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From the Grid to SmartGrids to the Grid of Things

Updated: Feb 27, 2019

Solar Panels, Energy Storage and Smart Data

Solar photovoltaic systems have found global success as a residential energy generation solution. However, there is still one key challenge to overcome: their energy output is tied to a resource that is only available half the time, and full output is only reached for a couple hours around noon. Therefore, while homeowners can size a solar PV system to produce all the energy they need, generation and consumption will rarely match – consider that households normally consume the most energy after sunset, while solar panels are productive around noon.

In theory, homeowners can export any surplus generation around noon to the power grid, and then consume electricity as needed once solar generation stops. However, this approach is becoming less viable from the financial standpoint:

  • Feed-in tariffs (FIT) for exported electricity are becoming lower. For example, the UK cut its FIT by around 65% in 2016. At best, you can expect to get around 4 pence per kWh exported to the grid.

  • On the other hand, peak-hour electricity rates in the UK are reaching values as high as 25 pence per kWh.

As a result, consuming solar energy is better than exporting it. With such a wide gap between the FIT and the peak-hour electricity price, there is a business case for storing surplus solar energy, and using it during peak demand to achieve the highest savings possible. Electricity pricing has created a market for energy storage, at it will become more valuable as peak-hour rates continue to increase.

Why FITs are Low and Peak-Hour Electricity is Expensive

As more households are equipped with solar panels, their generation peak around noon adds up, and utility companies must reduce their own generation to absorb that peak. The opposite process occurs after sunset: utilities must bring more generation capacity online to compensate for the lack of solar power and the extra demand caused by people returning to their homes.

Power plants have both fixed and variable costs. Distributed solar generation reduces the amount of energy they can inject into the grid, but they must still supply the peak in demand that occurs around noon. When fixed costs must be allocated among less kilowatt-hours of output, energy price increases. Also consider that variable operation wears down power plant components faster than constant operation, driving up maintenance expenses.

The Value of Energy Storage at the Point of Consumption

Although energy storage can be located anywhere in the power grid, it provides the most value when located at the point of consumption.

  • Surplus energy generated by solar panels or wind turbines can be stored locally, without burdening the grid and avoiding transmission and distribution losses.

  • Local storage serves as a backup power supply for utility customers when the electric service is interrupted.

  • It is possible to shape power grid demand more effectively with distributed storage. If the grid is burdened, energy storage can take over a part of the load; if there is surplus generation, energy storage can be filled up taking advantage of the low electricity price.

Energy storage is commonly associated with battery banks installed in homes and businesses, but there are viable alternatives. Heating systems can store energy thermally using insulated tanks filled with hot water, and electric vehicles will bring plenty of storage capacity online as they become mainstream – every EV not in use and connected to the grid is basically a battery.

Smart Data: The Link Between Distributed Energy Resources

The main challenge associated with distributed generation and storage is coordinating multiple small-scale systems. However, artificial intelligence can link multiple batteries or thermal energy storage systems as one, allowing them to operate in coordination as an effective demand-side management (DSM) solution.

The RealValue project is an example of how smart data can be used to maximise the value of distributed energy storage. The project was developed by a consortium of companies in the energy sector, including equipment providers and utilities, as well as academic institutions. Logic Energy developed a data aggregation system for smart heaters used by SSE Airtricity customers, and also a smartphone application that allows each unit to be configured locally. Homeowners get heating when needed, while the platform decides when to store hot water, when to use grid electricity, and when to minimise electricity use by relying on stored hot water as much as possible. Real Value was funded with EUR 15.5 million from Horizon2020, the largest research and innovation programme in Europe – the project spans 1,200 households in Ireland, Latvia and Germany, using distributed hot water storage for demand-side management.

Although the RealValue project focused on thermal energy storage, the Logic Energy platform offers the flexibility to accomplish the same function with other types of energy resource. For example, it can manage batteries in real time to minimise residential power bills.

When utility companies must manage shifting demand and generation, peak-hour rates can become very high. This has happened in places like California (USA) and South Australia. Once this point is reached, home and business owners can only avoid expensive peak-hour electricity if they own an energy storage system enhanced with automated system and Demand Management at the point of consumption. 

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