Presentation done during Energy Storage World Forum May 2018, Berlin

1. Evaluating The Top Three
Revenue Streams Available For
Energy Storage
And Where They Are Most
Profitable
ORES
Département Technique – Solution Technique et
Vision Long Terme
D. Vangulick

2. Who are we ?
« Opérateur de Réseaux d’Énergies »
Cooperative Limited Liability Company (scrl)
Private company 100% owned by public (municipalities / province)

3. Who are we ?
1 087 M€ Consolidated Turnover
249.7 M€ Investment /year
2.300 collaborators
49.981 km Electicity network
9.430 km Natural gas network
448.346 Luminaires Public street lighting
1.634.000 Meters read
11.613.792 MWh Electricity distributed
13.057.138 MWh
Natural gas
distributed
197 Served municipalities

5. Goal of these slides
• Examining each revenue stream
• Estimating the revenue streams available for the next
5 years
• Which income is more volatile and which carries
more regulatory risk?
• What are the economics when you have more
flexibility?
• Maximising the value of energy storage

6. Agenda
1.Definitions
2.Challenges that DSO’s are facing
3.Use cases
4.Revenue Streams
5.Conclusions

7. Definitions
• Storage: « the intake and stocking of electricity in different suitable energy
forms where the release of energy in the form of electricity, occurs at a
controlled time, at the same connection point where it was first absorbed
Legend:
• EMS: Energy Management System
• SMS: Storage Management system
It is not only a pack of batteries.
It’s a whole system

8. Definitions
• Why storage could just be another DSO’ s asset to actively manage
the network ?
• DSO:
• responsible for operating, ensuring the maintenance of
and, developing the distribution system
• Management interconnection with other system
(Transport system)
• in a given area and,
• for ensuring the long term ability of the system to meet
reasonable demands and local generation
• No commercial electricity supplier = strong unbundling

9. Challenges that DSOs are facing
From …
Example of a weekly profile no PV, no HP, no EV
DSO
Design
zone

10. Challenges that DSOs are facing
From …
DSO
Design
zone
Example of a weekly profile with PV, HP, and EV

11. What are the uses cases for storage ?
• We distinguish 4 large families of applications
• Those used for the management of power flows on the
networks (distribution and / or transport)
• Those used to manage the balance of the electrical system
(Belgian and European)
• Those used to manage the final energy bill
• Those used for the economic trade off of the production /
consumption of electricity.
• These applications use one or more basic functionalities
• Some of these applications can also be realized together (ex energy
trade off and support for voltage)

12. Uses cases
Network Mgt
Inspired by Rocky Mountain
Maximising
the value of
energy storage
depends on
where you are
connected

13. Revenue Stream: Final bills
• revenue streams available
– Depend on tariff => regulatory risk
– The risk of volatility of the revenue flow decreases as
the share of commodity in the final bill increases

14. Revenue Stream: Supplier
• Revenue stream available is a function of
– the margin between
• LCOE of your generation means and/or
• the lowest price on the energy market
• the highest price on the energy market
– The Levelized Cost of Stored Energy (LCoSE)
𝐿𝐶𝑜𝐸𝑆 =
𝐼0 + 𝑦=1
𝑛
𝑀 𝑦
𝑦=1
𝑛
𝜀𝑖𝑛,𝑦. 𝜂
– your capability to foreseen this margin.
– It’s a trader like business

15. Revenue Stream: Supplier
• E.g. Germany price week 12 /2018
110 €/MWh
https://www.energy-charts.de/price.htm?year=2018&auction=15m&week=12

16. Revenue Stream: System Management
• The need of system services will increase in the future.
• Storage competes with load flexibility (also electric vehicle & heat
pumps) and with generation units (incl. some renewable (e.g wind
turbine)
• Storage is very good for high value services (FCR, aFRR and spinning)
• Regulator Agencies sees the storage as good mean to increase
competition => low regulatory risk
• This will remain the most important revenue stream for storage for
the next 5 years.

17. Revenue Stream: Network Mgt
• As demonstrated in current R&D projects, electricity storage can
support network operations, but need to combine different use case
to be economically viable.
• DSOs should be allowed to procure system flexibility services from
existing electricity storage facilities.
• DSOs should also be able to deploy and operate their own electricity
storage facilities, if necessary.
• In the latter case, the energy storage facilities should be integrated in
the DSO’s regulatory asset base and their cost should be recovered
through network tariffs.
• Regulatory frameworks has to consider a fair return for the DSO on
invested capital and “avoided” invested capital

18. Revenue Stream: Network Mgt
• Our position is: Storage to be investigated if:
– BC storage > others alternatives
– ROI < 8 years
– Revenu flow:
DSO revenue > 50%

19. Revenue Stream: Network Mgt
• Many regulatory steps still need to be taken
• In principle, the regulators (and the European Commission)
are opposed to the idea that the DSO can operate and own a
storage.
• We believe that it is only on the basis of a concrete case,
demonstrating both the overall interest and the role of "pure"
DSO of ORES, that the regulator could accept.
• Absolute transparency is required on the part of the storage
managed for the benefit of the network and the part managed
for the benefit of another actor
• A good agreement / partnership / co-ownership contract is necessary
while giving the market players the opportunity to participate => call
for partners made public

20. To conclude
• Some ranges of revenue streams that we are using for CBA sensitivity
assessment (based on EPRI 2008)
– Final bills:
• tariff and commodity: 0,01 -> 0,04 €/kWh
• Peak shaving : 10 -> 20 €/kW/year
– Supplier :
• Price difference: 0,01 -> 0,03 €/kWh
– System Management:
• FCR & aFRR: 10 -> 90 €/MWh
– Network Management:
• DSO investment def.: 45 -> 80 k€/ MW /year deferral

21. To conclude …
• We are not requesting that DSO must have the monopoly for storage
• We advocate to have the choice in all transparency.
• This requires an open regulatory framework for both commercial and
DSO storage.
• The question about the ownership of the energy (and the cost of it)
has not been touched in this presentation but is also a major
challenge