Battery Energy Storage System Planning and Risk Management in an Electricity Market

Abstract

Driven by emission reduction and sustainable development goals, the energy sector, as the largest emission sector, has been undergoing rapid transitions from a conventional fossil fuel dominated energy composite into a renewable dominated composite. The installation of renewable power generation capacity has been sharply increased over the past decades and will continue in many counties in line with the decommissioning of thermal power plants running on fossil fuels. In Australia, the move towards zero-emission has become a reality in a staged process across the nation. The coal-fired power plants have been planned toward decommissioning in the coming decades, and a large number of solar photovoltaic and wind farms are emerging. This move is further accelerated following the Australian Energy Market Management Organisation (AEMO)’s reports on Integrated System Planning and COAG Energy Council’s consultation paper on National Renewable Energy Zones which give a clear indication of the needs and priorities of renewable energy development in the National Electricity Market of Australia. Given all these renewable energy development projects, however, there are also an increasing number of solar farms facing major delays or even went to bankrupt due to difficulties of grid connection constraints. The current electricity network is not strong enough to host all of the new developments of renewable farms without major investment to enhance the firming capacity of the proposed renewable farms. Network expansion planning is a lengthy process and involves increased network charges. Generation capacity solutions are preferred. From the generation capacity perspective, while synchronous condensers do provide system inertia, however, the operations and maintenance requirement are high given the rotating components involved. Nevertheless, Battery Energy Storage Systems (BESSs) provides at this stage the most effective solutions in enhancing the firming capacity and network strength in view of improved short circuit ratio for the renewable energy farms to meet the grid connection requirement. The successful operation of Hornsdale Power Reserve provides an excellent practical example for BESS in providing network support while generating sufficient revenue for investment returns. At the same time, in addition to large scale renewable farms, the distributed energy resources (DERs), especially rooftop PV installations have experienced sharp growth as the fastest growing renewable installation in Australia. While promoting emission reductions and better financial return for owners, they also cause problems to the distribution networks, in particular in voltage rise and uncertainties in emergency control strategies. Grid batteries and distributed batteries again provide effective support to handle such problems and at the same promote more opportunities of economic benefits for the customers as well as the network service providers. Given all these benefits, however, BESSs are still expensive and relatively new investment options for many investors in the electricity market. Proper modelling, planning and risk management methodologies are urgently needed to achieve economic efficiency in BESS development. This thesis provides a comprehensive research and engineering overview of BESS modelling, planning and financial investment risk management framework.