End-Customer Owned Decentralized Storage as a Part of the Smart Grid Volker Wachenfeld, SMA Solar Technology AG

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1 End-Customer Owned Decentralized Storage as a Part of the Smart Grid Volker Wachenfeld, European Utility Week Amsterdam

2 Introduction: Photovoltaic in Germany Key Success Factors of PV > Speed of innovation and cost reduction > Unique proximity to electrical demand > Outstanding acceptance in the population 0 Cent per kwh Electricity Rate 20 PV system costs Challenges for Further Growth > Avoidance of bottlenecks in distribution grids > Reduction of conventional Must-Run-Units > Improved market integration! What is the value that storage can add for PV grid integration? 2

3 Applications for Decentralized Battery Storage Systems Connected to the Low Voltage Grid > BMU-Market incentive program for decentralized battery storage > Last 12 months: approx additional batteries connected to the grid! > Drivers for the plant operator > socket parity (2012 in Germany) > local economic optimization of operational strategy = maximizing self-consumption Source: SMA > Regulated grid support > Peak power limited to 60 % of the installed generator capacity > Remote control required 3

4 Intelligent PV self consumption solutions with solutions storage with storage Which ancillary services the growing installed base can provide Lessons learned in off-grid business and pilot projects Outlook and Conclusion

5 Optimization Criteria for Grid-tie PV Self Consumption Solutions Costs of PV generation > less than 16 ct/kwh > tendency: decreasing Benefit through Energy feed-in > depending on feed-in tariff > approx. 16 ct/kwh in 04/13 > tendency: decreasing Self consumption ratio = consumed PV energy generated PV energy = 1500 kwh 5000 kwh = 30 % Source: SMA! Self consumption ratio = Independence from feed-in tariff! Autarky ratio = Independence from electricity rate Costs of electricity bill > depending on electricity rate > approx. 28 ct/kwh in 01/13* > tendency: increasing Autarky ratio = consumed PV energy total electricity demand = 1500 kwh 5000 kwh = 30 % 5 *Source: BDEW Strompreisanalyse

6 Optimization Criteria for Grid-tie PV Self Consumption Solutions Costs of PV generation > less than 16 ct/kwh > tendency: decreasing Self consumption ratio = consumed PV energy generated PV energy = 3000 kwh 5000 kwh = 60 % Applying Storage Source: SMA Autarky ratio = consumed PV energy total electricity demand = 2600 kwh 5000 kwh = 52 %! In a standard central European household, the self consumption ratio can be increased from 30 % up to 60 % by decentralized batteries Benefit through Energy feed-in > depending on feed-in tariff > approx. 16 ct/kwh in 04/13 > tendency: decreasing Costs of electricity bill > depending on electricity rate > approx. 28 ct/kwh in 01/13* > tendency: increasing 6 *Source: BDEW Strompreisanalyse

7 Energy (month average for one year) PV-Generator = 3.2 kwp; Energy Consumption = 4200 kwh/a; Usable Battery Capacity = 3.5 kwh 550 Consumption 500 Grid feed 450 Grid consumption self-consumption increase 400 natural self-consumption Energy [kwh] January February March April May June July August September October November December Month! 67 % higher self-consumption rate (42 % without and 70 % with storage)! 42 % lower energy bill with storage 7

8 PV inverter with integrated battery technology > Maximum battery efficiency and optimized battery utilization Increase of Self Consumption (Usable) Storage Capacity

9 Intelligent PV self consumption solutions with storage Which ancillary services the growing installed base can provide Lessons learned in off-grid business and pilot projects Outlook and Conclusion

10 How the grid benefits from residential PV with battery Storage mode/effect Benefit for the grid self-consumption optimization load and load fluctuation reduced in distribution grid utility grid power peak shaving react to price/control signals in a smart grid maximum power flow reduced in distribution grid flexibility for grid operators or energy traders PV with battery! Distribution level issues are improved instantly smart grids will enable more benefits 10

11 Peak Shaving Reduction of Generation Peaks Shifting the lunchtime peak into evening hours [Source: SMA] > Systems taking advantage of MAPincentive limit PV-feed-in to 60 % of generator power > Implementation by a combination of local demand side management, storage and surplus curtailment > Forecast will help to avoid losses with optimizing self-consumption > Proven via field-tests: Small-scale batteries with intelligent management sufficient > and the application is easily expandable towards peak demand reduction! 11

12 Intelligent Self Consumption Ancillary Services Lessons Learned Outlook and Conclusion

13 Intelligent PV self consumption solutions with storage Which ancillary services the growing installed base can provide Lessons learned in off-grid business and pilot projects Outlook and Conclusion

14 Off-Grid Solutions: Proven Technology as a Basis for the Development of Upcoming Grid-Tie Battery Systems for Renewable Integration > R&D and pilot projects executed by SMA since1982 > SMA s field experience out of commercial deployment > AC-coupled off-grid systems since 2001 > Grid-tie PV backup systems since 2007 > Grid-tie energy management since 2010! Field experience facilitated development of intelligent multi-purpose operational strategies! Systems designed for increasing self-consumption can provide any kind of services to maintain system stability in the utility grid! 14

15 Typical Micro-Grid Application: Isle of Eigg, Scotland Typical Micro Grid Application: MicroGrid lokal begrenztes, verteiltes Energieversorgungssystem 15

16 PV2VPP - Vattenfall and SMA Agreed on Dedicated Field Test Target: Provision of Operational Reserve by Distributed Storage Systems on LV Grid VPP - Source: SMA 16

17 Targets of the Field Test > Proof of concept: Double-use case to optimize self consumption and to provide ancillary services is feasible > Proof of concept: Even under a regulatory point of view, battery storage systems are capable of providing ancillary services > Study: the installed capacity/power of battery storage up to 2015 will grow to a significant magnitude > Proof of concept: Stochastic effects affecting forecast quality of generation and demand will be significant und utilizable > Proof of concept: The inverter s local frequency detection is utilizable for the provision of operating reserve from a technical as well as from an economic point of view! A successful implementation is a crucial step towards the participation of distributed storage systems at the energy market VPP - 17

18 Intelligent PV self consumption solutions with storage Which ancillary services the growing installed base can provide Lessons learned in off-grid business and pilot projects Outlook and Conclusion

19 Summary and Conclusion > PV is decentralized and predictable and already system relevant! > Local storage systems can relief grids from congestion, empower to participate at the energy market and can provide comprehensive ancillary services > and are thus a critical pre-condition to substitute must-run devices Source: SMA! Small-scale batteries on their way to system relevance will not have to face show killers in terms of regulatory or political barriers!! Pre-condition for economic feasibility: Combination of local optimization of selfconsumption and a suitable incentive for comprehensive ancillary services 19

20 Roadmap for Smart Inverter Based Systems Remote control by system operator Market-incentive grid support Automatic reaction on grid state variables (frequency, voltage) Participation on local markets Participation on energy spot markets Bi-directional communication with system operator Origin: SMA Key Driver: Grid Regulation Grid Regulation but Market Process Driven Key Driver: Market Design 20

21 Thank you very much for your attention! ENERGY THAT CHANGES Dipl.-Ing. Volker Wachenfeld Executive Vice President Head of Business Unit Off-Grid and Storage Sonnenallee 1 D Niestetal 21