Distribution Services

Summary for Decision Makers

Energy storage connected at the distribution level (i.e., “in front of” customer meters), can provide services both to the distribution system as well as to the transmission system. This section will focus on distribution-level services but will also offer general recommendations to enable and evaluate the provision of transmission-level services from distribution-interconnected energy storage resources.


Distribution Network Upgrade Deferral

Historically, distribution utilities have focused on “wire-only” solutions, replacing existing equipment with traditional investments such as distribution lines, substations, and transformers. More recently, distribution system operators have considered non-wires alternatives (NWAs) as well. These can be particularly valuable in space-constrained areas, such as on a feeder in a densely populated urban environment.

What to Consider

  • Local demand profiles and forecasted demand growth. It is typically less expensive to defer distribution upgrades with storage when the demand on that portion of the system is higher for relatively shorter time frames, such as demand spikes caused by electric vehicle charging infrastructure. Low forecasted demand growth indicates that energy storage can help address transmission constraints for more time before upgrades are needed.
  • Siting constraints. Conventional distribution upgrades are likely to suffer from acute siting constraints, such as limited land area to site a project or proximity to populations that may resist development, making conventional distribution upgrades less feasible than NWAs, including storage.
  • Response reliability. Distribution-interconnected energy storage has a more predictable and reliable response compared to individual customer asset because it is typically controlled by either the distribution system operator or a third-party developer.
  • Storage technology costs. The cost of deferring distribution system upgrades with storage will vary with the power and energy (i.e., duration) capacity of storage needed, and siting constraints or contracts to guarantee energy availability from storage.

How to Decide

A combination of load forecasting and distribution network modeling for the circuit in question can help answer key questions to , such as: how many hours out of a given year will local demand exceed existing capacity? What is the longest consecutive period that energy storage might need to meet local demand to avoid overloading existing infrastructure? These questions can inform the operational characteristics of the energy storage system (or a portfolio of NWA solutions including energy storage) needed to defer distribution infrastructure investments and how much the energy storage system would cost.


Distribution Voltage Support and Power Quality

Fast-acting energy storage can help compensate for system-wide or local issues by quickly injecting or absorbing power to maintain voltage, current, and frequency within acceptable levels.

What to Consider

  • Energy Storage Technology Costs. If the storage system is allowed to provide multiple services, storage may ultimately prove to be the most cost-effective solution, even if the costs exceed more traditional solutions.
  • Reason for voltage excursion or power quality issue. The most sensible choice for voltage support will be influenced by the underlying causes of excursions. It is possible that voltage excursions are caused by high demand (or a quick ramp up in demand) in a select number of hours. And DER exports or faulty equipment may cause power quality issues.

How To Decide

Power flow modeling of the circuit can help determine the operating characteristics (reaction time, energy and power capacity, duration) of an energy storage system necessary to address the voltage issue. Energy storage can then be compared on a price basis against more traditional investments.


Distribution Loss Reduction

Generally, the shorter the distance the power must travel, the less power is lost. Distribution-connected storage could reduce the distance power must flow by enabling excess energy from distributed generation to be locally stored and later delivered to serve demand. However, energy storage suffers from round-trip efficiency losses that must also be considered.

What to Consider

  • Source of losses. Utilities can consider storage alongside more traditional approaches such as increasing the size of lines or having them reconductored, siting distribution transformers closer to load centers, or rebalancing load across phases.
  • Technology costs. Applicable solutions should be compared on a cost-benefit basis. For example, if losses can be avoided by better managing load on a line or with demand response programs, the upfront costs of storage should be compared with the operational savings over time of reducing losses.
  • Round-trip efficiencies. Many storage technologies have high round-trip efficiencies, such as lithium-ion, but others may have considerably lower efficiencies, like flow batteries. Round-trip losses should be considered alongside other technical operating parameters, like duration, of the storage technology considered.

How to Decide

Distribution system modeling can help determine the losses experienced within a given segment of the distribution system and how an energy storage system dispatched to reduce losses would operate. This could determine the share of energy that would be lost due to the round-trip inefficiencies of the storage system.


Improved Resilience

Distribution-connected energy storage can play an important role in improving power system resilience by providing backup power to isolated sections of the network, extending the use of distributed generators, and by bringing the power system back online after a blackout. Applying storage in such microgrid applications can help ensure critical infrastructure is available during emergency conditions, such as a hospital during and in the aftermath of a natural disaster.

What to Consider

  • Nature of threat. Energy storage at the distribution level is better suited to address potential interruptions of power delivery from the transmission system (e.g., fallen power lines or impacts to centralized generators) than it is to avert cyberattacks. Understanding the nature of the likely threat and weak points within the power system can help planners decide whether energy storage systems may be merited.
  • Duration. The duration of storage solutions should be compared with the anticipated power and energy needs for critical loads, which will also depend on the expected outage duration (see “Nature of threat” above). Some duration-related concerns can potentially be offset by pairing energy storage with distributed generation (see “Associated generation” below).
  • Associated generation. Storage systems designed to offer resilience services are often connected to a separate generation resource to supply energy for charging. Pairing energy storage with distributed generators (such as solar PV, wind, or diesel) can improve both the storage and the generator’s potential to address local energy needs for the duration of the resilience event.
  • Multiple-use applications and state of charge. When storage is contracted to provide essential resilience services, these services should be prioritized so that additional service provision will not interfere those resilience services.
  • Energy storage technology costs. Energy storage should be considered against relevant alternatives, considering upfront costs as well as the quality of service (and duration) that storage can provide.

How to Decide

Determining which approach for meeting power system resilience needs is a matter of comparing the costs of each approach and the value that a given approach can provide in terms of improved resilience. Threats occur infrequently, making them hard to predict. For more information on determining the risk associated with contingency events and the value of increasing resilience in the face of these events (as well as storage’s role in providing resilience), see the Resilient Energy Platform.


Building Blocks to Enable Provision of Distribution-Level Services

  • Regulatory support for pilots. Policymakers and regulators can encourage familiarization with storage through the development of pilot projects. These projects allow stakeholders to experiment with various technical, operational, and regulatory options to incorporate energy storage in a contained environment. These pilots will help regulators determine which ownership models can provide the most benefit to ratepayers at least cost and can help utilities familiarize themselves with providing services with energy storage they own or procuring it from third parties.
  • Technical regulations specifying storage capabilities and behavior. Integrating energy storage into the distribution system and accessing its full value will require technical regulations that ensure reliable, predictable behavior from the asset during both normal operations and in response to contingency events. Such regulations could cover myriad topics from communication capabilities, level of observability over the storage system for system operators, and various operational characteristics such as minimum response times to signals from a system operator.
  • Addressing nontechnical barriers. In general, energy storage may face barriers due to its unique ability to act as both generation and load and serve multiple stakeholders, which may require adjustments to existing regulation developed for assets that were only either generation or load.
  • Changes to existing planning and operating practices. As a new and relatively unique power system asset, energy storage may often be overlooked in planning and operating practices for both distribution- and transmission-level exercises. In addition to pilot projects, decision makers can explicitly require such stakeholders to consider energy storage in their normal planning exercises or for various power system services.
  • Regulations to enable business model innovation. Making regulations more technology agnostic, explicitly allowing energy storage to provide multiple services, and allowing innovative shared ownership approaches can help improve the viability of energy storage and increase its value to the power system.
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