Singapore looking to develop policy framework for energy storage

Singapore looking to develop policy framework for energy storage

In order to fulfil its commitments under the Paris climate change agreement,
Singapore's climate action plan includes a number of strategies, including
reduction of emissions from its power generation sector. Already, Singapore
generates more than 95% electricity using combined cycle gas generators;
thus, it needs to increase the share of Solar PV to achieve further
reductions.

However, Singapore's electricity regulator - the Energy Market Authority
(EMA) - is rightly concerned about the impact of high PV penetration on grid
stability. Experience from other electricity markets with relatively high
percentage of PV and wind has shown that variability and intermittency
impacts can be reduced by spreading the installation of these resources
across large areas. Furthermore, strong interconnections with other power
systems allow for increased balancing errors to be cancelled out and also
allows for sharing of flexible conventional generators.

Thus, for geographically small, isolated power systems like Singapore,
energy storage will play a vital role in supporting higher levels of PV
deployment.
In 2015, Singapore opened its electricity market for energy storage systems
(ESS) by allowing them to bid for offering "regulation" service. Regulation
is a frequency balancing service which is used to correct the generation -
demand imbalances within a 30-minute trading period caused by load
variability and load forecasting error.

This followed a rule in 2014, which allowed PV systems that were paired with
energy storage, to not be classified as "intermittent" and potentially
participate in the wholesale market.

However, ESS' are very dynamic and can offer a number of solutions to
generators, grid operators, and consumers. As per the Sandia National
Laboratories, ESS can provide value in seventeen different types of
applications such as price arbitrage, ancillary services such as voltage
regulation and load following, facilitating demand side management, and
firming up output from variable renewable energy sources.

Recognising this potential, Singapore is now looking to develop a holistic
policy framework that will govern application agnostic integration of energy
storage solutions in its electricity market.

The framework will seek to answer a number of questions such as - which
applications of energy storage deployment can provide the most value in
Singapore? How can commercial viable business models be developed for ESS?
What changes to regulatory framework are required to accommodate certain
unique characteristics of storage systems - such as should ESS be considered
as a generation activity, as a load, or neither, or both?

An interesting question that the framework will answer is whether the
current electricity market design can provide enough incentives for ESS to
participate in the market. For example, studies have concluded that ESS can
be much more effective in providing regulation service as compared to a
combustion turbine, due to their high ramp rates and ability to accurately
follow the AGC signal.

System operators in the US thus provide fast responding regulation providers
with a performance payment in addition to the usual capacity payment, making
regulation markets more profitable for ESS. Singapore's rule change on
allowing ESS to participate in the regulation market notes this incentive,
however its market rules continue to treat ESS at par with other generation
asset that provides regulation.

Energy storage has the potential to revolutionise Singapore's electricity
market in the coming years; right from enabling Virtual Power Plants to
facilitating demand response, to increasing number of prosumers with PV
systems on their rooftops. However, this requires that Singapore develop a
solid framework that provides investors with certainty and appropriate
incentives to consider investing in energy storage applications that are
expected to have the maximum economic value and market potential.

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Link to Original Article:
http://sbr.com.sg/energy-offshore/commentary/singapore-looking-develop-polic
y-framework-energy-storage

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com