The Department of Energy (DOE) will be studying cost implications as well as supply reinforcement impact of the forthcoming innovations for energy storage systems (ESS) before integrating a pie of ‘renewable energy + ESS’ in the forthcoming green energy auction (GEAs) for RE projects.

Energy Assistant Secretary Mylene Capongcol said “we will do a study before we include that in GEA…we need to test the integration of RE with ESS.”

She qualified that part of the study and re-evaluation that the energy department will be undertaking would be the forthcoming innovations in ESS – primarily the targeted commercial rollout of long duration energy storage (LDES) systems in the next 3 to 5 years.

The outcome of the DOE study, she indicated, will be shared with the Energy Regulatory Commission (ERC) so it can also be considered in their calculation of the green energy auction reserve (GEAR) prices for the solar+ESS or wind+ESS fractions in the RE capacity tendering process.

Capongcol emphasized that the key parameters they will comprehensively examine will be the load curve in the country’s power system or the dynamics of supply and demand, as that “will be the gauge if we really need longer duration storage or not.”

For the Philippine market, she acknowledged that the battery energy storage systems (BESS) being deployed are the short-duration models, which could only store power up to four hours.

ERC Chairperson Monalisa C. Dimalanta similarly noted that “discussions are still ongoing with the DOE and stakeholders on the calculation of GEAR for the integrated RE+BESS facilities.”

She added that “the potential technology advancements will most likely affect and be affected by the timing of the auction and target commercial operations to be set by DOE.”

The ERC chief conveyed “we base our commercial and economic assumptions on those time pegs, mindful when investments decisions and when actual EPC (engineering procurement and construction) costs are incurred. So it is crucial that there are no delays in the target COD (commercial operations date) so that we are able to align assumptions to actual as close as possible.”

In the more mature energy markets, demonstration and pioneering projects are already being advanced for LDES, which could have extended storage of 8-12 hours and further innovations are looking at energy storage capabilities spanning beyond 100 hours.

If industry assumptions on the commercial maturity of LDES would turn out favorable, that may overrun the 20-year power supply agreements (PSAs) that the DOE has been awarding to the GEA winners, hence, that will unduly commit consumers to eventually paying long-term costs for outdated technology.

In the GEA terms of reference (TOR), there are no specific provisions how technology obsolescence will be treated in future circumstances – such as market introduction of more advanced and efficient technologies, hence, regulators and policymakers are being pressed to be more forward looking on technology deployments as well as in their levelized cost of electricity (LCOE) calculations in the government-enabled RE capacity auctions.

In other markets, LDES technologies are not just being aligned for integration with intermittent renewables like solar and wind, instead they are also experimented on as substitute to capacity buildout of transmission facilities.