time reducing the cost of that transition. Without capturing this value, the overall cost will be much higher, due to the increased investments in generation and transmission capacity needed.
To give a concrete example, analysis performed by Form Energy in collaboration with National Grid ESO has shown that curtailment at the B7a transmission boundary could be reduced by 89% with an optimal deployment of multi-day storage. This can lead to terawatt-hours of additional renewable energy consumption, and in the right market structures avoid millions of pounds in curtailment costs. In this way, multi-day storage can ease strain on the grid, decarbonise power supply and save costs, provided these services are adequately compensated.
What role does the Review of Electricity Market Arrangements need to play to support medium- and long-duration storage development?
A key factor in the deployment of multi-day storage will be the locational signals provided by the market. One way to deliver these signals is the introduction of locational marginal pricing (LMP). This would reflect the value of, for example, reducing congestion at transmission boundaries.
Alternative ways to recognise locational signals have been outlined by the Electricity Storage Network in this paper.
7. What steps should the Government take now to ensure this storage can come online later in the current decade?
Firstly, it is important to remain as technology open as feasible. There are substantial risks to selecting a single pathway, or even a limited set of options. Rather, policymakers should be clear in the problems they are trying to solve, and deliver mechanisms which allow all technologies to compete on solving them. Specifically, hydrogen and CCS, while critical parts of our future energy system, must be complemented by technologies like MDS. As such, funding and regulatory opportunities must not be overly weighted to these technology options.
Additionally, a narrow focus on the costs and value of specific projects should be avoided. Today, mechanisms put forward by National Grid ESO must meet a narrow definition of system value, making it difficult to deploy higher cost resources which can at the same time deliver system savings. For example, avoided costs from overbuilding renewables and transmission infrastructure cannot be counted when contracting in new assets. This misses the opportunity for a wider range of technologies to support a decarbonised system, and could, ironically, lead to less value for consumers. Projects should be evaluated based on their long-term system value.
Can the UK learn from other countries that have successful policies for supporting large-scale energy storage, or from pilot projects elsewhere?
One specific case study is the contracting of long-duration storage assets by the Australian Energy Market Operator (AEMO) under their Long Term Energy Service Agreements programme. Here, AEMO ran a tender process which sought to reduce congestion and curtailment, delivering higher value for Australian consumers. Put simply, the process modeled the energy system, invited tenderers to provide the specifics of proposed projects, assessed the impacts of those projects and then awarded long term agreements to those which provided the highest system value.
The LTESA programme shows that by taking a system value approach, you can better consider the value provided by projects than one which focuses on just the cost of the project itself. Factors like location, availability, storage duration and cost will all impact the outcome of the tender, ultimately leading to a better technology mix. The first round of these LTESAs provided important learnings for AEMO, including how to better calculate system value so that a wider range of technologies can better compete. Further auctions are planned over the coming years.
11 September 2023