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Questions around who should own, operate and ultimately benefit from the deployment of energy storage systems could soon be resolved in the Philippines after the government Department of Energy (DoE) issued a set of draft guidelines.
In order to accommodate energy storage as an enabler for the modernisation of its electricity networks, the Philippines’ Department of Energy (DoE) has issued a circular, “Providing a framework for energy storage system [sic] in the electric power industry”, this week.
Issuing the draft on 1 April and now seeking public comments only until 5 April 2019, the department has nonetheless attempted to take on some of the biggest questions facing electricity system planners, operators, generators and service suppliers alike. The DOE has already held four events to address policy gaps in the document with stakeholders and further events featuring public consultations.
Internationally, the department said, energy storage systems are in use for a variety of applications relating to the transmission, distribution and generation of energy. Domestically however, various stakeholders have raised concerns that there is a “lack of governing policy framework for its regulation and operation”.
The department recognised specific problems in the Philippines including load dropping on the Visayas Grid due to the addition of variable renewable energy sources, highlighting that ESS could stabilise that network. It also acknowledged environmental concerns over ESS system deployment, noting that the “ESS proponent” is to take responsibility for proper disposal and recycling of facilities and components.
The DOE is putting together a Smart Grid Roadmap in respect of modernising the national electric system. ESS will be one of the “key elements” of that:
“The DOE recognizes the applications and the benefits of ESS as an emerging technology in the improvement of the electric power system in accordance to the objective of ensuring the quality, reliability, security and affordability of the supply of electric power,” the circular reads.
Generation companies may own energy storage systems, either as standalone facilities or integrated into existing generation. ESS systems may then be registered to participate in the wholesale electricity spot market (WESM).
Distribution utilities may “develop or enhance appropriate business procedures for the connection of ESS to its distribution network”, consistent with applicable guidelines, while making sure the operation of systems is also in line with the rules. Distribution utilities will also need to ensure the coordination of ESS into the WESM with the transmission system and market operating entities.
In addition to also ensuring fair charges are levied for use of their networks, distribution companies will need to report back each month on the operation of ESS in their franchise area and notify the transmission network of new large-scale systems that have applied for grid connection.
So-called directly connected customers on the grid, meaning large businesses and commercial and industrial (C&I) facilities, may also own and operate ESS, subject to local permits and other conditions. C&I users must also provide technical information to the transmission network about their installed systems.
End-users are also to be allowed to own and operate their own energy storage systems but conversely are asked to notify distribution companies if doing so. Qualified third parties, such as providers of government microgram programmes, may also own and operate ESS, if used in conjunction with renewable energy facilities or hybrid power systems deployed for household use.
The System Operator (SO), on the other hand, will not own and operate energy storage systems. The Market Operator (MO) must comply with incorporating ESS into its WESM and asses the technology’s impact on market operations.
The government recognised that ESS could include battery energy storage systems (BESS), compressed-air energy storage (CAES), flywheel or pumped hydro, as wellas other technologies still to emerge on the market.
As an island country with relatively high solar irradiance but also susceptible to storms and hurricanes and a mixture of urban, industrial with remote and rural energy demand across those islands, the circumstances of the Philippines mean that both microgrids and largegrid-connected batteries have already been built or proposed in the country.
The DOE circular highlighted a number of potential applications for storage, including grid-connected front-of-meter benefits such as ancillary services and transmission/distribution investment deferral, transmission congestion relief. As well as behind-the-meter integration of renewable energy sources, there is also a separate application category for microgrids.
The draft also highlighted licensing and permitting, connection and operational requirements, and frameworks for market participation and registration. The document remains open for comment until 5 April 2019.
The right commercial and regulatory mechanisms must be implemented to boost its adoption.
The energy storage market in the Philippines is still in nascent stage and regulators have a big role to play to boost its adoption.
This was amongst the highlights of the first leg of the 2018 Asian Power Utility Forum held at Makati Shangri-La Manila on 27 February.
According to Sarah Fairhurst, partner at The Lantau Group, most local energy storage projects are delayed due to pending approval from regulators or only in proposal stage.
Globally, Fairhurst noted “the storage revolution is being driven by regulators who understand that they actually have to keep up with technological advances. That’s not happening here yet in the Philippines.”
On her presentation, Fairhurst said that some energy firms see battery storage as the solution to improve the economics of a larger scale roof-top solar solution particularly if they have non-day time load.
Basically, battery storage provides a backup energy resource for intermittent power sources such as the solar power, which saw a dip on output during cloudy conditions.
Similarly, Jeff Miller, partner at OWL, believes battery energy storage system (BESS) is the best solution for hybrid power plants using solar power to maintain the energy source throughout the day. He thus noted the use of BESS makes solar output more stable, provides additional power at night time, and helps in controlling frequency on the microgrid.
“Over the next 10 years, I think there’s going to be tremendous opportunities where solar plus battery storage could replace expensive coal with low cost,” said Bill Ruccius, executive vice chairman/treasurer of the Independent Power Producers Forum.
The state of solar market in the PhilippinesLeandro Leviste, founder and CEO of Solar Philippines, expects the solar energy to penetrate 20% of Filipino households over the next five years.
Leviste said they are now “under supply agreement with Meralco at a price as low as PHP2.99 per kilowatt hour with a new CSP now being conducted by Meralco at PHP 2.98 showing indeed the attractiveness of these rates and we have no doubt that the price will continue to drop.”
However, amongst the top concerns looming around solar energy is whether it is viable to be used with battery storage for peaking and midnight utilisation in the next two to three years.
“If you’re going to be integrating storage for a day time firming application you wouldn’t even need 1MWH of storage for 1MW of PV, you would only need perhaps half an hour per megawatt of PV,” he explained.
Moreover, some companies leveraged solar energy to power their corporate social responsibility (CSR) projects on provinces with inadequate source of electricity.
The Power Sector Assets and Liabilities Management (PSALM) Corporation, for instance, used solar panels as an energy source to power the machines they have to use on their livelihood programme (i.e. tailoring) in the municipality of Estancia in Iloilo.
Helena Tolentino, vice president for CSR of PSALM, said they spent PHP485,000 for the solar panels and hopes to extend it to government’s socialised housing units.
Finding the balance in development and environment protection“[The] energy sector has an impact on both economy and the environment. We do recognise that energy is the lifeblood of all economic growth. Without power, our factories, offices, and railways will simply not run but generating power to support these activities would cost pressure to the environment,” said Jaime T. Azurin, president of the Global Business Power Corporation.
The United Nations Development Programme (UNDP) in 2015 launched 17 Sustainable Development Goals, which zero in on climate change and sustainable consumption amongst others.
As such, Azurin elaborated four strategies to help energy firms embark on sustainable approach to development in line with the UNDP’s goals.
Firstly, find the right balance in the energy mix. In the Philippines, renewables take 30% of the current energy mix said Attorney Jose Layug Jr., chairman of the National Renewable Energy Board. However, the government is looking to raise it to 35% by 2030 as stated in the National Renewable Energy Programme.
Secondly, promote a healthy regulatory environment. Azurin mentioned several regulations in the pipeline that could help balance out environment and economic development.
“Under the RPS, distribution utilities must source a portion of their power supply from eligible RE producers whilst under the Green Energy Option end-users must have the option to choose renewable energy as their energy source,” he said.
Thirdly, improve energy efficiency by finding ways to consume less fuel without compromising the energy output. “This is done through careful and routine maintenance of our facilities to ensure that they are running in optimal condition. This can also be achieved through innovation of various energy technologies measures in our day-to-day operations,” Azurin explained.
Lastly, continuously leverage technologies that could help improve the energy sector.
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