Existing regional capacity mechanisms need significant adaptations to effectively support longer-duration energy storage (LDES), which typically involves storage and discharge capabilities of ten or more hours. Current capacity markets often lack incentives tailored to the unique value and operational profile of LDES, risking under-compensation and underinvestment in these technologies.
Key adaptation areas include:
- Multi-market Participation: LDES technologies benefit from participating in multiple market segments—capacity, energy, and ancillary services—simultaneously. Revising market rules to allow LDES to provide diverse services without compromising reliability obligations would enhance their revenue streams and accelerate deployment.
- Flexible Market Mechanisms: Existing capacity mechanisms are generally designed around short-duration resources and do not fully capture the value of LDES’s ability to manage seasonal and longer-term supply-demand imbalances. Markets need to incorporate products and performance metrics recognizing longer discharge durations and the seasonal shifting of energy enabled by LDES.
- Improved Planning Coordination: Effective integration of LDES requires better alignment between regional transmission organizations (ISOs/RTOs) and individual state policies. Harmonizing planning and market reforms ensures that capacity mechanisms reflect the actual needs and contributions of LDES within regions, optimizing system costs and reliability.
- Valuation of Long-Duration Services: Studies indicate that long-duration storage reduces total system costs by addressing seasonal variability and reducing the need for excess renewable generation capacity, especially in regions with high wind or solar penetration. Capacity mechanisms should value these flexibility and reliability benefits explicitly.
In summary, adapting regional capacity mechanisms to support longer-duration storage involves updating market rules to facilitate multiple service revenues, incorporating the longer discharge and flexibility characteristics into capacity products, aligning regional and state planning, and explicitly valuing the system-wide benefits LDES provides in decarbonized grids.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-existing-regional-capacity-mechanisms-need-to-be-adapted-to-support-longer-duration-storage/
