The total capacity of worldwide spinning reserves for the grid will rise 40% by 2022, finds a new report from Pike Research. In terms of revenue, the report says the global spinning reserves market will more than double in size during that period - from $261 million this year to $578 million by 2022.
According to the report, the increasing complexity of the smart grid - with more diversity of power generation assets and more sophisticated control capabilities - is heightening the importance of ancillary services such as spinning reserves. Spinning reserves can come online quickly to serve as bridge power for the grid, and Pike Research says they are needed to maintain system frequency stability during emergency operating conditions and unforeseen load swings.
The minimum duration of a spinning reserve varies among system operators, the report notes. The California Independent System Operator, for instance, requires that a spinning reserve come online within 10 minutes and be available for a minimum of two hours. In the absence of a spinning reserve, a system operator will typically shed load until the system is back in balance or slower ramping assets can come online. Some systems, such as India’s, operate in this manner, the report explains. Technologies The technologies that deliver spinning reserves include traditional generation assets and energy storage technologies, such as pumped storage, compressed air energy storage and advanced batteries.
“The traditional technologies that deliver spinning reserves, including all types of dispatchable power plants, are mature and well understood,” says research analyst Anissa Dehamna. “However, energy storage technologies, including pumped storage and newer forms of energy storage, are playing a larger role in this market. As markets begin to differentiate between technologies, such as with pay-for-performance regulations, energy storage technologies will gain market share in the spinning reserves market.”
By 2022, the report predicts natural gas and coal plants will still account for 93% of total spinning reserves capacity, but energy storage will grow to 7% of capacity in the same time frame. Of particular interest to grid operators are advances in battery technology, especially lithium-ion (Li-ion) batteries. Pike Research says Li-ion batteries can achieve up to 95% efficiency, but they remain relatively expensive compared to other forms of energy storage. Impressive economies of scale could reduce the cost of Li-ion for grid applications, the company adds.
Market drivers According to the report, key drivers in the spinning reserves market include conditions that affect the technical need for spinning reserves (i.e., the amount of reserves), the mix of technologies (i.e., the market share) and the revenue in the market (i.e., the value of the market).
Market conditions that affect the technical need for spinning reserves include increased volatility in load and/or generation, the ability of the grid operator or vertically integrated utility to accurately forecast sharp increases in load or significant decreases in generation, and the ability of a grid operator or vertically integrated utility to call upon resources from interconnected systems.
Drivers that influence the technology mix of assets include the generation asset mix and factors that affect the mix (e.g., government policies that enforce clean air standards or require renewables integration into the system), fuel prices, and business models that bundle spinning reserves with another, more-high-value application.
The market condition that will influence the value of the spinning reserves market is the market structure (e.g., whether a market is regulated or deregulated), the report adds.
More information about this report is available here.
