Energetica India Magazine: september 2020

Increasing Renewable Contributions for Island Utilities Battery energy storage and solar PV with smart controls can reduce costs, reduce risk, and increase renewable penetration and contribution to meet island goals. The low cost of these technologies presents a compelling case to justify making an investment in them to reduce reliance on diesel fuel today. Their economics and technical capabilities present an investment opportunity for islands and island utilities where the technical, economic, and environmental goals all align. Globally, island electricity systems are on a journey to reduce energy costs and break their historical reliance on imported diesel and heavy fuel oil. As the costs for renewable generation and battery energy storage decline, island utilities can create increasingly resil- ient, reliable, lower-cost energy supplies while meeting domestic goals on the use of renewable energy. Intelligent controls and smart automation are critical tech- nologies for enabling island utilities to unlock the benefits of the low-cost solar photovoltaics (PV) and battery energy storage systems (BESS) available today. The largest driver for high-energy costs in islands is the price of imported fuels. To address this issue, Hitachi ABB Pow- er Grids first developed an island utility business case achieving an 18 percent reduction in the cost of generation while sourcing 35 percent of the delivered energy from renewable sources. This is- land utility was able to deliver 35 percent of the energy to customers from renew- able sources while minimizing the life cycle cost of their electricity supply. The cumulative investment increased the use of domestic energy sources, enhanced energy security and reduced the island’s contribution to climate change. It pro- vided a robust foundation for meeting higher renewable contributions into the future—even up to 100 per cent. Three conclusions could be drawn from this business case: 1) Islands have a strong economic case for the use of so- lar PV and BESS to reduce their reliance on imported diesel fuel. This improves their resilience against volatile fuel pric- es. 2) Islands can make strong progress towards their renewable energy goals while lowering costs. 3) Smart controls and automation are key technologies necessary to unlock the benefits of low- cost solar PV and BESS. Benefits of Storage and Renewables for Island Utilities Investments in renewable generation, BESS and smart control technologies can make islands less vulnerable to market conditions, more resilient to en- vironmental challenges and increase energy security using domestic energy sources. Island utilities are, traditionally, reliant on costly diesel and heavy fuel oil for their electricity. This singular reliance on an expensive resource has led them to pay some of the highest and most vola- tile electricity costs in the world. It is not uncommon for island utility customers to pay between 0.20 and 0.50 USD/kWh for their electricity — two to five times what many customers of mainland utilities might pay. Beyond the high cost, these fuels are toxic and contribute to climate changes that are eroding shorelines and affect- ing the environmental stability of many islands. Recognizing these challenges, many islands have committed to am- bitious targets to reduce their depen- dence on imported fossil fuels. To meet these goals, islands must increasingly rely on renewable energy with support from BESS and smart control solutions. This island energy transition is technical- ly viable and can economically reduce the risk and exposure to fossil fuels. As compared to mainland utility grids, is- land grids have less diverse generation and demand, do not interconnect with larger networks and tend to have less secure and reliable network infrastruc- ture. Adding BESS and smart control solutions has the added benefit of miti - gating the impact of these challenges. One key economic driver is reduced technology costs: Installed solar PV prices have declined around 80 per- cent over the past eight years, while 46 energetica INDIA- September_2020 John Glassmire Senior Advisor, Hitachi ABB Power Grids Hamideh Bitaraf Ph.D., Senior Advisor, Hitachi ABB Power Grids