We Don’t Have to Wait for Real-Time Markets to Bid Renewable Power Onto the Grid

Growing the amount of renewable power that’s available on the grid is equally as crucial for the energy transition as the ability to generate power from renewable sources.

Fossil fuels continue to have the advantage because of market-bidding protocols that place their power on wholesale energy markets across the country, making it widely available to utilities and municipalities to draw on in order to meet demand. Until recently, renewables weren’t able to participate in the wholesale markets because of their less predictable nature. It is thought that energy markets will have to migrate to more immediate real-time trading before renewables can participate and go head-to-head with fossil fuel generated power.

COMMENTARY

But that’s a misnomer.

The energy industry at large is just starting to learn what storage paired with sophisticated energy management software is capable of. In the time of a fossil fuel dominated grid where renewables are just being introduced, storage has been used in a limited capacity, viewed as an ancillary service ensuring grid stability by filling in the gaps for solar and wind. Meaning, it’s only used a small percentage of the time when there’s need for backup, and rarely is its full capacity called on. The rest of the time a storage system may be sitting idle and could go hours, days, or weeks without being used.

But well-managed storage provides a guarantee that reliable renewable power is available, just as any flexible fossil fuel power plant guarantees fossil fuel electricity. This means that anywhere around the country that there’s a storage system that’s tied to renewable generation, there’s renewable power available to meet the demand of energy markets. That is, as long as the system is connected to auto-bidding software that can determine market demand timing and pricing and release the energy as it’s selected.

Because of the nature of flexible systems, bidding from storage requires a sophisticated approach that anticipates fluctuations and can recalibrate and react in fractions of a second, making it too complex for human traders but something an algorithmic software can easily manage. In fact, auto-bidding software makes it possible for energy storage systems to see across multiple energy markets and dispatch to them simultaneously, giving asset owners access to multiple revenue streams. Systems are able to meet their contractual agreements of frequency regulation and then sell the remaining unused energy on the wholesale market.

Auto-bidding solves another important hurdle to renewable adoption. Utilities and municipalities have a responsibility to purchase the least expensive electricity available.  Smart energy management software is able to price competitively and ensure that it is always bidding renewable power at the lowest rates so that their dispatch is prioritized and chosen over fossil fuels.

Storage plays a critical role in the energy transition; ancillary services were just the beginning. Renewable energy participation in daily energy markets, the largest source of energy demand, is essential to achieving high levels of renewable energy usage. We don’t have to wait for markets to transition to real time, auto-bidding software makes it possible now.

—Sen Zhang is Director of Software Engineering for Wärtsilä Energy Storage and Optimization.