Off the grid - how energy storage can improve the hybrid microgrid case

“There has never been a better time for hybrid microgrids”, I recently read in the context of the completion of yet another PV-battery-thermal project at an Australian off-grid mine.

And in fact, adding renewables and storage to existing fossil fuel based power plants seems to become increasingly fashionable in a variety of off-grid settings all around the world. Just to mention three examples from the last two months:

• In Australia, the Agnew Gold Mine implemented probably the biggest hybrid solution yet, consisting of 4 MW solar, 18 MW wind, a 13 MW/4 MWh battery and a 21 MW thermal plant.
• In Niger, the first ground-mounted solar-diesel-battery storage based power plant was realized to supply Agadez, a city which is located at the gateway to the Sahara Desert and isolated from the rest of the country. It features ~19 MW PV, a ~12 MWh/3 MW battery and ~7 MW of diesel generator capacity.
• And in Oman, 48 MW PV combined with a 28 MW/14 MWh storage system and a 70 MW diesel component was tendered for distribution over eleven sites to electrify the more rural parts of the country.

The benefits of replacing some of the thermal generation with renewables are probably obvious, given the ever-falling costs for PV and wind and the expensive and sometimes unreliable supply with fossil fuels to remote off-grid locations.

But why adding energy storage, you may ask, given that dispatchable thermal generation is already in place to complement variable solar and wind power?

 Spinning reserve caps achievable fuel savings

The overall economics of a renewables-hybrid system depend heavily on how much of the fossil fuel-based generation can be replaced by renewable power, or in other words, how much fuel can be saved. As adding renewables requires an upfront investment that is amortized through reduced operation costs, a low PV or wind yield leads to unfavorable IRR and payback periods that will make a hybrid solution economically unviable in many cases.

However, hybrid systems are often limited in the fuel savings they can deliver due to certain characteristics of both diesel gensets and, for example, PV plants.

For a diesel genset to function efficiently, it needs to operate above 40% utilization. This naturally limits the PV penetration, i.e., the ratio between nominal PV power and nominal genset power (of gensets running at the same time) to 60%. Due to PV’s intermittent nature, a “spinning reserve” is required in case a drop in output (e.g., due to cloud cover) or a sudden step load (e.g., due to the activation of heavy machinery) is experienced, enabling online diesel capacity to take over the load immediately.

As a reminder, spinning reserve is defined as all (spinning) generation capacity (i.e. generators with inertia) that is already connected to the grid, but not used by the electrical demand. A simple example would be two 1 MW diesel generators with a current load of 600 kW each – this would leave an 800 kW spinning reserve in total.

Multiple diesel gensets often run jointly at low utilization rates, which limits overall PV penetration, reduces generation efficiency and therefore impacts achievable fuel savings.

As result of the need for spinning reserve, multiple diesel gensets often run jointly at low utilization rates, which limits overall PV penetration, reduces generation efficiency and therefore impacts achievable fuel savings.

 Don’t spin your wheels - why adding energy storage can help

The need for a spinning reserve can be reduced with the addition of energy storage to the hybrid system, thereby mitigating the drop in efficiency and fuel savings.

If PV output falls, energy storage is immediately available and extends the time required for the diesel genset to start up. This provides the benefit of needing fewer diesel gensets to run while allowing the remaining units to operate more efficiently at a higher utilization rate, saving fuel. As some of the diesel gensets can be switched off completely, they can be fully replaced by PV capacity, increasing the PV penetration of the overall hybrid system setup – again decreasing the fuel consumption. In addition, depending on the application and required safety standards, the number of installed gensets can be reduced in the first place, saving on investment costs.

The need for a spinning reserve can be reduced with the addition of energy storage to the hybrid system, thereby mitigating the drop in efficiency and fuel savings.

Hence, adding storage to a PV-hybrid system can significantly increase fuel savings, save Capex for thermal generation and thereby more than offset the impact of the investment in the energy storage system.

 Requirements and prerequisites

The ability to switch off one or more generators for a defined time, or to run generators at an almost fixed operational point for a long period of time is a key requirement for adding storage. The switching off of generators due to the inclusion of storage, however, requires the storage to have the power rating of the running generator and sufficient energy storage capacity to supply electricity demand until a black start of a generator could be performed.

Furthermore, it is important to note that adding energy storage does not make sense in every situation. A careful, individual assessment of a number of factors is required such as operational parameters, PV system size, site specific fossil fuel prices, cost and efficiency of the energy storage technology applied as well as genset performance at different utilization rates.

The power demand of different types of mini-grids or industrial customers is still one of the big unknowns.

Probably most importantly, the site’s specific load profile has to be closely assessed and understood to correctly size the system and determine the economic viability of adding storage. The power demand of different types of mini-grids or industrial customers is still one of the big unknowns as little data has often been gathered or is publicly available. In fact, for the tender of the aforementioned microgrids in Oman, only one party submitted a bid. The lack of a clear off-taker demand pattern was a key reason for the low interest.

-Parts of this article are originally based on contributions by Martin Baart and Philipp Kunze-