Regional capacity mechanisms can be redesigned to better support long-duration energy storage (LDES) through several strategic changes that enhance flexibility, incentivize regional cooperation, and accommodate diverse technologies. Key redesign elements include:
1. Regional Integration and Market Scope
- Shifting from national-only capacity mechanisms to regional capacity markets leverages interconnections among neighboring countries or areas, which can reduce overall capacity requirements by sharing resources during shortages. This regional mindset encourages more efficient use of generation and storage assets across borders, reducing the need for costly local overcapacity.
- Regional markets require trust and agreed rules for sharing capacity during scarcity, which can promote investments in interconnections and optimize resource adequacy on a larger scale.
2. Flexibility and Technology-Neutral Design
- Capacity mechanisms should lower the minimum size threshold for participation (e.g., from 2 MW to 1 MW or lower), enabling distributed energy resources (DER) and smaller-scale LDES systems to enter the market.
- Introducing flexible certification processes and allowing hybrid installations (combinations of generation and storage technologies) to participate recognizes the evolving energy landscape and the unique characteristics of LDES.
- Setting capacity utilization factors tailored to different technologies can better reflect the actual contribution of LDES to system adequacy, unlike traditional metrics focused on steady output.
3. Demand-Side Participation and Advanced Metering Infrastructure
- Incorporating demand response and aggregated DERs into capacity mechanisms can enhance system flexibility and reliability, particularly when enabled by advanced metering infrastructure (AMI) to ensure performance and credibility.
- Ensuring that aggregators of DERs and storage can reliably deliver capacity when needed is essential for the mechanism’s effectiveness, which calls for robust monitoring, communication networks, and data management.
4. Rolling Auctions and Dynamic Procurement
- Transitioning to more frequent capacity auctions (e.g., 5, 3, and 1 year ahead) allows the market to better adapt to changing system needs and technological developments, supporting the gradual integration of long-duration storage which may require longer lead times.
- This dynamic approach balances long-term capacity sufficiency with the need for flexibility and responsiveness to evolving demand and supply conditions.
5. Incentivizing Interconnections and Regional Adequacy
- Capacity remuneration should incentivize investments in transmission and interconnection infrastructure to facilitate the sharing of surplus capacity across regions, a critical enabler for LDES which can shift energy supply across time and geography.
- Regional coordination reduces the need for redundant local capacities by optimizing storage and generation portfolios regionally.
In summary, redesigning regional capacity mechanisms to support long-duration energy storage involves expanding the market’s geographic scope, lowering participation barriers, tailoring capacity accreditation to storage technologies, integrating advanced demand-side capabilities, and adopting flexible procurement frameworks. Such reforms enhance system flexibility, reliability, and cost-effectiveness, enabling LDES to play a vital role in the clean energy transition.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-can-regional-capacity-mechanisms-be-redesigned-to-better-support-long-duration-energy-storage/
