Unpacking battery energy storage systems for City of Cape Town

The City of Cape Town will, in the third quarter of this year, release an RFP for 100MW of battery energy storage systems in an effort to bolster energy security.

Shane Prins, Manager: Generation Management for the City of Cape Town, used an AFSIA e-conference on energy storage to talk through the City's thinking on how they will roll out the battery storage component of their overall power programme.

He said the City was looking to energy storage systems to deal with energy security issues and loadshedding, as well as to deal with future alternative variable energy sources, which will introduce greater intermittency to the grid.

There are regulatory changes in the power industry in South Africa, which show we’re moving to a distribution system operator model.

A great deal of research has gone into developing a roadmap for how a rollout of energy storage systems would work, starting in this case with batteries. This began with a deep dive into selecting the optimal technology: "Not just what is available, but what is coming up over the planning horizon. We wanted to ensure we are aware of market trends in manufacturing, and what is happening with pricing," said Prins.

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In looking at what the introduction of a large-scale battery energy storage system (BESS) would mean for a municipality they looked at multiple use cases to gain an understanding of what flexibility it could offer, what the future impact would be on the power system and establishing the most optimal.

The City of Cape Town (CoCT) will follow a phased approach, using this first pilot project as a way to apply learnings to future projects and then upscale efforts in the coming years, perhaps through a mix of PPA and own-build projects.

The CoCT is in the scoping phase right now and will conduct feasibility studies to finalise the preferred location (out of the three identified sites), probably by August, said Prins.

They have identified the factors applicable to not only the CoCT, but probably other local municipalities that encourage the introduction of BESS onto their local electricity grid.

"We are looking at an increase in renewable energy and SSEG penetration, with the accompanying impact on power system stability, so we need to maximise our hosting capacity without adding additional complexity around keeping the system stable.

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"There are regulatory changes in the power industry in South Africa, which show we’re moving to a distribution system operator model. That DSO could potentially be required to procure its own ancillary devices. Having these in strategic locations could support us in keeping the network stable through all types of contingencies," said Prins.

Depending on how they utilise the systems, using BESS on the municipal grid could:

He sees energy arbitrage as particularly relevant for the City. "We procure most of our energy from the national utility, and we’ve seen a tremendous rise in Eskom tariffs in the last 10 to 12 years – way above inflation. We pay a time-of-use tariff to Eskom and foresee the use of arbitrage will become useful."

Additionally, some of the outlying areas with fairly small loads at the end of 56kV feeders, which only exceed capacity for a few hours in a year, would benefit from the deployment of battery energy storage systems on the line to defer having to build out the network.

"It is critical to understand where the cost of tariffs is going. We need a sound business case backed by sound project economics."

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On the technical side, the City has narrowed it down to a choice between Lithium Ion Phosphate batteries or Vanadium Redox Flow Batteries. While the first is a mature technology with a high efficiency and reliability rating, they have a lower lifespan and a low possibility for recycling.

The second choice has a longer lifespan, is recyclable and has a slow performance degradation. But, it is a significantly more capital-heavy, less mature technology and requires a higher level of maintenance.

"Our technology choice has a significant influence on the associated CAPEX and future expenditure of OPEX," said Prins.

He explained that while their research shows these as attractive technologies, the City would not discount using a different type of battery technology if their RFP draws proposals which make a sound business case for something else.

Rolling out BESS at a later stage also has its merits – the rand might strengthen, which would influence how much the City would pay for imported technologies, and the costs of battery technologies are steadily decreasing – but an increase in companies choosing the technology could lead to a supply chain bottleneck.

"Typically, you could require less capital if you wait, but this will not be the case if there's a reversal in the medium term of the prices of these systems," mused Prins.

The City is considering putting the proposed BESS system at a main substation, depending on whether it is CoCT-owned land, what the equipment ratings and load profile are and whether there are overlapping projects and potential synergies with the energy master plan.

Again, the impact of future renewable energy deployment on the grid will affect this decision.

"As a municipality which acts as a utility, we are connected to the Eskom grid. All of this comes into play for the location, sizing and operating regime [of the BESS] going forward.

"What is important here is, whenever you consider the role of a programme of this nature, you must try and target as many use cases as possible for the consideration of a location, to reduce the risk of a stranded asset and to increase the flexibility of how you use the device. This improves the cost-benefit of the device and maximises the benefit you will get out of it."

The City has narrowed it down to three potential sites for the project, with seven sites identified for potential subsequent BESS projects. Each site has to undergo a techno-economic feasibility study and HAZOP (hazard and operability) study as part of project development.

"Space has been the primary constraint. But we are looking at either acquiring the land around the substations they want to focus on or shifting focus to easier land access."

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In addition to the first two mentioned stimuli of variable energy resource integration and mitigation of loadshedding, Prins also mentioned the following BESS uses beyond utility-scale integration:

After this first project, the City will also consider the merits of own-build procurement vs drawing on independent power producers. Whichever method they use in future, they do want to build out the City's skills capacity first and then help the energy sector at large. "We can scale it however large we want and modify it for different purposes."

Prins said the City is not considering divesting itself from the Eskom grid, which he thinks will eventually re-invent itself as it unbundles into three separate entities. "From a municipality point of view, we have other responsibilities such as water and sanitation, housing, roads, and public goods that need resources and budget. Energy is top of mind, but there has to be a balance," he reminded. ESI

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