It is clear that the regulatory framework is evolving rapidly for distributed generation (DG) and the “transactional grid” to challenge, or perhaps more appropriately, complement the traditional centralized “big iron,” one-way paradigm of the last century. However, there’s another critical hurdle which must be overcome. DG has to evolve from a vast suite of viable and cost-effective technologies to a few suppliers of engineered systems, based on a dominant design, providing warranties expected by purchasers. In other words, DG has to become truly commercial, not merely viable.

Large gas turbines are an excellent analogy. They were viable and cost-effective many years before approximately 200,000 MW of these machines, in simple cycle and combined cycle, were added to the US electric system during the 2000-2005 “bubble.” At that point, there were essentially four major suppliers and a dominant design based on can-annular combustion systems.            

While indications are that lithium-ion technology could be the dominant grid-scale distributed- storage platform, this is far from a foregone conclusion. A dominant microgrid platform doesn’t yet exist.

This is critical because purchasers, whether under the regulated-rate-of-return utility model or private investment, have to minimize operational/lifecycle risk.

That doesn’t happen overnight. And it doesn’t end. Even before the industry’s large-gas-turbine feeding frenzy subsided, vibrant user groups were established around every major gas-turbine design platform. Participants actively manage operational and lifecycle risk by sharing experiences as a fleet, just with different owner/operators. In the spirit of checks and balances, these user groups also act as independent voices and sources of evidence against vendor claims. Second opinions and additional insight hold great value in an industry as consolidated as large gas turbines.

Reports from owner/operators on actual field experience with DG systems paint a different picture than those from the advocacy wing of the business. One of the most recent, based on a three-year battery demonstration program in California, listed, among others, these broad operational issues:

• Pricing differentials between charging and discharging were not high enough to offset the round-trip efficiency of the battery system, around 75%.

• Charging rates and the battery’s state of charge (SOC) interfered with ISO bidding.

• Managing the financial impact of the system’s parasitic loads was a challenge throughout the project.

• There was a significant learning curve between the ISO and the owner/operator regarding SOC assumptions which ultimately required changes to tariff construction.

• Problems with the software the ISO was using to dispatch the facility had to be resolved.

• Although batteries are credited with satisfying multiple ISO and grid functions, field operations showed that deploying the battery to capitalize on these separate functions involves “mutually exclusive tradeoffs”—the bottom line is that you have to guess which function will maximize revenue.

The report also concluded that, while the battery technology demonstrated would be classified as “long duration,” current market dynamics do not favor this technology class.

Grid-scale storage is a seminal transactional, two-way asset class. However, the experience summarized above shows that the “two-way” aspects of operations are the most problematic. It is also typical; review of many other reports on storage field experience, and presentations at industry events, reveals similar challenges.

Interestingly, the transactional aspects are a primary technical barrier for microgrids. A presentation by officials from the California Energy Commission at a microgrid workshop in May concluded, through industry survey efforts, that “technical barriers related to interoperability of technologies and components from different vendors using varying control and communications protocols in new and legacy systems requires a high degree of customization.” Interconnection issues were also diverse and complex.

For this reason, forming user groups around grid-scale DG systems may be appropriate, as a start to share experiences with integrating these systems into ISO bidding and operating procedures; control, communications, and SCADA platform functionality; reliability standards; grid interconnection; and other aspects. As dominant designs emerge, splinter user groups can form around specific systems or OEM platforms.

Other reasons for organizing user groups sooner rather than later:

• Most DG grid-scale storage technologies have catastrophic-events issues, especially thermal runaway and fire risks, which must be addressed.

• Most utilities that have evaluated grid-scale storage have not found compelling use cases or economics.

• Many systems are being supplied from Asia; quality control and supply chain oversight are areas that can be explored immediately.

• Most microgrids are still custom one-off efforts; value and systems engineering could benefit from early user engagement.

In sum, it would be beneficial to the electric power industry if the user groups around DG operational and lifecycle issues formed now and provided a feedback loop into the design process, rather than later and having to react to design issues already embedded into the platform.